Real Estate: Strong immunity to the crisis in Southeast France

Autumn real estate in the south of France? A flood of requests for help on social media: "Urgent: a student is looking for a studio or a room for shared living in Aix-en-Provence." The president of the student union, Lies Belhadj, claims that the city in Provence (147,000 residents, including 30,000 students) has long become "one of the most strained areas in France in terms of housing, especially for students, and the situation has only worsened this year." This conclusion is supported by the Federation of Real Estate (Fnaim) Aix-Marseille-Provence (AMP), where the president, François-Xavier Guy, who also heads several real estate agencies, describes the market's characteristics: "Buyers from Aix have high purchasing power. And there are very few properties for sale. As a result, prices continue to rise - up to 6,500 euros per square meter!"

At this level, many landlords are looking for the most profitable rentals: "It's easier to find accommodation through Airbnb during the Rugby World Cup than student housing," says Lies Belhadj. "Many students have to go far away, to Vitrolles, Salon-de-Provence, or Cavaillon. After a few months, our classmate found a rundown studio of 18 square meters for 800 euros a month!"

Lies Belhadj chose to live 20 kilometers from his university, in a cozy two-room apartment for 600 euros a month: "A decision only available to those who have a car," he adds. Even with the price of gasoline at 2 euros per liter, it is still economically viable. Environmentally, it raises some concerns.

The risk of a mass shift to short-term rentals

It's illogical to waste gas searching for housing, especially when ecology is one of the main reasons for fighting against "thermal sieves" - energy-intensive homes that will be banned for rent if they are not renovated according to the requirements. This is a noble policy, but it is criticized for its complexity and gaps in the system, including housing rented on platforms like Airbnb, which are not subject to this anti-fighting policy!

“We are concerned that owners who cannot or do not want to carry out such thermal renovations will rent out their properties for short-term rentals, which are not regulated,” warns François-Xavier Guy. “Energy-intensive housing has no impact on tenants who stay for two nights.” However, the mass shift to short-term rentals will only exacerbate the problem of rental shortages, especially in tourist areas. For instance, in Marseille, the number of seasonal rentals has significantly increased over the past year (12,000 compared to 9,600 in 2022, according to the city hall), contributing to market tension.

Problems for developers

The housing market crisis has not spared developers: "Today, construction is not in favor," claims Arno Bastid, president of the Real Estate Fund (FPI) Provence. "Nevertheless, everyone is happy to move into a building that meets the latest standards. But when it comes to building for others, many suddenly become opponents of concrete. However, it all depends on how it is built."

The rise in interest rates ("which has reduced buyers' purchasing power by 25%") and the consequences of the Russian-Ukrainian war ("which have led to an increase in prices for energy resources and construction materials, and consequently, for construction") are intensifying the pressure in the new housing sector.

Even in such attractive southern lands, the situation has historically been poor: "For the past three years, the numbers have been catastrophic, with a 15-30% drop in housing bookings," explains the president of FPI-Provence in detail. "This crisis is unique in its scale. All signals are red. We have no offers for clients who, in any case, have insufficient purchasing power."

Real estate agents in a difficult situation

A deadlock situation also threatens real estate agents.

"Our job is to provide people with housing. However, from the perspective of Marseille and Aix, those who previously had the opportunity to become first-time owners can no longer do so. They must remain in rented accommodation," says the regional president of Fnaim. With such a decline in activity, will some agencies have to close? "Those agencies that are completely dependent on transactions are at risk," he notes. "Agencies that also deal with management and rentals will be less affected."

Strong pressure on social housing

What is the situation with social housing and the most vulnerable groups? "If we compare it to the rest of France, we can see that we already had a tense situation," says Robin Amadi, director of the Regional Association of HLM (AR HLM) Provence-Corsica. "The production of social housing is significantly lower than the demand, and the rising cost of construction only worsens the situation." The director has even seen some projects canceled.

“The number of people wanting to obtain social housing has increased by 10% from January to today, totaling 220,000 individuals. I have never seen anything like this in thirty years in the field of social housing!” he says. In his opinion, this is directly related to the rise in interest rates: “Due to a lack of funds, people are staying in their apartments. As a result, the turnover rate has dropped from 7% to 5% in the most stressed areas.”

Tough times for social workers

Local social workers are already seeing the consequences of the crisis: "Requests for housing registration are increasing, day shelters are overcrowded, with a large number of women and very small children," says Francis Verned, director of the regional branch of the Abbé Pierre Foundation. "In Marseille, we are tired of waiting for a housing Marshall Plan. 'Marseille is great' could be a real starting point. In terms of construction, we are not far off. However, even from a purely liberal perspective, it is necessary to invest massively in housing, including social housing. Well-off workers are more productive."