"Its up to everyone to take full advantage of the new measures in the Elan law"

It's been six months since the law relating to changes in housing, development and digital technology (Elan) was adopted. To coincide with MIPIM 2019 Cannes, French housing minister Julien Denormandie spoke to Leaders League about the government’s real estate policy.

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It's been six months since the law relating to changes in housing, development and digital technology (Elan) was adopted. To coincide with MIPIM 2019 Cannes, French housing minister Julien Denormandie spoke to Leaders League about the government’s real estate policy.

Leaders League. The “gilet jaune” movement has highlighted the worsening territorial divide in France. How can you expect to reduce it through real estate?

Julien Denormandie. Our approach should be even more territorially based: build in the right place, and above all at affordable prices. We have to build where it is needed, taking into account the needs of the businesses, jobs and services that go hand in hand with the need for housing. It is also about providing impetus and life to those towns and cities that need it. We are working to revitalize our city centers: this is the aim of the Action Coeur de Ville program, thanks to which 222 cities are being helped by the government - to the tune of five billion euros - to bring back businesses and give new life to their city centres. These measures will go hand in hand with the operations to revitalize the territories (ORT) introduced under the auspices of the Elan law. 
This mechanism gives local elected officials the necessary tools to rehabilitate and renovate their public spaces, businesses, and housing. We have also created a new rental investment scheme to encourage owners to renovate their properties. This tax assistance has been designed to combat energy leaks and improve the quality of the existing housing stock. Finally, we are helping to build but also to renovate the housing stock by offering concrete financial aid.


Twenty-eighteen marked the return of professional and institutional investors in the residential sector. What do you expect from them? 


I expect them to start construction projects in the places where they are needed. There is a lack of housing in our country and we should be driving this construction effort. The measures in the new Elan law are a step in the right direction. It’s up to  everyone to take full advantage and act with determination. I’m here to help them. I also expect them to renovate in the areas that most need it. Real estate players are crucial in this approach because they are the prime movers on the ground. They must mobilize in order to have a major effect. Promoters could also be more involved in general renovations that they would then sell to owners benefiting from these tax exemptions since those investing in real estate projects led by promoters are also eligible for this tax assistance.


What arguments can you use to convince companies to ratify the charter designed to transform 500,000 square meters of office space into housing by 2022? 


The charter I signed in March 2018 aims to raise awareness about this major issue and get real estate professionals on board. It is based on the observation that the stock of vacant office space has not fallen, while the lack of housing persists in the big cities - particularly in the Île-de-France region.
One year on, work has been done in the Paris region, commune by commune, to identify vacant office buildings that could be converted. On this basis I am mobilizing all the stakeholders, promoters, property owners and local elected officials. 
Today many buildings are vacant and do not meet the standards required for the office space market. Converting them presents an opportunity in terms of urban development and housing and in addition makes economic sense. 
Thanks to the Elan law, we have facilitated these projects and increased their profitability to encourage them. The operators are ready for it. 
Many of them, not yet signatories to the charter, have demonstrated to me that they are determined to engage concretely in conversion programs. Now it’s time for action.


What is your strategy over the next few years in terms of accelerating the ecological transition in the building sector?


In conjunction with the Ministry for the Ecological Transition and Solidarity and construction professionals, we are preparing new environmental regulations for the new-build market that are intended to replace the current RT 2012 thermal regulations by 2020. It falls within the ecological transition because it will be about energy as well as carbon - a long-standing intention. To prepare the actors for the future standard, an experiment has been launched and is already showing positive signs: 600 buildings are involved. On the existing market, the energy renovation plan launched by the government last year sets ambitious goals for state-owned public buildings, local authorities, social and private housing. It includes important resources provided under the major investment plan (nine billion euros over five years) along with the energy transition tax credit, energy saving certificates and aid from the Agence Nationale de l’Habitat (ANAH). We have simplified access to aid with a platform that everyone can use.


What will you be doing next to support the digital transition and innovation in real estate? 


Since 2015, through the digital transition plan, the government has supported the building sector in rolling out the digital model (BIM) more widely. The work that has been carried out with all the construction professionals makes the generalization of BIM achievable by 2022. I therefore signed the BIM 2022 Plan with the sector at the Assises du Logement last November. It seems to me essential to rely on the new digital resources we have at our disposal to build better. The government is releasing 10 million euros under this three-year plan. And actions are continuing in its wake: small businesses can also access them.
Another short-term project we support is that of ADN Construction, an association that represents construction professionals as regards digital technology through its digital observatory that will promote the industry’s ownership of BIM and exemplary projects that will make all stakeholders want to engage. Finally, the government supports the sector by working to create a framework of trust for users, encouraging actors to experiment, and developing new solutions. That’s the support I am bringing to Real Estech.

What are the initial results of the experiment with the innovation permit?


The innovation permit was introduced to make the rules more flexible and so encourage creativity. It is part of an approach that looks at the results and not the means, thereby opening up a wider field of possibilities for project developers leaving more room for innovation. It’s now operational. In addition to the innovation permit, rewriting has begun on the Construction Code to introduce the same results and innovation based approach and achieve the same quality. This is a very important point and I want to push it. It just had to be tested with key stakeholders... At the end of 2017 three public development institutions (Bordeaux Euratlantique, Grand Paris Aménagement and Marseille Euroméditerrannée) launched calls for expressions of interest. The initial feedback is positive: a number of project backers have approached these public development institutions with innovative urban planning, development and construction projects. Around twenty proposals have already been submitted.

Read the full Special Report: MIPIM 2019 - Cannes

When is the cycle going to end? While the question has been discussed at length by real estate professionals in recent months, the general consensus seems to be ‘no time soon’. Several of the leaders interviewed for this special report have committed their companies to targeting core office properties to hedge against a possible market downturn. That is just one of many strategies being deployed by investors in Europe in 2019. Leaders League gives you a 360-degree perspective on the state of play in the industry today, in the company of its main players.
Summary MIPIM 2019 Round-Up Allianz Real Estate is Working on Its Asset Pool to Create Value AXA IM-Real Assets Expects to Remain Active Across the Entire Risk Spectrum Paref’s Strategy Rests on Three Principal Pillars La Française Aims to Redirect its Focus to Interconnected Urban Centers AEW Favor Core-plus and Value-added Strategies We Invest in Products That are Core/core+ With a Long-term Approach Primonial is in Lockstep With Developments in the Market Diversification of Our Asset Allocation is Our Watchword for 2019 Covivio Will Use Three Pillars to Further Improve Results


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