Country Report France Q4-2018
“Nobody is expecting a real estate bubble.”

Dear readers,

the negative development we have seen on the stock markets in the last quarter clearly shows that the economy is nervous. When viewed against the backdrop of the difficult current global political situation, that does not surprise me at all. The budget dispute between Italy and the EU, the upcoming Brexit, the trade war between the USA and China, and the continuing protests by the ‘gilets jaunes’ in France are all reasons to be nervous. However, that nervousness has not yet reached the real estate market. Transaction volume totalled € 32.5 billion in 2018 – a year-on-year increase of 19 %. In addition, investors and banks have learned from the financial crisis and, for example, have significantly lower leverage ratios than 10 years ago. That’s why nobody is expecting a real estate bubble. At the same time, the development of the real estate market is of course closely connected to the state of the economy as a whole. So it is more important than ever to watch the market closely and, above all, continue to focus on quality rather than quantity.


Your Anne-Isabelle Carbonnières

Contact

Ms Anne-Isabelle Carbonnières
Managing Director France

Phone: +33 1 550 484 85
E-mail: Anne-Isabelle.Carbonnieres@Deutsche-Hypo.de

REECOX in France in decline

Following the recent stable development of the French Real Estate Economy Index, it decreased at the end of the year and stood at 223.7 points in the fourth quarter. That was its lowest level since summer 2016 and represents a drop of 5.3 % compared to the previous quarter. Overall, last year was characterised by predominantly negative development, with the REECOX falling by 8.6 % compared to the fourth quarter of 2017.

Share indices see double-digit declines

The current developments are due to the prevailing negative trends in all included market indices. The FTSE EPRA/NAREIT France real estate index made a significant contribution to the downward trend. Over the last three months of 2018 it fell continuously to 3,266.5 points, representing a decline of 15.5 % – a level not seen since January 2014. The French leading share index CAC 40 displayed a similar trend: It fell by 13.9 % compared to the previous quarter, to its current level of 4,730.7 points. The Economic Sentiment Indicator (ESI) also continued to develop negatively. The sentiment index fell by 3.3 % compared to the previous quarter, to its current level of 102.8 points.

Synopsis of Input Variables and Real Estate Economic Situations Q4-2018

Country

Stock Index

Real Estate Economy Index

Economic Indicator

Base Interest Rate

Interest Rate 10-Year Government Bonds

Q3-1810/1811/18Q4-18Delta (%)
Q3-18 / Q4-18
DE
dodo
do
do
eq
do
312.8
306.0
308.2
298.2
-4.7
GB
dodo
do
do
eq
do
216.5
213.1
206.8
204.9
-5.4
PL
eq
do
eq
eq
dodo
188.3
185.6
188.8
187.5
-0.4
NL
dodo
dodo
do
eq
do
199.3
195.3
194.8
191.3
-4.0
FR
dodo
dodo
dodo
eq
eq
236.2
229.7
228.6
223.7
-5.3
ES
dodo
do
do
eq
eq
196.4
195.8
196.4
191.8
-2.3