Interview with Gerard Paratte, CEO of Properstar: Analysis of the state of the current real estate market in Europe

In this interview, Gerard Paratte, CEO of Properstar, gives us his analysis of the state of the real estate market in Europe today, but also his vision for the future of real estate and its main players.  

What is your vision of the real estate market for 2023? 

The market has been rather slow in recent months, especially because of an increased interest rates on mortgages and it is a little more complicated than in previous years. With the rise in interest rates, it costs more to buy a new property as the amount borrowed increases which ultimately impacts the price of the property.  


We are seeing a slowdown in transactions, but no significant price declines yet. Nevertheless, it depends on the markets, as some are more stable than others.  


In France, there is a slowdown in the real estate market, but there are still great opportunities to seize. There are always buyers ; there are always transactions, and it remains a good time to buy. We are no longer in the frenzy we experienced a year or two ago and investing in real estate is still considered an appealing option.

What is the state of the real estate market in Europe in 2023? 

Currently there are very different situations in Europe, so it really depends on each of the markets. From an economic context, some countries have suffered much more than others in recent months.  For example, in Switzerland, interest rates on mortgages have remained relatively affordable, creating a stabilizing slowdown in price increases with a lslight decrease in transactions. But overall, the Swiss housing market is still attractive.  

Other countries are impacted much more by the current economic context, such as France, Portugal and Spain. These countries have slightly different market issues but the bottom line always returns back to the rate hikes in the end. We hope to have reached the bottom of the wave, with rates that should gently stabilize and begin to come down. There are still great opportunities to be found in these countries. Generally, the market is healthy compared to the crises experienced in the past, which is rather good news.  


There have always been cycles in real estate that cause ups and downs. It's never comfortable in very tight markets, but it is nice to say, "Here we are going to hit the bottom of the wave and the market will now be able to restart on a healthier basis than it was a year or two ago."

What real estate challenges are we facing this year and how do we overcome them? 

Well, as the number of transactions decreases - the share of the market decreases and this is precisely where real estate investers must differentiate and discern new opportunities. It is in moments of crisis that we observe interesting results.There are some who will suffer from market lows, but there are also those who remain agile and responsive and are able to adapt to the market. Some big players may also be challenged when there are fewer transactions and this is where we observe how the strength of their positions are tested. It is indeed, interesting to see that those who persist are generally those who benefit the most from the rebound, when market activity picks up. We see that those who had prepared well tend to have a long term view. These type of agencies remain and endure, while some others do not manage to hold steady after the first blow.  


The reality of the real estate market is that it cycles high and low, and those who go through all these cycles smoothly are the ones who will last over time.  Conversely, some agencies start with courageous but short-term strategies during a market boom.  They arrive and thrive at the top of the wave, but on the downturn, they do not pass the course. Like all cycles, whether for real estate or other financial investments - in the end you have to know how to adapt. 

What are the current expectations of buyers and sellers? 

Sellers are in a somewhat difficult situation, because in the past two years, they have experienced rising prices that went very high. There are some who think they can still sell at that high price, but the market has changed. In today’s market, sellers need to re-align themselves with the current situation. Prices are still falling and that can be a little frustrating for them. We also have buyers who are expressing relunctance to go ahead with their project because of the current inflation situation. Changes are occurring but we  still have a gap between the expectations of sellers and the reality of the market. It takes some time for buyers and sellers to accept this but the lag is starting to adjust, which is encouraging.


For buyers who ready to purchase, they are anticipating price drops, and are expected to be very responsive when they see more attractive property prices. We are really in a dynamic tension, where both buyers and sellers are adjusting and anticipating that transactions will resume their normal course.  
Today, transactions are lagging but it's only a matter of time until the market will stabilize pretty quickly in the coming months. 

What is your vision for real estate in the world today? What are its weaknesses and strengths? 

At present, the real strength of the real estate market is that the majority of property transactions are managed by real estate agencies and real estate professionals. Over the past few years, there was talk about market disintermediation. Other models arrived on the market, where the agents’ role was reduced somewhat : to make visits with very low costs, but without really facilitating the transaction. We now realize that these models are fortunately, not developed in such a way as to revolutionize the real estate market toward this end.


On the contrary, we have now returned to a traditional model of real estate professional involvement in transactions. However, the structure of the agencies are changing.  Today we observe real estate agencies with large networks of agents on the market, whose goal is to favor the agent. Thus, there is increasingly strong competition between agents. Their business models may clash, but this is not necessarily very visible, or perceptible, by consumers.  

Big changes are taking place in the business model of agencies. In the end, it's like everything, there is currently more competition and a smaller slice of the market. Clearly, agencies are evolving and will continue to innovate and differentiate themselves. The key to succeeding in this, lies in the digitalization of real estate agents. We are not saying that agents should be replaced, but on the contrary, we should assist them in their effort to innovate and evolve. There are many newer tools on the market for agents - some of which are obviously offered by Properstar. The goal is really to accompany these agents so that they do their job in a more efficient yet structured way. 


Here is an example: if a buyer wants to visit a property, they find it very complicated to make an appointment when this is something that could be completely automated. We are looking at tactics that would allow agents to spend more time with clients less time doing paperwork. There is a lot of room for improvement in the digitalization of real estate agent processes, which we plan to develop and provide - especially with the increasingly strong competition among agents! Those who understand this necessity the fastest, will be those agents/agencies who take the market share. 

Do you think that the digitalization of the real estate market is an essential issue? 

Yes, the digitalization of the real estate market is an essential issue for real estate market stakeholders. It is even more than essential, it is a matter of survival. We notice that modern consumers are inclined to embrace new technologies and that these tools are actually in demand. Agencies are adapting and there is some latency.  

A dynamic must in place for agencies so that they can adopt the new tools and assimilate these new platforms and methods of interacting. This is not a question of seniority or a question of the type of agency, but it is a matter meeting the needs of consumers. This is a big, exciting, challenge in the industry and will be so for the coming years.  The digitalization of the real estate market is, and will be, a crucial issue for the sector. 





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