Pre-emptions are going well in the capital. Newmark, an international real estate consultancy, has counted 84 private housing units purchased by the City of Paris and social landlords between January 2023 and the end of October 2024, in a study devoted to the actions of cities and social landlords in the face of the housing crisis and its consequences for the residential investment market. Of these 84 units, 69 are pre-emptions, exercised by the city.

Pre-emptions, which enable a local authority to acquire a property on a priority basis before the owner can sell it to another buyer, thus represent 82% of the total number of housing units acquired by the city or delegated to social landlords. “These 84 transactions represent a total of 1.1 billion euros, including just under 650 million euros for pre-emptions, making public-sector players the main players in the market, ahead of private and institutional investors.“explains David Bourla, Director of Studies and Research at Newmark. Over €1 billion worth of property was acquired or pre-empted by the City of Paris and social landlords during this period. This represents 41% of all residential property investment in Paris. Paris.

Pre-emption has become one of the preferred solutions in the face of difficulties in reviving new construction and rising property prices. By using existing housing stock, it is possible to achieve higher production targets. The aim? To create more social housing. In Paris, the aim is toachieve 40% public housing by 2035 including 30% social rental housing and 10% “affordable” housing. Nearly 300,000 requests for social housing were registered in 2023 in Paris (+ 7.2% in one year).

Towards increased rental tension?

“The City’s main lever is therefore accelerating the conversion of private housing stock into social and affordable housing “explains David Bourla. Especially since the market is more favorable to social landlords: “Between 2020 and 2022, they were constrained by high prices and competition from other types of buyers. In 2023, the context has changed, with weaker demand from institutional and private buyers, and market values corrected downwards.“continues David Bourla.

The city doesn’t think in terms of the arrondissement, but in terms of the neighborhood: certain neighborhoods can be in deficit, even if they belong to an arrondissement with a social housing rate of over 25%, which leads the city to create a greater number of social housing units. 43% of the number of acquisitions and pre-emptions recorded are concentrated in arrondissements that have already reached or even exceeded the 25% social housing threshold (13th, 18th, 20th, etc.)… . “For example, the city pre-empted 38-40 avenue des Gobelins, located in the 13th arrondissement, which is generally over-supplied, but in an under-supplied district.“explains David Bourla.

This interventionism on the part of the City of Paris has an impact on the assets of institutional and private investors. This policy would contract the private rental stock by limiting the potential number of homes to be acquired by private or institutional investors, and by driving a large number of assets out of the private market. Acceleration of pre-emptions by the City of Paris would accentuate rental tension and lead to higher property prices, according to Newmark.