French Developers Adapt to the Economic Situation

After a record level of sales in 2007, the market of new homes in France is at a halt. The developers are reacting and slowing down the number of new projects launched. The result is a shortage of homes which is going to last.

The developers should sell less than 80,000 French homes this year compared to 127,500 in 2007 (highest level since 1979). Pricewise, the square metre goes up 3.4% per year. A general drop is very unlikely. Land and construction materials are still expensive, building regulations and energy efficiency measures are ongoing and more and more strict which makes the price per square metre go up. This price per m squared is around €3,400 on average in the whole of France.

The clients are usually solvent for up to € 3,000 per m squared. The properties on offer under that price are being sold without a problem. So are the upmarket properties for which the clientele still exists.

The developers are adapting to the economic situation

In order to sell the programmes for which the marketing is coming to an end, some developers have come up with various offers: here the first m² is sold at € 1, there the legal fees are offered or the property delivered with a fitted kitchen. These types of properties are sold very quickly.

For tomorrow’s homes, the developers are renegotiating the prices of the land and are not buying the most expensive ones. They are only launching the projects which are likely to be sold. “Half of the 113,450 new homes available for sale are made up of projects for which works have not started yet. In case of marketing difficulties, the developers will not go ahead with some programmes” says Jean-Francois Gabilla President of the Federation of the developers-builders (Federation des Promoteurs-Constructeurs). “When you build less, you do not make up for the lack of homes which is estimated at 800,000. And developers are preparing for the rise of tomorrow’s prices”.

Plan of revival

Worried about the fall of the market and anxious to protect jobs in the building trade, the French Government will buy back 30,000 homes issued from private offers and for which the works have not yet started. The objective being to increase the supply of land on offer and to build more.

Cesar Azevedo
http://www.aplaceinfrance.co.uk

http://www.aplaceinfrance.co.uk