You can see the same thing in the province

Real estate professionals view the crisis to continue in 2009

BERTRAND ENJOYED. Currently, transactions relate a seller who is not yet committed to lower its price and a buyer who said that the price will decline and waiting. Prices actually start to adjust and lower should be effective in the first half of 2009.

We are on a rate of 20 in the number of transactions... On the one hand, vendors cannot sell their prices and, on the other, buyers expect the decline or difficulties to obtain funding. In addition, rental investment, we expect the legislative developments in discussions in Parliament. But it goes well take this wait situation is breaking.

RIC COSSERAT. I would like to go back on what said Ms. Lemoine when she spoke of real estate crisis (see above). Unlike the United States, there is not a real estate crisis accentuated by a financial crisis, but a financial crisis affecting the real estate sector. It is important to note that, because the real estate fundamentals are healthy. Indeed, we are not at all in the situation that we have known in the 1990s, during which the production and stocks were too important. The French real estate market is now much more mature, and actors are reasonable. Thus, if we compare the Spain, the United States or the Ireland, we see that we are not at all in the same situation.

Then, you must have in mind that there are several real estate markets. There is the residential market, which divides itself between Paris and province markets. There is new and the old market. We find the same segmentation in the real estate offices. If we can say that the automotive sector is affected, because it is clear that the Act of purchase is not, the crisis affects on the other hand more or less strongly different compartments of the real estate sector.

I have the impression that everyone expected price declines which do not; This is due in part to the fact that the situation is different according to the markets. Clearly, there are decreases in real estate nine in some regions of the Southwest, because there is no rental demand matches supply. However, in Paris intramural, where demand is still strong, prices are less down. The request exist, but it is limited by the restriction of credit.

Concerning the real estate business, I would say that 2008 has been a significant decline in the number of transactions ( 50). I think that it is a good thing, because this cleans up the market. There were indeed many actors, including foreign, invested with a very strong leverage; the real estate market benefited much of easy credit in recent years. These operators have exited the market, what is right for the remaining players and the price. The French players back on the front of the stage; they buy cash and reason much more long term, so with some degree of stability. Among these players, I think including life insurance companies and the SCPI.

We will see about 10 billion euros of transactions on the market of the real estate business investment this year. The decline is spectacular from the 23 billion euros last year. But the market has evolved; It must be remembered that the market of the real estate business investment was only EUR 80 million in 1993.

Have you already found an improvement of the profitability of the proposed products

RIC COSSERAT. Yes, it is undeniable. We also see the recovery of a hierarchy of rates of return. You know that by intervening in the real estate business, you buy primarily on performance rates that allow you to repay credits or pay the SCPI Associates, for example. We return rates of return in line with the location of the building, its quality and the quality of the tenant. This is an important development, because we had a hierarchy flattener; There was more discernment on the acquisition. Many investors had a reasoning purely financial in anticipation of the cash flow that would allow them to repay their advantageous credits. On the other hand we see today a return to the fundamentals of real estate.

In the beautiful areas of Paris, what can we currently have that it would not have had a year ago

RIC COSSERAT. Where you had 4 last year, you can have 5 or 6 today, which is a significant shift. You can see the same thing in the province. You should know that the Parisian Golden Triangle is more exposed, because it was coveted by the players international, little present markets province. It is therefore more volatile because it generated more than upgrading; It can therefore accuse the strongest decrease.

Markets which have the most increased in value have more risk of cuts. On the other hand, there are markets that have been more reasonable, including the real estate office in the province; valuations have been less strong, with higher yields. Therefore, be vigilant about real estate crisis.

MATHILDE LEMOINE. At the macroeconomic level, real estate has always been cyclical. We anticipate a decrease in the prices of the sector by 6 in 2009 and 10 in 2010. This course is an annual average is not taking into account regional specificities. The decline will fix households with the ability to purchase had was strongly deteriorated in recent years with the doubling of real estate prices since 2000. To find a balance between home prices and the revenue ratio, should they fall 20 if credit conditions were similar to those of 2003. The ECB has strongly decreased its rate but the preference for liquidity is still high, it will be several semesters to find a balance.

Many individuals have cooled recently, not only by the fall of the shares, but risks on their contracts of life insurance also. At the time, they might be tempted to refer to real estate, more securing long term, despite his lack of liquidity.

BERTRAND ENJOYED. I agree entirely with this analysis. Real estate will return in the coming months that it is basically, which is an investment in the long term. With the bull market of the past years, we tend to forget this: investments were made and structured with a view to resale in the short term. It was sometimes the objective, and always a probability.

The annual rise will probably be before long on the rhythms we have known. But the real estate will continue to play its role of safe haven; families will buy still their principal residence and their secondary residence; There is also always investors to find a reliable performance in income or capital gain in the long term. This fact, reflection on the structuring of the investment must be shifted in this long-term perspective. The use of companies subject to the SI or the dismemberment of the property may be a response.

The reform of the tax niches occurs not at a time where real estate just would need to be supported by flows of seduction

EDOUARD MILHAC. I'm not sure that Malraux plans and all aid real estate contributed to a natural development of the market. They have led to abuses; You spoke of the southwest at the time, which is an area where there were constructions in the absence of rental market.

Watch a withdrawal of foreign investors in the high range real estate At one point, they pay almost any price for any product.

BERTRAND ENJOYED. I do not sense today. Other parameters come into account, including the exchange rate. Our country is attractive. Foreign investors are still present and reason rather long term.