France is not alone: The real estate crisis is also hitting China

The global real estate market is shaken by crises of unprecedented magnitude, affecting both emerging giants and mature economies. In China, once a spearhead of global growth, the collapse of real estate investment highlights the flaws of a development model based on frantic urbanization. This brutal fall, much more than a simple cyclical slowdown, resonates as a warning for the global economy. Meanwhile, in France, another stronghold of stability is wavering, with a real estate crisis marked by the continued decline in prices and an unprecedented wave of bankruptcies among agencies. These two phenomena, seemingly distant, reveal a common vulnerability and raise the question of a possible global contagion.

The dizzying drop in real estate investment in China

China, once an unstoppable locomotive of global growth, now sees one of its economic pillars dangerously waver. Between January and July, real estate investment in the country fell by 10.2%, a tumble that says a lot about the state of health of this essential sector. Far from the years of uncontrolled expansion, the Chinese real estate market is now facing a much darker reality: over-indebted developers, slowing demand, and timid stimulus measures that struggle to reassure investors. This decline, much more than a simple statistic, reflects the exhaustion of an economic model that has relied for decades on frantic construction and rapid urbanization.

This situation is all the more alarming as it fits into a context of growing distrust towards the Chinese market, once perceived as a safe haven. The government’s efforts to stabilize the sector, through regulations and financial support, are met with a loss of confidence from investors, both domestic and international. The weakness of the stimulus measures, combined with the scale of the developer debt crisis, suggests a prolonged crisis, with potentially devastating repercussions for the Chinese economy and, by extension, for the global economy.

The French real estate crisis: a market in full decomposition

While China faces a rapid deterioration of its real estate market, France is not spared by this global crisis, with its own market in turmoil. Long perceived as a bastion of stability, the French real estate sector is going through an unprecedentedly severe crisis. The continued decline in prices, combined with a drastic drop in transactions, highlights the fragilities of a once-flourishing market. Despite a slight decrease in interest rates initiated by the European Central Bank, the market remains frozen, caught in a vise where supply no longer meets demand, exacerbated by omnipresent economic uncertainty.

The crisis is not limited to a simple price correction. It is accompanied by a real hemorrhage in the professional sector, with an unprecedented wave of bankruptcies among real estate agencies. The National Federation of Real Estate Agents (FNAIM) reports a staggering 112% increase in agency bankruptcies over the past twelve months, a figure that testifies to the magnitude of the crisis.

The real estate crisis simultaneously striking China and France reveals structural weaknesses that cannot be ignored. While the current situation calls for drastic economic and political adjustments, it also opens the door to a profound restructuring of the sector. This process will undoubtedly be long and painful, but it is essential to restore confidence and stabilize these markets in turmoil.