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

Last update : 4 December 2023

Our monthly press review is here. What news has hit the property, investment and tourism sectors in recent weeks? To discuss them, we have selected the most relevant press publications, including an event that has shaken up the office property sector: the surprising bankruptcy of the American company WeWork. Trends, market situations, sector developments: we bring you a focus on a month of November full of lessons, in France, Europe and internationally.

Office property: the consequences of WeWork’s bankruptcy

The collapse of WeWork in the United States and Canada is a wake-up call for the property market, which has already been weakened by high vacancy rates. The downfall of the coworking pioneer, linked to overly rapid expansion and a vulnerable business model, could prompt investors to adopt a cautious approach, putting the brakes on developments in the flexible office market. However, this situation could benefit competitors and the French market, where demand remains strong. The sector must therefore adapt to a changing working environment and to property valuations under pressure. (Pierre Papier)

Logistics real estate: what scenario for 2040 ?

What are the land requirements for logistics real estate in the Paris Region between now and 2040? How can we meet the challenges of the future without any net artificialisation of land? To discuss the actions to be taken, the environmental objectives and the compromises to be envisaged, the experts at the Institut Paris Région have carried out a comprehensive prospective study, with four scenarios, including reflections on technological developments, new consumption patterns and a potentially restrictive regulatory context. At present, the 15 million square metres of warehouses in the Paris Region represent 1.2% of the urbanised area. (BatiActu)

Real Estate: What about Signature Bank’s commercial mortgage loans?

The liquidation of Signature Bank’s commercial mortgage loans, organized by the Federal Deposit Insurance Corporation and valued at $33 billion, is attracting bids well below their original value. Indeed, they range from 15 to 40% less than the face value. Nevertheless, the situation pleases some. Major investors, such as Blackstone and Goldman Sachs, ready to bid, are closely examining the portfolio to seize a real opportunity in a weakened New York market. It is likely that this sale could set a benchmark for the commercial real estate market. (The Wall Street Journal)

Investment : are young SCPIs at an advantage ?

In a context marked by the depreciation of certain units, following requests from the Autorité des Marchés Financier (AMF), young SCPIs seem to have an advantage, as they are more agile and resilient, at least in the opinion of Victor Piriou, of Axipit. By holding only recently acquired assets, they are able to offer investors distribution rates that fully reflect current yields on the property market,” explains Victor Piriou of Axipit. Another key success factor is to have a comprehensive and advanced command of the entire value chain, from sourcing to the operational management of property assets. (Pierre Papier)

Investment: Is this the end of an era for commercial real estate?

In the United States, the contraction of commercial mortgage lending has reached unprecedented levels, unseen for years. As a result, this could lead to an increased number of payment defaults and a marked reduction in new construction. Indeed, with rising interest rates and recession fears, financial institutions are becoming increasingly reluctant to grant new loans. The growth trend, steady since 2014, is reversing sharply, raising real questions for investors. (The Wall Street Journal)

Tourism: A Rebound in Europe, but Visible Disparities

International tourist arrivals in Europe have almost returned to 2019 levels, with only a 3.2% shortfall. However, the recovery is uneven. As such, 65% of destinations report lower figures compared to the pre-pandemic period. This is the case for Estonia, Lithuania, and Latvia. More broadly, the observation is clear: Mediterranean and Southern European destinations are doing well, but Eastern Europe remains behind, affected by the war in Ukraine and dependence on the Russian market. Nonetheless, at a global level, a full recovery of tourism is anticipated by 2024, despite inflation and geopolitical instability. (European Travel Commission)

Commercial Real Estate: Understanding WeWork’s Bankruptcy

WeWork, a trailblazer in the coworking sector, has filed for Chapter 11 bankruptcy, indicating a significant downfall from its previous $47 billion valuation. Founded in 2010 by Adam Neumann, WeWork had long dominated its market with an innovative business model offering contemporary office spaces. Facing massive losses and management challenges, and despite a recovery attempt, the company could not withstand successive lockdowns, the rapid adoption of remote work, the founder’s conflicts of interest, and rising interest rates. (The Wall Street Journal)

Tourism : what future for the mountains ?

The mountains are looking to a future without snow. As a result, it is preparing to become a four-season holiday destination. The subject is back on the table, just a few weeks before the winter holidays. Faced with the decline in skiing, professionals and associations met in Chamonix to find sustainable solutions. Olivia Grégoire, the French Minister for Tourism, took advantage of her visit to encourage those involved in the sector to diversify their tourism offering. The challenge is twofold: to remain attractive and preserve the environment. (Le Figaro)

Office real estate: the impact of a possible merger between UBS and Credit Suisse

The merger of Swiss banks UBS and Credit Suisse could have an impact on the local office property market. It could possibly reduce demand for office space as a result of staff reductions and branch closures. However, other bank mergers, such as that between Dresdner Bank and Commerzbank in Germany, have shown that, even with bank consolidation, the property market can remain stable if the economy remains strong and demand is high. (Agefi)

Office property: the crisis deepens in Germany

The office property market in Germany is in the doldrums. The market is in full recession. The main reason: a reduction in demand due to teleworking and a visible economic slowdown. As a result, property transactions have fallen sharply, which has naturally led to a rise in vacancy rates. Against this backdrop, businesses are holding back on investment, and commercial property prices are down by around 10% on last year. Will this situation last? Yes, according to some experts. However, the suspicion of a financial crisis still seems to have been dismissed. “The risk is lower than in the United States,” says Christian Oberst (Le Monde).

Tourism: the transition for mountain resorts

In Switzerland, global warming is forcing mountain resorts to rethink their economic model, which has traditionally revolved around winter holidays and snow. Manu Broccard, from the HES-SO Valais-Wallis, points out that “skiing is an area that requires more and more investment for fewer and fewer working days”. As a result, resorts need to consider new activities and ensure that they are attractive all year round. Four-season tourism has become a sine qua non for a future in which “skiing plays a less dominant role”. (Le Temps)

Investment : a heterogeneous SCPI market

In 2023, the SCPI market was marked by contrasting performances. Some investors have seen their yields fall as a result of lower unit prices. Conversely, other SCPIs, such as Iroko ZEN and Remake Live, have revised their targets upwards. They are now aiming for a payout ratio of over 7%, well above the average for 2022. Another finding is that the best-performing SCPIs are often young, and invest strategically in Europe. As a result, they benefit from advantageous taxation on dividends. (La Tribune)

Real estate : bankruptcy of WeWork, what impact on the French market ?

The bankruptcy of WeWork, suffocated by an abysmal debt of 3 billion dollars, could have an impact on the French coworking market, where the company holds the largest surface area of offices with its 15 establishments in Paris. The American company, a pioneer in coworking, has in fact contributed to the development of an entire sector in France, bringing a new way of thinking about office property. So what impact will its liquidation have on the French market? It will be anecdotal, say some experts. European players even see new opportunities for growth. According to forecasts, the market could actually reach 120 billion dollars by 2025. (Maddyness)

Date de première publication : 4 December 2023

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