Press review - 14/03/2023
REAL ESTATE : THREE YEARS AFTER LOCKDOWN, POST COVID HOUSING STRUGGLES TO EMERGE
In the aftermath of the first lockdown in spring 2020, specialists of urban development committed to build a post-Covid city with larger, brighter homes, featuring more outdoor area and shared spaces. Three years later, the promise is proving difficult to keep. While the Pinel + scheme increases the dwellings’ size and some real estate developer are launching “ready to live” housing, the crisis is real in Ile-de-France region and on coastal areas. Private decision-makers are not lacking creativity on fiscal and financial fields to reverse the trend.
“Modern lifestyle in its concrete, bitumen and neon form will increasingly generate a need for escape, nature and beauty in everyone” When the President Pompidou wrote to his Prime Minister, Jacques Chaban-Delmas, on July 17, 1970, to lament the felling of trees along the roads, he could not have imagined that fifty years later, in March 2020, wealthy Parisians and city dwellers would leave their downtown apartment to join their second homes.
It was almost three years ago to the day. In the aftermath of the first round of municipal elections, the head of State delivered his second “address to the French” in less than a week, urging them “we are at war […] stay home”. So much so that at the end of the first national lockdown, which lasted nearly two months ,urban development professionals pledged to build post covid cities with larger, brighter housing, more outdoor area and shared spaces.
“French people want to live better while giving a more reassuring and cheerful perspective to their children. They aspire to less commuting and enjoy more space, live close to services, schools, their workplace, and want to homework. “Summarizes Marjan Hessamfar, Vice President of the National Council of the Order of Architects.
“This translates into car sharing, co-living where living rooms, DIY spaces, laundry, storage and gardens are shared. Schoolyard and public buildings courtyards would be open on weekends to become neighbourhood parks. And since the need of socialization is strong, coworking spaces are set up near homes. The creation of third places is becoming widespread, allowing the rising of services in a single space.” she adds.
A promise that is hard to keep
However, thirteen months after the outbreak of the war in Ukraine and its cascading energy and financial consequences on the daily economy, this promise is becoming difficult to keep. “We can obviously put in more areas, more outdoor spaces, more shared places but due to economic reality, it is not certain that we can fulfil everyone’s expectations” surprisingly admits the president of the real estate developers Union (FPI).
“Everyone wants a sunroof and leather seats in their car but in real life, no one takes all these options. We would like to offer an extra room of 15 square meters but at an average price of € 4,600 €, it amounts to € 69,000 extra” continues Pascal Boulanger.
This, while the latest figures published by new housing professionals are not good. Last year, sales to owner-occupiers decreased by 13.4 % while sales to individual investors plummeted by 26 % compared to 2021. The blame lies with inflation and rising interest rates which hamper bankers and the granting of real estate loans. This, while annual authorizations for collective hosing have jumped by 11.6 % compared to the previous year.
“With the implementation of the RE2020 environmental regulation on January 1, 2022, applications for building permit experienced an acceleration effect, further exacerbated by local recovery contracts favoring dense projects in high-demand areas. These two effects will disappear during 2023, leading to a decrease in the number of building licence” warns the Union of real estate developers.
The new Pinel scheme (Pinel +) that increases the size of dwellings
The latter likely refers to the Pinel + tax benefit named after the minister who introduced it in 2015 which came into force on January 1, 2023. Investors wishing to benefit from this tax reduction in the private rental market will no longer just have to rent their property for at least six years and comply with a rent cap.
They must also acquire an apartment that adheres to a strict set of specifications. Specifically, those set by urban designer Laurent Girometti and architect François Leclercq, adopted at the end of 2021 by former minister Emmanuelle Wargon. This imposes ecological criteria, interior and exterior surfaces and orientation.
Thus, to be eligible for this exemption, a studio must measure 28 sq m and include an outdoor space of 3 sq m. For a 2-room apartment, it must be 45 sq m with 3 sq m of outdoor space. For the 3-room flat, it must be 62 sq m with 5 sq m (a 4-room apartment must be 79 sq m with 7 sq m, and a 5-room apartment must measure 96 sq m with 9 sq m of outdoor space).
Roofs are the land of tomorrow
3-room apartment and larger will even feature two different orientations. “In 2021, I invited François Leclercq at the commercial real estate exhibition (SIMI). All the real estate developers were displeased with him”, recalls Cédric de Lestrange, CEO of Axe Immobilier. “We apply his report on housing quality because everything is included in it !” hecontinues.
"The first homes designed after the lockdown are just starting to emerge. People are preferring 3 sq m more outdoors than indoors.", confirms Olivier Bokobza, President of BNP Paribas Real Estate's development activities, who is also transforming all his rooftops into terraces "so that the building's residents can host in good conditions."
"Roofs are the land of tomorrow. They offer access to a view, a landscape, and even a path between buildings beyond the roadways," emphasizes David Habrias, CEO of Kardham Group, in charge of architecture and founding partner.