Not a week goes by without a French investor announcing an acquisition in Spain. Why the frenzy to cross the Pyrenees?
Heliotropism, or the pursuit of sunny climes, aside, it's above all Spain's economic health that's being hailed. In just a few years, Europe's dunce of the class "Clotaire" has become the best student, the new "Agnan," thanks to structural reforms (and an influx of European funds). These reforms began in the aftermath of the great financial crisis with initial austerity measures, followed by a more flexible labor market, a budgetary diet and a pension reform (led by the Socialists) aimed at extending the contribution period.
The result: growth of 3.2% in 2024 and a projected 2.5% in 2025. The real estate investment market, for its part, is recovering while others are struggling to bounce back. In the first half of the year, it exceeded €7 billion, and advisory firms are forecasting a landing of around €16 billion. This is more or less the volume of investment expected in France.
In the minds of international investors, Spain is now Europe's second-most popular investment destination, behind the UK. On a global scale, it enters the top five countries attracting the most foreign capital, ahead of... France. In fact, it is the French who are the leading foreign investors in Spain, accounting for 9% of volumes.
There are two ways of looking at this.
One can be dismayed that France is inexorably slipping back in the attractiveness rankings, paying for political instability, poor public finance management and tax ingenuity that borders on obsession.
French investors are happy to go hunting in Europe. A study by Savills revealed that 80% of SCPI investments (deals involving France's version of the real estate investment trust) in the first quarter were international.
The arguments put forward include a desire for geographical diversification, access to more dynamic markets and economies, a more attractive risk/return profile and less punitive taxation.
We could even talk about tax distortion, since property rents are taxed in the country where they are located, and are therefore not subject to the 17.2% social security deductions. "This discrepancy alone is enough to direct flows, without even needing a performance differential" (...) and "mechanically pushes managers to invest outside France and savers to favor so-called 'European' SCPIs", rightly protests Faïz Hebbadj, chairman of Norma Capital. Over 10 years, he estimates the loss of tax revenue for France at €1.6 billion.
But in the meantime, people are arguing about the proposed wealth tax in France, the so-called Zucman levy advocated by economist Gabriel Zucman, and the advisability of taxing the rich, sometimes even before they become rich. Poor France.
Gaël Thomas is the editor-in-chief of Business Immo, CoStar's French real estate publication.