Does the value of a property are still based on its only location? While the French market has been going through its strongest correction for several decades, the sector dynamics seem to be reversed. After a sudden fall in prices in 2024, the year 2025 promises to be that of the profound change in the market. From large metropolises to medium -sized cities, from deserted offices to less accessible housing, a switch takes place, carried by an unprecedented economic and regulatory context. Between increase in interest rates, credit tightening and new environmental requirements, real estate must rethink its fundamentals.
A brutal correction that redraws the market
The year 2024 will remain engraved as a major turn for French real estate. Indeed, the market has recorded a historical drop in prices of 6.8 % over a year, a correction of unprecedented scale for decades. Some cities, so far considered as bastions of real estate dynamism, are on the front line of this fall: Bordeaux (-9.1 %), Nantes (-8.2 %), Lyon (-7.5 %). Such a drop now extends far beyond large metropolises, which also affects the medium-sized cities which had however benefited from a renewed post-Cavid attractiveness. Thus, “the French real estate market is going through an unprecedented multifactorial crisis”, explain Nicolas Brosseaud, Managing Director of Catella Valuation.
The causes of this fall are multiple and deeply anchored in the structure of the market. Unlike previous crises (that of the 1990s caused by an overproduction or that of 2008 linked to excess of credit), the current context results from a chain of combined factors. The increase in interest rates, which limits access to credit, is added to ever more strict environmental regulations and to an evolution of real estate uses. In addition, the traditional market model, based on long -term profitability, is called into question.
The tertiary sector in full mutation: a revealer of the current switch
The office market, often considered as an advanced indicator of real estate trends, alone illustrates the extent of current upheavals. In Île-de-France, the vacancy rate now reaches 10.2 %, and even climbs to 19.7 % in the first crown. This level of vacancy recalls that observed in 1993, where the supply exceeded demand spectacularly. But unlike this cyclical crisis, the current mutation is structural: the generalization of telework and the rise of flexible office spaces upset demand.
The residential also undergoes the effects of this transformation. This rate of refusal of real estate credits now amounts to 35 %, while the property purchasing power dropped by 15 % compared to 2021, according to the Crédit Housing/CSA observatory. Even SCPIs, long perceived as refuge values thanks to yields of 6-7 %, must review their strategies in the face of a drop-down profitability. The time when stone was synonymous with financial stability seems to be over.
Beyond the simple price correction, the real estate market enters a new phase where the value of the goods will no longer be only defined by their location. “2025 could mark the start of a structural transformation in the sector,” said Nicolas Brosseaud. Now adaptability to new uses and environmental performance will become central criteria. With the entry into force of more strict energy performance regulations, poorly classified buildings are likely to lose even more value on the market.
This overhaul of real estate fundamentals will reward investors capable of anticipating these developments. The opportunities exist, but they require a finer approach: upgrading to environmental standards, development of hybrid models between residential and tertiary use, and increased flexibility to meet new expectations of users. To those who will adapt, the future offers interesting perspectives, in a market where the old model of heritage real estate is no longer enough to guarantee profitability.
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