Press Review

December 2023: the real estate, tourism and hospitality press review

Last update : 6 February 2024

What news has hit the property, tourism and investment sectors in recent weeks? For our final press review of the year, we have selected the most relevant French and international articles of December. On the agenda: market movements, underlying trends, financial forecasts and major concerns. Among the points to remember: a majority of analysts note the free fall of the office property market in Europe and the United States.

Office Real Estate: A Freefalling Market in 2024

There are ongoing concerns for the office real estate market in the United States. For the coming year, the forecasts are hardly promising: a further 20% drop in value is expected, and it will likely take two decades to return to levels comparable to 2020. These are, at least, the detailed estimates from Capital Economics. The reason for this trend is the popularity of teleworking, leading to a logical and significant reduction in the demand for office spaces. This situation, coupled with high interest rates and tighter credit conditions, is also leading to record vacancies in many cities. (Financial Times)

Commercial Real Estate: A Critical Situation in Europe

The European Central Bank (ECB) is warning of a critical situation in the commercial real estate sector in the Eurozone, characterized by a level of indebtedness exceeding that observed before the 2008 crisis. Indeed, according to their analysis, three combined factors threaten the stability of the financial system: high financing costs, falling real estate values, and weakened rental incomes. About 26% of real estate loans could become unprofitable. (Financial Times)

Tourism: Switzerland attracts foreign travellers

Tourism in Switzerland is booming this winter. This trend, marked by an average increase of 1.6% in overnight stays, is mainly attributable to the image of stability and security projected by Switzerland in a tense international context. A haven of peace, the country attracts international visitors in search of serenity. This reputation is amplified by advertising campaigns and influencers on social networks. So, despite the strong franc, constant inflation and falling purchasing power, the destination remains attractive. As a result, mountain resorts large and small are posting optimistic forecasts for the season (RTS).

Investment: luxury property in the French Alps appeals

An exceptional natural setting. A diversity of activities. For these two reasons, the French Alps are attractive to international investors. Among the most popular resorts, Courchevel and Méribel attract a wealthy clientele looking for second homes that can be used all year round, in winter as well as in summer. In fact, buyers prefer properties that combine luxury and authenticity, with high-quality hotel services. There is also a growing interest in new-build property, because of its advantages, particularly in terms of energy efficiency (Le Dauphiné Libéré).

Commercial Real Estate: A Significant and Imminent Bubble?

Economist Gary Shilling, known for predicting the 2008 real estate crisis, raises an alarm. The American commentator perceives the imminent burst of a bubble in commercial real estate, exacerbated by teleworking and the bankruptcy of WeWork. This concern is shared by several of his peers. Among the indicators are high vacancy rates, rising interest, and an increase in defaults on commercial real estate loans. Thus, we may only be at the beginning of a major market correction. (Fortune)

Commercial property : first signs of stabilisation ?

According to a report by La Française REM Research, the commercial property market in Europe is showing signs of stabilising. Despite rising financing costs, there are even signs of a recovery in the short and medium term, particularly in Germany and the UK. Some markets are already experiencing a recovery. Prime office yields are rising in line with the European Central Bank (ECB) rate hike. Demand is concentrated on quality assets. (La Française REM)

Property : the market is on the rise in mountain resorts

Climate change is affecting snow cover. Even so, property prices in French ski resorts continue to rise, up 4.4% in just one year. Some resorts, such as Val d’Isère and Courchevel, have particularly high prices. As a result, investment alternatives are emerging. These include buying shares in a property or buying holiday homes as a group. These approaches offer more accessible options for buyers. Other investors are opting for more affordable resorts, such as Les Contamines and Chamrousse (BFM Business).

Real Estate: American Cities in a Worrisome Situation

Pandemic, the rise of telework, and social issues: according to Jeffrey Tucker, these three factors are behind the decline of American cities. Observations emerge. San Francisco, Chicago, and New York: in terms of office real estate, all are experiencing a significant drop in occupancy and high vacancy rates. The economic consequences are severe, including a reduction in tax revenue and declining business districts. The current situation could continue to worsen without significant policy changes. (Brownstone)

Real estate : questions surrounding teleworking and hybrid working

Grégoire Leclercq looks at the changes in office property, exacerbated by teleworking. Are offices still useful? How can we reassess the effectiveness of workspaces? Certainly, coworking spaces could be one answer. However, although popular at the outset, they have their limitations in terms of confidentiality and environment. In fact, the hybrid model is emerging as the future norm. “What’s more, the Boston Consulting Group’s barometers confirm that 80% of job applicants expect more flexibility in their workplace, and 46% expect more flexibility in their working hours,” confides the interested party. (My Sweet Immo)

Real Estate: Market Trends for 2024

Commercial real estate in 2024 is experiencing moderate performance, with multiple challenges: fluctuating interest rates, rising costs, and distinct opportunities. Offices face a high vacancy rate, suggesting a potential repurposing of space. The industrial sector is slowing down but shows positive prospects, especially in cold storage. Local commerce remains stable, benefiting from sustained demand in urban and suburban areas. Investors can thus take advantage of the current situation. (JP Morgan)

Tourism : the mountain economy and the climate challenge

In Switzerland, the climate crisis is disrupting the mountain economy and threatening its historical pattern. Due to a lack of snow, some resorts are closing their ski areas. Others are continuing to develop new slopes and speeding up the transition of their business model. The aim is to adapt to climate change and gradually move towards a global offering. The answer is now well known: sustainable four-season tourism. However, this diversification requires an overhaul of the economy and the development of activities that complement skiing. This is the challenge currently facing cantons such as Valais, where winter tourism is still predominant. (Courrier International)

Investment : mitigating property volatility

Kenza Houd, a representative of V Patrimoine, analyses the current changes in the property markets. She recommends that investors focus on sustainable property sectors, particularly residential housing. After all, property is evolving rapidly as a result of new consumption patterns and social change. “We now realise that certain property asset classes have become volatile,” she says. Her advice is therefore clear: choose stable and predictable residential property assets, mainly in towns with more than 10,000 inhabitants. (PierrePapier)

Real estate : transaction volumes down in 2024

According to the MSCI Barometer, property transaction volumes in France will remain low next year, at an estimated €13.9 billion. This is down sharply on the €25 to €29 billion recorded annually over the past three years. Investors are cautious. The reason: continuing uncertainty about interest rates and economic growth. Even more worrying: “93% of investors expect forced sales in 2024”, says the report, compared with 10% at the start of the year. Some sectors, however, remain unaffected by these trends. These include the hotel and healthcare sectors. (PierrePapier)

Date de première publication : 21 December 2023

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