French officials believe Le Pen victory could be bad for property market

French mayors and regional officials were out in force promoting their cities at MIPIM 2017, the world’s largest property conference, which took place in Cannes, France in mid-March. With the French presidential elections scheduled for April 23, many in the real estate world are pondering what the results will mean for investment and global markets. Further deepening the uncertainty is the fact that French officials themselves lack consensus regarding the outcome. 

Ahead of one of the most unpredictable elections in the country’s history, current polls show far-right National Front candidate Marine Le Pen neck-and-neck with former investment banker Emmanuel Macron, the fairly untested candidate of the social liberal party En Marche, founded in 2016.

Republican candidate François Fillon, previously assumed to maintain a comfortable lead, now trails in the polls after being hit by WikiLeaks revelations disclosing his misuse of public funds.  

This year’s election is fundamental simply for the level of change it could trigger, representing as it does the first time an anti-EU candidate, Ms Le Pen, stands a realistic chance of winning. Several recent polls show her with a small lead. If victorious, Ms Le Pen has vowed to hold a referendum to leave the EU. The National Front’s agenda also promises anti-immigration and anti-globalisation policies, echoing a rallying cry of populist candidates who have won increasing support around the world in the past year. 

Gerard Collomb, mayor of France’s second-largest city of Lyon, is unconcerned. “I think things are going to go well. There won’t be a shock from Le Pen winning because she isn’t going to win,” Mr Collomb told fDi during the conference. “Here we see at MIPIM that the economy is faring far better than last year, and this year we’ve seen all the big European cities and investors come back, so I am optimistic about the future.”  

Mr Collomb’s tone contrasted with that of Dijon’s vice mayor Denis Hameau. Asked if commerce and investment are vulnerable to a Le Pen victory, Mr Hameu responded: “Yes, because you are facing two different conceptions of the economy and globalisation. We have parties who are favourable towards globalisation, and on the other side we have a protectionist mentality in which we raise tariffs everywhere, and our exports and trade become less free. It will have consequences especially for those who work in exporting. So yes, there is a worry.” 

Mayor of Bordeaux and former French prime minister, Alain Juppé, expressed the gravity of the impending electoral contest. “Protectionism is a detestable idea,” he said. “We tested it some decades ago, and it led to the big crisis of the 1930s. Anything that can obstruct – especially at the heart of Europe – the liberty of movement of goods and people and capital is a real issue. I am worried in the context of Brexit that a consensus is developing, a historic choice. 

“On the other hand, I do not want to linger on it because I am absolutely convinced that we must do everything to avoid the dislocation of Europe. The danger is great. It is more urgent than ever to restart the idea of the EU. I would simply say that the worst is not certain.” 

Walter Boettcher, director of research and forecasting at global real estate firm Colliers, stressed that any drastic change will be bad for investors. “Fillon would have been best for property in the sense that a certain discipline would be maintained in France and that the investment environment would be a bit more stable,” he said.  

“I think that anybody else coming in, including Le Pen, would have the potential to destabilise that hugely. And Le Pen specifically, because she’s anti-EU and wants to come out of the euro. I’m not sure which one is more serious for investors: leaving the euro or the EU quite frankly. Is Fillon finished? It’s too soon to write him off; too many stranger things have happened.”