By John Meyer, consultant in business – Eurasia Business News, October 16, 2025. Article no. 1831
French real estate developers are facing mounting difficulties as the time it takes to sell housing stock lengthens, compounding an ongoing crisis that has lasted three years. This has made refinancing their debt increasingly challenging, particularly amid the broader public debt crisis in France.
Some observers fear that, while over one year, at the end of September 2025, the number of insolvencies in the sector has already increased by 45%, according to the latest figures published by the firm Altares. Knowing that 2024 had already been a black year for French developers.
It must be said that the drop in transactions has been continuous. According to the French Federation of Real Estate Developers (FPI), almost half as many new homes were sold in the first quarter of 2025 as in the same period of 2019. But, beyond the known problems – a drop in demand and a difficulty in launching new programs at affordable prices for customers – another cloud is looming for a number of companies: that of refinancing their debt.
The sector is experiencing a prolonged downturn with construction activities nearing historic lows due to high construction costs, stringent environmental regulations, and weak demand exacerbated by rising borrowing costs. Construction permits and housing starts have fallen sharply, with authorizations down by 12.7% year-on-year and housing starts declining near 12% in 2024. Sales have also halved compared to previous levels, severely hurting developers’ cash flow and their ability to service debt.
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Despite this, banks have recently shown increased willingness to lend, and government initiatives such as extensions of zero-rate loans and tax exemptions are in place to support demand. However, the persistent public debt crisis in France, with public debt at 115% of GDP in June 2025 and political gridlock hindering any decisive fiscal austerity, keeps financial conditions uncertain and mortgage rates stable or slightly up, rather than falling significantly. This environment makes debt refinancing for developers particularly challenging, especially given inflationary pressures on material costs, exposure to variable-rate loans, and cautious investor sentiment. The risk of defaults and bankruptcies among developers is rising, requiring increased vigilance and real guarantees to protect transactions and financiers amid this fragile market.
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© Copyright 2025 – Eurasia Business News. Article no. 1831
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