The Capital Market Forum ULI France held its Council webinar on September 8 in a restricted committee. Some fifteen industry leaders from a variety of backgrounds, including owners, insurers, third-party investor-managers, real estate companies, subsidiaries of banking groups, consultants and developers exchanged ideas freely.

Eric Chaney, economic advisor to the Institut Montaigne, and previously chief economist at AXA for its global activities, was once again invited to present his convictions on the theme:

What kind of recovery?

Eric’s main conclusions were as follows:

– Rather positive signals… in terms of a recovery in world trade, in Asia, a strong American dynamism that is driving the world economy, a Europe that is surprisingly lively, despite a certain inequality between countries, a France that is recovering in terms of growth, but unevenly across its regions (Paris Region and smaller cities).

– …but for the future…a risk of a double-dip in the USA, with a necessary reconfinement for certain regions in the world, and growing uncertainties about the evolution of the epidemic. A recovery that will not continue, and no recovery from previous levels before 2022.

– In terms of actions: central banks have rescued companies and avoided bankruptcies, and European and French governments have implemented recovery plans.

– Focus on the French stimulus plan: an unprecedented envelope, with a budgetary effort of between 7 and 8% of GDP, equal to the challenge of the 9% contraction in French GDP. With its three main components (ecological transition, competitiveness, and social aspects), it is nonetheless questionable whether it is a genuine recovery plan, with effective short-term effects of all these measures on activity. On the other hand, direct subsidies for the renovation of buildings will have direct impacts on this sector, as will measures to support employment, especially for the youngest, who are already there. Companies benefiting from the cash injected with the EMPs could be at risk of insolvency in the medium term (at the time of loan repayment or renewal), the main concern and uncertainty being the lack of current investment decisions arising from uncertainties about future demand and pessimistic prospects for future orders. Perhaps to be subsidized in a second plan to support demand (e.g. in Germany with the VAT cut)? The accumulated savings of households also accentuate the situation. Finally, the recovery plan did not provide anything for the self-employed and the craft industry.

– As for the return of inflation, economists are divided, within one sense: the COVID virus clearly deflationary and in another sense, as inflationary factors: the ageing population, barriers to international trade and household fear of inflation.

The exchanges between members and interactions with Eric demonstrate a mixed perception of the major players in our sector, between a certain pessimism on the part of some leaders with difficult times ahead and an accentuation of imbalances, or even an accelerated downgrading of the country, and a certain optimism and a willingness to act and to renew or reconvert oneself. On the other hand, there is a consensus on the fact that a breakthrough in the current situation will come especially when visibility on a virus behind us emerges.

The Capital Market Forum will meet again on 6 October for a Council focused on a more sectoral and operational real estate market point of view.