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France Outlook 2023

The macroeconomic and geopolitical horizon appears far from clear at the beginning of 2023: a simultaneous slowdown in the US and China, a probable entry into recession and an upward revision of the Eurozone's inflation outlook. The Outlook 2023 study provides a clearer picture of the year's real estate outlook.

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What to Expect in Commercial Real Estate This Year

2023 began with an unprecedented set of circumstances: geopolitical crisis(for which the outcomes and risk of spread remain unclear), energy crisis and supply chains still under pressure 2 years on from the Covid crisis, inflationary and bond pressures at record levels, combined with the likelihood of economic recession, unprecedented increases in the cost of finance and soaring construction costs…Meanwhile, workplace transformations are on the increase and tension in the employment market is rising, retail hybridisation is ongoing and the impact of the energy crisis and new environmental legislation (décret tertiaire) are now an inescapable reality. With all the upheaval we are seeing, we’ve created this new-format Outlook for 2023 which considers the impact of these challenges on the various real estate markets and asset classes. 

The year 2023 opens in an unprecedented context on all fronts: geopolitical crisis whose outcome and risks of propagation remain uncertain, energy crisis and supply chain still under tension 2 years after the beginning of the Covid crisis, inflationary and bond pressure historically high, accompanied by a probable economic recession, an unprecedented rise in financing costs and an explosion in construction costs...

At the same time, the transformation of work organizations and the tension on the job market are increasing, the hybridization of retail is continuing, and the climate emergency and its corollary, the tertiary decree, are becoming an inescapable reality.    


Despite France's undeniable status as a safe haven, thanks to the excellent resilience of the user markets, real estate investment will experience a real slowdown while the adjustments between sellers and buyers required by the new financial context are made. At the same time, players will have to take into account the impact of the strong redifferentiation of the underlying rents on the prospects for value creation linked to the change in real estate uses.  


The long pandemic time has profoundly changed work organizations (remote work, remote management, etc.) and the many departures of employees, in a context of strong competition on the job market, have changed the behavior of companies towards recruiting talent. This has led to new real estate needs and requirements: redefinition of the head office, the concept of the flagship office, flex office, space optimization, energy and biophilic performance and, above all, a strong search for hyper-central locations.  



While some predicted the end of physical retail, the last few months have shown that the retail sector is doing more than resisting : it is adapting and reinventing itself every day, to emerge stronger from these months of successive crises. Thus, despite the inevitable wait-and-see attitude linked to expectations of repricing in certain segments, investor appetite will remain strong in view of the returns on offer and the sector's proven solidity.  


After the strong and continuous growth recorded in recent years, logistics seems to be showing the first signs of a slowdown. Is this new asset class, which is "beloved" by investors, entering a period of sustained turbulence? Or, in the face of increasingly complex challenges and needs, is it taking a break to adjust and get back on track? 


Looking for more historic or specific property market data? Get in touch.
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