The residential real estate market is being driven by student housing and coliving
In line with the trend observed in other asset classes, the residential real estate investment market posted a sharp year-over-year decline (-52%), with only €2.8 billion invested in 2023, according to the latest study by JLL
Traditional residential real estate has been hit the hardest (-62%, €1.7 billion), given the absence of any mega-portfolios. Indeed, the 159 transactions recorded for this type of housing (compared with 163 last year and an average of 167 over the past five years) confirm that a certain level of activity has been maintained, but no transaction exceeding 100 million euros took place in 2023. GECINA’s sale of its building on Rue de l’Abreuvoir in Courbevoie and CCR’s sale of the property at 179 Rue de la Pompe in Paris’s 16th arrondissement thus remain the most significant transactions. In contrast, assets under management, with €1.1 billion invested, showed a decline of only 16% year-over-year and accounted for 37% of commitments. There is strong interest in student housing (€471 million) and coliving (€428 million), with transaction volumes showing a marked increase year-over-year, while senior living facilities posted a 73% decline, with only €169 million invested.
Florence Sémelin, Director of Residential Investment and Managed Assets in JLL’s Investment Department, comments: “In line with our forecasts, the French residential real estate investment market ended 2023 with a transaction volume of approximately 3 billion euros after three years of euphoria. In the absence of any mega-portfolios, the market was primarily driven by sales of existing assets in Paris and the inner suburbs, held mainly by insurance companies—such as the portfolio sold by Swiss Life, which we advised on—and by private investors, notably including the sale of 120 Avenue de Wagram, which we executed. Off-plan sales, meanwhile, came to a virtual standstill—with the exception of a few student housing and coliving projects—due to an unbridged price gap between developers’ expectations and investors’ offers. However, investors’ interest in new assets that meet the latest environmental standards remains undiminished.”
Foreign investors, who were relatively inactive toward the end of the year, accounted for a 14% market share for the full year 2023. Pan-European funds were the most active (11% of total activity), with five acquisitions, including GREYSTAR Investment’s purchase of the “Lilo” residential complex in Puteaux in the third quarter.
Premium yields rose slightly again toward the end of 2023. However, they appear to be beginning to stabilize, in line with the end of the rise in key interest rates.
Florence Sémelin concluded: “We should see a slow market recovery in 2024, which could end the year with a transaction volume of around €4 billion. Activity is expected to be driven in particular by sales of existing properties, which remain in high demand, as evidenced by the interest in a property on Rue Meissonier in Paris’s 17th arrondissement, for which we have just launched the marketing campaign. We are also seeing strong interest from both domestic and international investors in student housing, particularly properties with more than 200 beds, such as the one we have just signed with a new player.”
(source: JLL)
