The French real estate market in 2024 has undergone a phase of adjustment marked by rising interest rates, a decline in transaction volumes, and the implementation of new regulations. For investors, these movements reshape risk areas and pockets of opportunity, with no clear consensus emerging on the medium-term price trajectory.
The Le Meur Law and short-term rentals: a tightened regulatory framework
The most significant trend for investors in furnished tourist rentals is the adoption of law no. 2024-1039 of November 19, 2024. This legislation provides municipalities with enhanced levers to regulate short-term rentals: mandatory registration, quotas, change of use procedures, and the possibility of reducing the maximum rental duration of a primary residence from 120 to 90 days.
Co-ownerships are also affected. The law facilitates the modification of co-ownership regulations to prohibit tourist rentals, which could render certain assets less liquid overnight.
To keep track of the evolution of these regulations and their consequences on wealth strategies, analyses published in real estate on Zenith Actu regularly detail the concrete impacts of these texts on rental yields.
The DPE as an entry filter for tourist rentals
Since November 21, 2024, any new change of use authorization in the metropolitan area requires a housing classified from A to E in the energy performance diagnosis. Starting January 1, 2034, the threshold will tighten to classes A to D, except for exceptions related to the landlord’s primary residence.
This timeline creates a risk of depreciation for properties classified F or G intended for seasonal rental. An investor acquiring an energy-intensive property with this perspective must factor in the cost of energy renovation works in their profitability calculation, or risk ending up with an unusable asset in the long term.
Interest rates and real estate prices: where is the rebalancing
The rise in interest rates that began in recent years has reduced buyers’ borrowing capacity and weighed on sales volumes. Prices have begun to correct in several major urban areas, while some tight zones have fared better due to a persistent imbalance between housing supply and demand.
The available data does not allow for a conclusion that the price low has been reached. Field reports diverge on this point according to segments: the residential real estate in city centers follows a different dynamic than that of suburban developments or new properties.
- Buyers with significant personal contributions benefit from increased negotiating power, with sellers accepting more frequent discounts than during low-rate periods.
- Investors in rentals must recalculate their net yields by incorporating the real cost of credit, which has significantly increased compared to the 2019-2021 period.
- Medium-sized cities attract some of the displaced demand from metropolitan areas, but the depth of the rental market there remains more uncertain.
Conversion of offices into housing: potential under constraints
France has several million square meters of vacant office space. The conversion of these areas into housing is regularly the subject of political announcements, but this transformation does not automatically resolve the housing shortage.
The obstacles are primarily technical. An office floor does not have the same configuration as a residential building: the networks (water, drainage, ventilation), natural light per unit, and habitability standards impose heavy works whose costs often exceed those of new construction with equivalent surface area.
For an investor, this segment remains reserved for specialized operators capable of managing complex projects over several years. Individuals interested in this must verify regulatory feasibility (PLU, opinions from ABF in protected areas) before any financial commitment.
Real estate investment trends: what choices in 2024
The context of 2024 pushes for more selective choices. The time when a property purchased on credit in any city mechanically generated capital gains due to the continuous decline in rates is over, at least temporarily.
Long-term furnished rental or seasonal rental
The tightening of regulations favors long-term furnished rentals over tourist rentals. Rents in traditional furnished rentals remain regulated in certain areas, but the legal framework there is more stable and less exposed to municipal changes.
In contrast, seasonal rentals retain a gross yield advantage in highly touristy areas, provided that the property meets the new DPE requirements and the municipality has not imposed additional restrictions.
Tertiary real estate: caution on exposed SCPI
SCPI invested in offices face rising rates that weigh on the valuation of their assets. SCPI shares with high office exposure have experienced price declines in recent quarters. Investors entering now are potentially buying at a discounted price, but the risk of rental vacancy on certain tertiary assets remains high.
The health, education, and logistics segments display more resilient fundamentals, driven by demographic trends and structural needs less sensitive to economic cycles.
The year 2024 does not offer a single answer to real estate investors. The tightening of credit, the tightening of regulations on tourist rentals, and the gradual revaluation of the DPE as an investment criterion are permanently altering the framework of understanding. Each project must now incorporate the real cost of energy compliance and the stability of the local legal framework before aiming for a target yield.
