Buying residential real estate in France: investors are standing still.

The residential real estate market in France is falling rapidly. A trend already seen with private individuals is also confirmed with institutional investors, who have reduced their investments by 24% in 2022, according to a recent study by consultancy Knight Frank. Investors are becoming less interested in buying residential units on the block and are increasingly turning their attention to managed residential real estate.

The residential real estate market is currently slowing down in France. Last year, institutional investors reduced their investment in block residential purchases by 24% compared to 2021, according to a study by consultancy Knight Frank. The main reason for this trend' 'is the sharp rise in interest rates, which has been observed unevenly across all regions. Unsurprisingly, the main focus of investors is on the Ile-de-France region, where three quarters of volumes in the residential real estate market were invested in 2022. However, investors are also increasingly interested in another promising market - the managed residential real estate market, i.e. housing for vacation, seniors, students, etc.

Managed real estate: a safe model for investors

This type of real estate, due to its special tax and more secure status, is increasingly attracting institutional investors.

What is the outlook for 2023?

The managed residential real estate market is expected to continue its growth in France in 2023, according to Knight Frank. With demand and supply increasing, senior living developments will continue to attract more investment. However, this interest will be accompanied by a decline in investment in the residential real estate market as a whole. In fact, the effects of rising interest rates will make institutional investors even more cautious this year and prioritize the safest assets, expecting improvements in this segment.