Francois Hollande's election is representative of the French people’s will for change as they are tired of a centre-right led government which has always been rigid in its approach to security, immigration and work.
Holland is to re-launch a program for growth and stimulate the economy instead of implementing the austerity measures of Sarkozy.
The real estate sector accounts for 18% of France’s economy and growth, so it is likely this sector will benefit from some sort of stimulus package. If you combine this with the strength of the loan book of French
banks and the low default rate of borrowers, it is unlikely France’s real estate will suffer dramatically even if lending continues to slow. Hollande will focus on the needs of the country, developing affordable housing, green constructions, transportation infrastructure etc..
The industry sector is the 3rd largest employer in France, with 7% of the employees and 84% work in construction. If a socialist president is focussed on reducing the unemployment rate, he can't ignore the importance of the property sector so therefore we believe that much of the infrastructure work will result in new projects including new airports and train lines using a mixture of private and public money to finance it. As France is the world’s most visited country and tourism is one of the main pillars of the economy, the impact on construction of hotels/residences is closely linked to real estate and one which Hollande will have to address.
Overall there is undoubtedly less of an appetite for new build in key residential areas, however the demand in key resorts remains strong due to the scarcity of land, construction and interest from international investors
and holiday-makers so while there may be an overall decrease in average French property prices our partners anticipate prices in prime locations in Paris, Alps and Cote d’Azur to remain more stable. Our partners essentially see these areas of the market continuing to do better than average in a two-speed market, much like the UK, where areas outside of the popular destinations suffer declines in prices, whilst prime locations remain static as properties are taken off the market until growth returns.
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