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(Interview by Jacques R. LORNE)
The MIPIM is an event that is so dense with endless beautiful and magic projects, that it makes our head spin. Prestigious, huge and often twin towers, constructions on sites which make us dream… everything is there. Escaping from this galloping euphoria with loads of questions in mind, we needed to settle down to try to understand the phenomenon. The importance of these future constructions, if they become reality, highlights all the problems that are recurrent in our century. Regional and urban development is one, the accesses, the motorcar and public transport are others. How we can resolve all this whilst preserving the quality of life of those who will live or work there ? Since the question is too inextricable for us, we met Marc Piétri, a personality of reference, well known in the world of planning and property construction, so that he could explain to us.
How do you view real estate development after having seen the large projects which were present at the MIPIM, particularly the EuroMéditerranée project and others, compared to Marseilles and Nice where there are also very large projects ongoing? How does a professional like you position himself on this and how does he analyze this phenomenon?
Marc Pietri: MIPIM is no longer what it used to be. It is no longer the image of the French real estate profession as it was at the beginning; today it is the image of international real estate. It is so true that we are thinking of dividing it into three: one part for the emerging countries, one French part and one for the Asian countries… Over the past 15 years, real estate was an economic activity linked to a specific location; as it is now financed worldwide, it has become an international activity. The most important is the professionalism, the seriousness, the financial management, and the various possibilities brought to this business by the Americans. Real estate has become a business which has acquired its noble reputation by becoming very sophisticated and most of all highly diversified. It encompasses the following aspects: marketing, mediation, asset management, and property management, as well as the development of housing, offices, logistics centers, businesses, tourist residences, residences for students, the elderly and people requiring medical care. The business has become plentiful. Moreover, the presence of the Anglo-Saxons has introduced a lot of thoroughness, especially in terms of financial statements and risk regulations. One should not believe that because there is an enormous amount of money in real estate, risk controls are no longer there. On the contrary, they were never as strict as they are now. This business is presently a real part of the economy, a genuine sector, and it is international. Our clients are American, Dutch, English, people from the Middle East, Italians, and Spaniards of course since they are revolutionizing the French market. The issues related to real estate are also present. If earlier, everyone wanted to sell properties, today everyone wants to buy them in the hope of achieving profits and valuation on the medium and long term. And like the other sectors of the economy, real estate has become a sector of value creation.
Indeed, the first important thing for real estate operators is to create value, as in all the sectors of economy and finance. Real estate as presented at the MIPIM is totally different; moreover, this event presents certain excesses, since personally I do not know whether building in Ekatharinenburg, Kiev or Smolensk could be of interest to me. On the other hand, comparing different points of view and contrasting expertise can make you move forward. In fact, we never saw so many reputed architects, nor as much effort for urban rehabilitation and reconstruction, and this thanks to this recent order of rigor, finance and quality in the project, of which we can be proud. If earlier everyone thought that this business was highly unorthodox, these ideas have now disappeared; the real estate developer is recognized as a player in the city, and this, I believe, is a very important evolution.
ASI: You mention international projects, and when one goes to the MIPIM, one is struck by the fact that seventy-five percent of the large projects are foreign! There are some which are extraordinary, I would say pharaonic. Is this something which existed before, because it gives the impression that it has taken an extraordinary magnitude?
MP: Pharaonic projects, when they are serious, are in general the ones coming from emerging countries: China, Russia, the Middle East… It is where one finds the largest projects, for two reasons: for China and the Middle East, because there are absolutely amazing financial flows. Secondly, these countries were a little late in reaching modernity, and they are over-compensating their delay by creating cities. It should not be forgotten that in Abu-Dhabi there are currently 10 million square meters to be built, but nothing had been done since the origin of times! 20 years ago, there was nothing in Dubai! Cities are re-created, because populations are increasing, and so have the means of communication and transport. Before, there was the notion of the village or city, now cities are being created according to the capacity of the sites to accommodate equipment, and the quality of the environment to house people. Very often this is done in relationship with tax issues, as in Dubai, because people working and residing there pay very little tax or do not pay any at all. One always talked about globalization, but in fact one did not know very well what it meant. When one goes to the MIPIM, one understands what it is: that everyone decided at one time: wanting Dubai as the tenth airport of the world, because there was money, a site, and land, and especially people wanting to invest on a site which could become a bridge between Europe and the Middle East. Indeed, it is more or less equally distant from Paris, New Delhi and not far from China. What is globalization? It is communication and exchange which makes the reality of the cities; it hasn’t changed much in fact! What made the reality of the French cities in the Middle Ages? It was the cities where there were fairs. Now, on a worldwide level with the pressure and development in the World, one sees the creation of hubs as in the United States, for instance Atlanta, Dallas, etc. Places where people meet and re-create cities. These are the pharaonic projects. The Russian projects are financial projects which do not correspond to realities. But this is a country which is becoming increasingly richer, while managing excessively huge financial flows. As to pharaonic projects some of these are phony, as they are simply an opportunity to come and spend a week at the MIPIM. But most are very serious, well capitalized, and correspond to a true need for development. One must note the development of the Middle East.
ASI: One also notes the internationalization of work! More and more people now have the need to move. It is also something which we did not have before.
MP: I do not know if this is a very good thing, because in cities like Dubai for example, there are Chinese and Filipino workers who come by coaches and full charters. But you have just raised a problem which is very important and which will exist in France also. It is not employment which leads the individual, it is the individual who leads employment, by the expansion of the means of transport and communication, by teleworking, with all that relates to new technologies. The worker has become a “mutant”, particularly in the services. There are less and less industries, but more and more services, and therefore people have to have “mutant’” activities. They have to find a place of residence with easy access because they have to move so often.
Today, it is the quality of the habitat and environment which is the true phenomenon. People can live where they want and they do not hesitate to take a plane or a train. The second important thing: real estate in the Seventies was based on a model of a society and a model of family. Today, we are in a society made up of recomposed families, of people who have already been separated once, twice and with children of several households, regrouping in a place where they will re-create a new environment. And then there is the problem of single-parent families (there are more divorces than marriages); in France there are 800,000 single-parent families, it is a true housing problem because there is not much available for them. These are generally women facing job insecurity.
Today, the market has changed. Earlier there was Paris and the French “desert”. Now, with a very important concept, which is of economic Europe, France has been repositioned in the center of a geographical system which makes it an indispensable cross-roads for all the populations. We have become an area of residence and the entire French territory constitutes a real estate market. There is a market in Blois, Périgueux, Avignon, Marseilles, and at Seyne-sur-Mer. Who would ever have said that one day there would be 2,000 residences built at Seyne-sur-Mer? Currently the French territory is under full urban reconstruction, with a revival of provincial cities, and all these residents, which create problems and obligations for the communes in terms of utility services; some communes have even overtaken by their success. We now have a real estate landscape which is radically different.
ASI: But with reference to what you are saying, there is nevertheless a latent problem. It is true that at present, all the provinces are becoming important from the perspective of a change. This migration nevertheless causes a little concern because it deprives some departments or some Regions vs. others. It is the famous transfer from North to South for which one fears the effects of a more or less long term desertification. This actually brings us to the problem of access. You spoke about access, and it is true that we have the need for it at present. But have all the necessary means been implemented to have this? Does one not look at the real estate objectives and the property system a little too simply, while forgetting infrastructures? Do the persons in charge of city and country planning have the possibility and the resources to react as quickly as possible when a project is set up?
MP: You mention several problems here. The problem of the country planning and development is important and it is an issue which has been neglected for 20 years. During this period, there was none, because France did not have the money; there was the DATAR, very directive, and there was decentralization. Country planning, for me, is a “royal” prerogative. It is actually the work and the responsibility of the State. Moreover, it is quite obvious, it is a political problem! You have areas like Brittany which developed remarkably in terms of infrastructures, because they had active politicians and business leaders. On the other hand, on the Côte d'Azur the SDAU (urban development plan) was not adopted, the second highway has not been built. There was no plan for land development, one was satisfied with building on the sea and leaving the hinterland deserted. This was a mistake! Presently urban planning and reconstruction are just starting again. The re-planning of the territory can only be an activity between the regional authorities and the State, since creating the necessary infrastructures is its business. In my opinion, the measures to be implemented cannot always be delegated to the Conseil Général or the Conseil Régional, because they are excessively long to implement.
The second thing you mentioned is an interesting issue: cities. It is true that they all are choked up. Why? Because they are generally heavily in debt, and jobs and businesses have often left the cities, either to be relocated, or to move to Paris during the great crisis, etc. A de-industrialization of the landscape occurred which has affected relatively poor communes. They can do a certain number of things, but not everything. With regard to Marseilles, its renewal is the tunnel under the Vieux Port, the highway of the Littoral, the things which have transformed the city. But obviously it is not enough, since the issue of the city was not brought up. Since the means of creating these infrastructures such as car parks and other installations in the downtown area were not available, people relocated outside the city and this costs a huge amount of money, because they have to have EDF and means of transport, at a time when the city has all these means. We are witnessing today a rehabilitation of the cities, but they suffer from a lack of public equipment and infrastructures. All this is being set up: the tram, the metro… Unfortunately, the city is developing faster than its infrastructures, and this it is a problem. Marseilles has one advantage as it is a large territory and can be reconstructed. Real estate operations should not be carried out; the city must be regenerated as a whole. The city should be reconsidered, and this is important because the city is citizenship. This is a crucial debate, it is a more global consideration which is essential, requiring the city’s “States General”, and it is of primary importance. The city should be transformed where serious problems occur, particularly those linked to cars, traffic and public transport. This is currently ongoing in Saint-Etienne, Nantes, and Lyon, but it should be approached as a whole.
ASI: Since you are talking about remedies, I do not have the impression that an analysis integrating infrastructural planning was made! A city was rebuilt in the city, in a place where there was nobody, but where it was already difficult to move because of significant movements of trucks and other vehicles. Do you think that this will change with three times more inhabitants and three times more projects, even if for the moment there is a conviction that the system is dangerously choked up, without really initiating large urban planning and developments?
MP: You are right! But one thing must not be forgotten: we have the advantages and drawbacks of an old structured nation. In other words France is a country which has remained very centralized, very organized and very administrative. And what was possible 50 years ago or one century ago is not so today, because you have a POS, a PLU, the Bâtiments de France, the Atelier du Patrimoine, the DAF, DIREN, the right of third parties… In a sense, we are in a system where the will for development is opposed to acquired rights and a process which we cannot circumvent. Presently there is no freedom to construct 200 meters in height. I would not say that we are restricted, since we are lucky enough to live in a State with laws, but the State imposes its rules ….. It has its advantages, but also its drawbacks. We cannot just do everything, and when we want to do something, it takes a long time.
ASI: Isn't this due to the fact that new laws are made, but old ones are never cancelled?
MP: Exactly! It is like the hull of a boat: it is weighed down progressively by all the seashells and weeds which get stuck to the keel and after some time the boat cannot move any further. It is this phenomenon which I call the general states of the city or the general condition of housing. In an assessment of real estate management, one just puts one layer on top of the other … For example, two very good laws have just been enacted, one on the handicapped persons and the other on the HQE (Environmental High Quality). The law on handicapped people now prescribes to widen apartments by 3 to 4 meters, which obviously poses problems for student residences for example, and especially inflates the cost by 10%, to which you have to add a VAT of 19.6, plus insurance which costs between 4 and 6 points, to which you add etc, etc.
At a certain time, it is necessary to “trim the elephant” and re-examine the problems. That does not mean that one should not have laws for the handicapped people or for the HQE, on the contrary! This means quite simply that one cannot do everything. The real problem, it is that we build too expensively, because it is a global system which has stored laws and regulations one after the other, even if taken independently, all are justified. Everything is justified, but everything is expensive. It is like people who live in an apartment and then they want services. Unfortunately services have to be paid for, and they are increasingly expensive… It would be necessary today that all the players in the building game make a stop and face the economic and sociological realities. This is the real issue!
ASI: But, with regard to this particular issue, is the politician’s work going in this direction at the present time? I would not say to federate, but at least to bring people together in order to be able to start new projects.
MP: At the national level, no. One sees this at the regional level. There is a will, but the national level is not at all aware of this type of problem, and yet, there is an arsenal of extraordinary laws. The SRU law (Urban Renovation Solidarity), the PLU is a good law, some flexibilities exist. The ANRU zones (perimeter of the National Agency for Urban Restoration), this is something extraordinary! But there is no true national commitment for housing for example. This is the difference with real estate for offices because it is easier, it is highly “normative”. There are very good professionals particularly in France; on this basis things are simpler. There are office areas, good companies, good real estate developers, good engineering and design departments… Housing is different. It is the individual who is going to be living there. If you deliver a project of 10,000 meters of offices, there will be 10 tenants. If you deliver a 10,000 m ² residential project, there will be 100 owners accounting for 300 or 400 people; they will be living there, need schools, they will want to have transport, etc…. Nowadays, with regard to housing real estate, habitat and city, there are laws, but which were not grouped in one set with the aim of finding simple rules which are imposed to all. There is the zero rate loan, double zero rate loan, loans from the County Council. All this represents a mass of regulations which people have difficulty understanding. I am for decentralization but I have to admit that when things were centralized, it was definitely easier. There was a national law which was applicable. Now, each region has its characteristics, its own forms, its own form of expression, development and town planning, which creates a sort of kaleidoscope.
ASI: Don’t you believe that there is also perhaps the desire of the people who are at the head of the Regions to want to mark the area with their footprint?
MP : Man will remain man. At present, there is no national policy for housing. And yet! You are raising an issue which is to a certain extent serious, because everyone is currently satisfied with the 450,000 residences which are built. But in fact, if you consider private real estate: it does not build the necessary housing. It should not be forgotten that with regard to first ownership for the middle class, we are late by between 700,000 and 1,000,000 residences because we build too expensively… 125,000 residences are built by the private sector: apartments and individual houses, this is wonderful, but among these there are between 60 and 70% sold in the form of products exempt from tax. This means that in France each year, 60,000 users are satisfied, whereas 150 or 160,000 users should be satisfied each year, if we take into account that first ownership ranges rather between 1,500 and 2,500 Euros than between 3,500 and 5,000. However, we must continue to build houses at 5,000, 6,000, 7,000 Euros for people who have the resources. But we are forgetting one thing: the first owners of today will buy at 5,000 Euros tomorrow. We are breaking the food chain of real estate and we are building mostly non taxed residences to turn them into investment products. This is very good, but we should not forget that it is necessary to satisfy the demand of people who have hardly any resources. It is this task which must be fulfilled.
ASI: It is what one also calls housing for the “active”. In Nice a survey showed that a person with the SMIC must give almost his entire salary to have a modest apartment. Do you find this normal?
MP: Exactly! Now, housing for the “active” must be the priority, because every year, 100,000 requests are not satisfied. There is a huge effort to be made, and the national policy must focus on this; it is in this area that we need the State. Not to give money, but perhaps, instead of letting people go to Brussels because they do not want to pay the wealth tax, let us give them the opportunity to convert this tax into financing first ownership housing; thus those who take the risk of investing can ultimately have the possibility of being exempt from tax. This seems fair to me. It should not be forgotten that Men are Men, and that developers are Men. And one very important thing that should not be forgotten is that virtuous incentive does exist. Asking someone to make an effort and not to earn anything to satisfy a civic need is ideal but a little complicated. On the other hand if you tell this person that if he makes this effort he shall not pay any taxes and he will have tax deductions, this is important. It’s this mentality that has to change. It is necessary to go back to a mentality of development by considering all the players in the real estate business as true win-win partners: “I make an effort, I take risks, on the other hand this is what I get”.
ASI: In fact there was the problem in the Sofia area, where a very good company whose name I will not mention, (the General Director stated his fears to our correspondent), had difficulties in making its executives come to work on the site. Indeed his own workers are leaving because there is no housing at reasonable prices on the site. This situation is serious because it calls into question the settling of the company on the site. One measures in this case the importance which housing for active people takes in these areas. What is your point of view on this?
MP: This is what I am telling you, that soon the companies will follow their employees, because employees are the ones who are required. There is still some space in the Nice and Cannes hinterland without needing to destroy the forests. We must re-create new cities and an urban development so that the people can live there, have children who will go to school and create a history.
ASI : With respect to your company “Constructa”, which is involved in a lot of real estate projects, for example in the framework of the project you are carrying out in La Seyne, did you have the possibility of discussing with the Mayor and the County Council, to say: “Shouldn’t there be infrastructural facilities for the number of apartments we are building?”
MP: La Seyne is a rather exemplary story. I had already worked in La Seyne, and I had known the market for 25 years. I was there for 15 years and I gave it up because the market was no longer there. But mostly because there was no longer any will for any type of development. The mayor, Arthur Paecht, had his Municipal council vote that the preferred partner of the commune would be Constructa. Every day we worked hand in hand with the Mayor, because it was important… The mayor had the will to establish a critical mass immediately, in order to change the image of the city, and we took up a commitment for 600 residences. Finally, he built the park. Now the marina is going to be started and the rehabilitation of the downtown area of La Seyne is remarkable. The re-planning of the ZUP of Berthe is amazing and I believe that the festival hall has just been allotted. With regard to the Cultural and Theatre Center, the work is going to start. The large avenue, the Croisette de la Seyne, has been completed. All this was done hand in hand. In all the communes in which we work, Saint-Etienne, Clermont-Ferrand, Val-de-Reuil, Nancy, Chambéry, Aix-les-Bains… it has always been in partnership, because it should be known that the thing to improve in France and in our business, is this attitude of always complaining about France. The French are as good as anyone in any field of competences. They are always clever, intelligent and hard-working, and the images which are given are not true. On the other hand, there is an issue which does not exist elsewhere: it is the issue of dialogue. You go to Spain, Italy, and England; there is none of this kind of a-priori and criticism of the other’s status. And as long as we do not re-established trust among the 60 million French, by always looking upon the people of the South as lazy, and saying that the people of Marseilles are allied with I do not know whom, that the Corsicans are like this… It is necessary to get rid of this system of a-priori, of total xenophobia. Let’s stop saying that the architect is romantic, and the real-estate agent is a swindler… Let’s stop living in this Manichaeism! Let’s renew the dialogue. And as regards real estate development, it is not only a profession of faith which I make. The reality of productivity gains, as Carlos Ghosn achieved when he arrived at Nissan, is to reintroduce the dialogue between various chains in the act of building, construction and production. It is fundamental. This is done within the framework of Euro-Méditerranée. One is able to settle, to create this climate of trust, whereas as long as everyone is suspicious of the other, nothing is possible.
ASI: Are you involved in the Euro-Méditerranée project?
MP: I have four projects ongoing and I will soon have a fifth one, among which the “Blue Train”, project of 50 residences located at the station Saint-Charles, sold to the insurance company ING. Nedelec, a project where there are archaeological excavations from which it was discovered that Marseilles was 8,000 years old. This is a project which represents approximately 16,000 m ² with a tourist residence, businesses, rental apartments, and owned residences. The “Coeur Méditerranée” project, which is directly facing the harbor site, with 6,000 m² of office space, 1,500 m ² for businesses, a 240-room IBIS hotel and a Sweet Hotel with 120 rooms. And finally, my work of my life in this city, in the extension of the Boulevard de Dunkerque where we will build three high rise towers: one with Jean Nouvel with 35,000 m ² of office space. One is for residences which are on half rental and half ownership basis, with Yves Lion. And the last with Jean-Baptiste Piétri, my son, which will be a tower with approximately 120 high standing residences, and a 10,000 m ² transition building which will be located on this site. There is also the project of the rue Fauchier, where in partnership with Euraséo we have the project management for a very nice project which includes offices and the residences. We are indeed well present on the Euromed site
ASI: If you had a forecast to make, how do you see the future of Marseilles?
MP: Marseilles is relatively simple, you just have to read its history. Marseilles goes down every 80 years, and every 80 years it rises. Today, the city has took off again, which is a psychological term. This means that Marseilles is in fashion. Just listen to the people in Paris like Franz-Olivier Giesbert, the chairman of the Point, tell how they cannot imagine their life anymore without Marseilles, where they came to live, where they are happy, where they want to build their family future. During 30 years, when we went to Paris, people took us for gangsters, and now, they ask us: “Be nice, invite to us to spend the weekend at Marseilles”. I believe that Marseilles has all the opportunities. Obviously, it will be necessary to overcome reservations, administrative problems, the harbor, all this. But today, the wave has started and there is nothing that can stop it. Marseilles has the opportunity to have the first European Public Establishment, and this is an engine which will drive everything.
ASI: Do you think that ITER, with all the projects of global conformity which result from this, will also bring in repute and business to Marseilles?
MP: The entire area will benefit from ITER! There will be approximately 10,000 direct jobs and perhaps 20 or 25,000, and this is fantastic. Country development, for me, is nevertheless something which belongs to the State and I consider that if there were a Marseilles/Gap express train, it would be an axis for relevant development! At the time when ITER is going to set off this area, they are cancelling the Gap/Paris night train! Moreover, there is an airport at Gap and it should be able to function properly. It is necessary to assist ITER. All these people with very high purchasing power and with very high intelligence and scientific potential, must find their happiness here, because they will spend a lot of money.
ASI: This is in line with the need to build the tunnel of Montgenèvre to stop the isolation of the departments in our region. What do you think about it?
MP: I am from the Queyras, and Freyssinière is all my life. I am 60 years old, and I have heard about the tunnel of Montgenèvre for the past 52 years. It is a responsibility of the State, a fundamental involvement for the opening-up, as well as equipping Gap, because there is the possibility of settling populations in places where there is a quality of life. I am rather a man of nature; obviously I do not want anyone to destroy my valleys and my woods. But the motorway between Gap and Grenoble is essential. There are beautiful places in France; I do not say that it is necessary to destroy everything; I simply say “there is a time when decisions have to be made between the quality of the nature and Men’s quality of life; otherwise we are going to be crushed.” You have put your finger on something which is one of my hobbies, it is the development of the Hautes-Alpes and the Alpes of Haute-Provence thru the development of the valley of the Durance. This is essential.