Thierry Laroue-Pont (BNP Paribas Real Estate): “European real estate is an island of stability at the global level”

Thierry Laroue-Pont is Chairman of the Management Board of BNP Paribas Real Estate, a real estate services and development group present in Europe, carrying out half of its activity in France.

How did you manage to cross the billion euro turnover mark in advance?

There are several factors. First, let’s point out our particularity: we are the only real estate group of this size to be part of a banking establishment. We generate 20% of our turnover thanks to synergies with BNP Paribas, such as the marketing of residential properties to wealth management clients, or the sale of offices to large companies and sovereign funds clients of the bank, and finally renting offices to the bank, for example the future headquarters of BNP Paribas in Frankfurt.

Last year, all of our business lines were driven by a favorable environment. Equity markets are volatile; however, real estate has historically been a safe haven for individuals and institutions. The residential market is at its strongest, fueled by a real need for housing, and historically low and favorable credit conditions. The “transaction” part of our activity (corporate real estate advice) is experiencing a conjunction of the planets: a very high volume of investment and a very high demand from companies for new offices.

Whether in residential, office or logistics, asset prices are reaching very high levels. Are there bubble risks?

We look at the two parameters that can create a bubble phenomenon: if the market is fueled by a massive recourse to loans on the part of investors; or if it is not supported by strong user demand.

On the office side, business demand has been stable for two years in Europe. This is explained by a need for renewal of major head offices, concentration of teams, search for services and green offers. Vacancy rates are historically low, so there is no oversupply. For its part, logistics is boosted by e-commerce and last-mile logistics. In the future, there will be major logistics hubs as people increasingly turn to drive-ins and having them delivered to their homes. As for residential, most property companies want to return to it because the time has come to diversify assets. Low rates and rental investment assistance schemes are supporting demand. Almost all homes are pre-marketed prior to delivery.

Moreover, the European market is one of the most transparent in the world thanks to numerous clear sensors on the absorption of new products, the future supply, the quality of stock, the diversity of buyers. And none of these indicators show a risk of a price bubble or correction.

What are the buoyant markets in the future? Do Berlin’s rent freeze measures discourage some investors?

The European market is considered as an island of stability at the global level. Germany will continue to be a safe haven. It is a geographically very diversified market, much less centralized than France, with six cities with different specializations. Large foreign investors appreciate the investment volumes there. Regarding the restrictive measures taken in Berlin, we did not feel any discomfort from investors. Whether it is the major sovereign or international funds, they have a privileged view of Germany. The French market has a good reserve of growth because it will be carried by the regional market increasingly appreciated by investors (Lille, Lyon, Marseille, Nice, Bordeaux, etc.), while the Ile-de-France market will benefit from the double effect of the 2024 Olympic Games and Grand Paris. There is also a strong appetite for the Spanish and Portuguese markets, which are less dense and deep but allow diversification of assets.

The city of tomorrow, to be ecological, must be dense, but is this accepted by citizens and elected officials?

We have several projects of “small” high-rise buildings, 50 meters. The subject of height must be dealt with, the inhabitants and political leaders must accept the fact of accommodating height on certain smaller plots. This frees up square meters on the ground which can be combined in urban agriculture, planting…

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