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

Last update : 6 February 2024

It's time for our monthly press review. What happened in October in the property, investment and tourism sectors? What were the highlights and news stories? We take a step back, selecting the most relevant articles of the past few weeks, which have enabled us, among other things, to identify new trends and get an overall view of the market situation, in France, Europe and internationally.

Tourism: Switzerland Heading for a Record Year ?
Switzerland’s tourism is regaining momentum, showing results comparable, if not superior, to pre-pandemic levels. In August, overnight stays in Switzerland increased by 2.4% (compared to the same month last year), reaching 4.6 million, according to the Federal Statistical Office (FSO). The significant rise in foreign tourists is boosting this positive trend. Thus, Switzerland’s hotel industry is on track to break records this year. Will the last quarter maintain this positive momentum? (SwissInfo)
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Office Real Estate: Concerns Intensify in the U.S.
“Building owners who borrowed money to finance their properties are under pressure due to high-interest rates and vacant offices.” This is how Reuters paints a picture causing concern not just for investors but, more significantly, banks, which face a potential rise in credit losses and defaults. Some, like Morgan Stanley, have already set aside provisions of $134 million. The deteriorating conditions in the commercial real estate sector are indeed alarming, especially as it seems to mirror a larger trend, which the widespread adoption of remote work seems to reinforce. “This phenomenon will continue for at least another year,” stated Rebel Cole, a finance professor at Atlantic University in Florida. Notably, smaller banks have 4.4 times more exposure to commercial real estate loans than their larger counterparts. (Reuters)
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Real Estate: A Prolonged Commercial Real Estate Crisis ?
In the U.S., architectural firms reported a sharp drop in activity in September, with a significant decline in their billings. This naturally suggests further challenges for the commercial real estate market in the coming year, with deteriorating conditions. The slowdown in non-residential construction, both commercial and industrial, indeed indicates a deep-seated trend: companies are reluctant to commit to new projects amidst economic uncertainties. (CNBC)
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Commercial Real Estate: India Contrasts Western Markets
While there’s frequent discussion about the state of commercial real estate in the West, what about other parts of the world? A quick detour to India, where momentum is picking up after a dull period marked by the health crisis. According to a CBRE report, shopping centers, shops, and office spaces continue to grow in appeal. As a result, the commercial real estate sector witnessed a 15% increase in the first half, signaling a booming region. “The commercial real estate sector is rebounding strongly after pandemic setbacks,” shares Vikas Garg of Ganga Realty. “Its future potential is also substantial, considering the current numbers and the rapid expansion of real estate developers into new territories.” (Financial Express)
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Investment : what can we learn from the fall in SCPI values ?
The recent fall in the value of several SCPIs has caused a stir in the media. Jean-Denis Errard, a journalist specialising in savings and taxation, offers his informed view of the current situation. In particular, he criticises the behaviour of certain companies that have prioritised savings collection over prudent management of SCPIs. Few managers have put their foot on the brake when it comes to fundraising,” he says. It’s so tempting to leave the floodgates wide open”. In his speech, Jean-Denis Errard called on SCPIs to focus on what really counts: tangible income, rather than the theoretical value of property, which is currently being impacted by consecutive rises in interest rates, the democratisation of teleworking and trade bashing. (PierrePapier)
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Tourism : AccorInvest steps up its asset sale plan
AccorInvest, the former real estate arm of Accor, which holds the property assets of 753 of the group’s hotels, is stepping up its plan to sell assets in order to reduce its debt. The aim is to raise €1.7 billion by 2025. This debt reduction strategy comes against a backdrop of restructuring since 2020, with a refocus on economy and mid-range hotels in Europe. To date, €500 million worth of assets have already been sold. The company is also negotiating an agreement to extend the term of its €4 billion debt, which matures in 2025. (La Tribune)
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Investment : can SCPIs withstand crises ?
“SCPIs have come through the health crisis unscathed”. These are the findings of a study commissioned by ASPIM, with rather reassuring results at the end of the pandemic. However, the successive falls in subscription prices for a number of SCPIs, accompanied by a drop in fundraising, are a cause for concern. The main concern is the current and future liquidity of these property investment vehicles. The latest studies, carried out for the first half of 2023, show signs of tension, with a significant increase in the amount of units traded and the turnover rate. However, Pierre Schoeffler is reassuring: “The open-ended SCPI model has proved resilient for over 50 years”, even during the worst crises our societies have seen. (PierrePapier)
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Investment : Spain Draws Foreign Buyers
In Spain, foreign real estate sales and purchases are on the rise, now accounting for 22% of all transactions. Among the top buyers are Latin Americans (19%), Brits (13%), Moroccans (11%), Germans (10%), and Romanians (8%). Two crucial points to highlight: only 11% of foreign buyers see their purchase as a rental investment. Secondly, one-third of foreign investors require bank financing to finalize their purchase. Consequently, the effect of rising interest rates remains to be seen. Even though transaction rates have slowed, “the market is holding up,” as confirmed by the Real Estate Credit Union. (Le Courrier d’Espagne)
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Investment: Office Real Estate Crisis Deepens in London
In London, a trend is becoming clear: the office real estate market is also experiencing a rental recession. According to Jeffries, vacancy rates in the city’s business center have hit an unprecedented high, unseen in the last thirty years. Multiple factors contribute: the rise of remote work, the growth of hybrid work, increasing demand for eco-friendly offices, and the pullback of major companies like Meta and HSBC. It’s worth noting that in the English capital, flexible workspaces, coworking, and serviced offices now occupy 9% of the space. (CNBC)
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Tourism : why is Switzerland having trouble attracting Chinese travellers ?
Switzerland is still struggling to attract Chinese travellers, who represented the fifth largest market for tourism in Switzerland before the pandemic. There are a number of obstacles to recovery. The main reason: the significant reduction in direct air links between Switzerland and China. Since 2020, the number of direct flights per week between the two countries has been halved. Added to this are three other strong markers: the uncertain economic situation in China, administrative problems and the difficulties encountered by Chinese travel agencies. As a result, full recovery is not expected before 2026. (Le Temps)
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Tourism : All Saints’ Day and the boom in local tourism
The All Saints’ Day holidays are attracting more and more French people, with a significant increase in tourist bookings. On some platforms, bookings are up 40% on the previous year. This trend can be explained by favourable weather conditions and a favourable calendar, with a public holiday right in the middle of the school holidays. Another finding is that holidaymakers prefer destinations close to home. Campsites on the Atlantic coast are particularly popular. The same is true for Gîtes de France, which are reporting occupancy rates up by more than 10%. (Europe 1)
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Investment : erosion of office property values until 2030
Consulting firm McKinsey predicts an erosion in the value of office buildings up to 2030. According to the study, which looked at eight of the world’s major cities, demand for office space could fall by 20% over the next few years, reducing the value of the global property market by between 26% and 42% in just one decade. To adapt, offices could become hybrid, integrating different functions and uses, and leases could become more flexible. Although some of these trends are already being observed on a global scale, the situation seems different in Belgium, with a moderate expansion of coworking. “We are not seeing a drastic reduction in long-term leases either. On the other hand, the reduction in floor space is a movement that has been well underway since the pandemic,” the article states. (Le Vif)
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Tourism : the French hotel industry is on a roll
“The first half of 2023 was particularly good”. According to KPMG’s annual study, the French hotel industry will maintain its positive momentum in 2022 and 2023. The absence of Asian tourists has been offset by the domestic market and visitors from North America and Great Britain. As a result, the first half of 2023 has seen Paris and the other major cities assert themselves, with optimistic forecasts for 2024, due in particular to the Olympic Games. As a result, average prices have risen sharply, particularly in luxury hotels. The only cautionary note: business travellers are less present, preferring shorter trips. (Business travel)
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Investment : current trends in the property market
Marc Bertrand, from Amundi Immobilier, discusses the main trends in the property market and the investment strategies available to funds. The good news is that revenues remain stable overall, thanks to rent indexation, despite a slight increase in the vacancy rate. However, there are some indicators that may give cause for concern, as a result of the rise in interest rates. The rates of return required to invest in property are rising,” he explains. The price of a property asset is determined by the ratio between the income it generates and its rate of return. So, automatically, the value of a property asset falls”. His advice to managers is to reduce their exposure to office property. (Pierre Papier)
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Date de première publication : 30 October 2023

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