2024-01-17 16:46:43
This text is taken from the book “The urban empire of finance. Powers and Inequalities in Asset Management Capitalism » published by Antoine Guironnet and Ludovic Halbert by Éditions Amsterdam in November 2023.
Fifteen years after the global financial crisis triggered by the bursting of the real estate bubble in the United States, the overlap between financial markets and real estate markets is still at work. At the end of her visit to France in 2019, the UN special rapporteur on the right to adequate housing expressed public concern that “the financialization of housing – when housing is highlighted and used as a financial instrument rather than as a social good – quickly gaining momentum ” in this country. More recently, left-wing elected officials from major French metropolises expressed the same kind of fearsdenouncing “an unprecedented speculation [qui] today transforms housing into financial assets” and forces the middle and working classes to leave.
The financialization of cities, under various meanings, thus mobilizes more and more political and media attention. An entire imagination fraught with threats arises when this term is invoked. Monsieur Vautour, the intractable owner of the Napoleonic boulevard theater, the real estate companies gutting the streets of Paris under Haussmann, the touristification of city centers by Airbnb-type platforms: these figures and phenomena evoke the specter of speculation and its deleterious effects for local populations. […]
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A long story
Urban spaces played a pioneering and active role in this process. From the 19th centurye century, listed companies specialize in real estate and infrastructure in large French cities (railways, canals). Such urban shareholder ownership ensured fortune – and caused bankruptcy! – great figures of capitalism of the time, like the Pereire brothers.
But its contemporary specificity lies in the fact that the world of real estate asset management, with its actors, its techniques and its own rationalities, is today at the pinnacle of the connection between financial and real estate markets. For around twenty years now, a growing mass of financial capital has been pouring into the real estate of large cities, in proportions and with an unprecedented spatial scope. […]
The financial markets in fact form a vast financial infrastructure with a global reach through which the savings of individuals, companies or States are drained and centralized by asset managers responsible for making them grow. In the case of the purchase of buildings intended to be rented out and resold over a more or less long term, two main types predominate: real estate companies, some of which are listed on the stock exchange, and portfolio management companies which create investment funds dedicated to real estate.
Little-known companies
In both cases, the principle remains the same: by purchasing shares of companies or real estate funds, client-investors seek to reduce risks and diversify their income compared to other usual investments (shares of companies listed on the stock exchange in other sectors, government debt, derivatives, currencies, etc.). It is up to asset managers administering their capital to find ways to pay them attractive profits by taking over places of work, consumption, leisure and housing.
Little known to the general public, these companies nevertheless own numerous addresses. The Les Halles shopping centers in Paris, Part-Dieu in Lyon and Euralille belong to Unibail-Rodamco-Westfield, one of the world leaders in commercial real estate. In the residential sector, the SNCF brought together 4,000 of its homes in a fund to sell part of it to a consortium of investors, including the Establishment of the Additional Pension of the Civil Service and the German Vonovia, alter ego of ‘Unibail for housing. Residences with services for students or dependent people are also on the rise.
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While Orpea has sadly hit the headlines for the treatment reserved for its tenants, few people know that this publicly traded company has become a behemoth with nearly 100,000 beds for dependent people around the world. In logistics, there are countless warehouses on the outskirts of cities that belong to sector giants like Prologis or Goodman, listed on the stock exchange.
This panorama would be incomplete if we did not mention office real estate, the sector’s favorite terrain, from the Haussmannian buildings of the capital to the towers of La Défense, including the countless modern buildings that have spread throughout the major urban planning operations of metropolises over the last twenty years.
Five times the GDP of France
Editions Amsterdam, November 2023
In total, analysts are counting on $11.5 trillion in 2021 on a global scale, i.e. five times the annual GDP of France and one doubling of assets since the 2007-2008 financial crisis which represented at most only a parenthesis. Estimates for France put forward a value of 365 billion euros in 2019 and an increase of 80% in around ten yearsi.e. a sector which would control a third of corporate real estate assets (offices, logistics, shops).
A proportion which obviously varies depending on the scale and territory, depending on whether we consider the office park in the Parisian central business district, owned in its “almost entirety” by asset managers, on a scale of the city of Paris where their share is established at a square meter out of twoor even the housing of which they owned less than 2% nationally in 2011.
The trend was also upward, at least until the outbreak of the Covid-19 pandemic, with approximately 25 billion euros invested annually over the last decade. That’s almost the equivalent, each year, of the cost of 70 stadiums in France!
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