“Without recovery measures, the market will not recover on its own,” according to Olivier Roussin, CEO of Bouygues

Construction and real estate giant Bouygues reported its annual results on Tuesday. Its turnover jumped 26.4%. Although the real estate sector is still suffering, Bouygues Construction’s order book is full. Olivier Roussin, its general director, is Franceinfo’s eco guest.

Olivier Roussin is the CEO of Bouygues. Bouygues is construction, real estate, telecoms, media too, with TF1. The company has just published its annual results on Tuesday February 27. They are still growing with a turnover of 56 billion euros in 2023.

franceinfo: They say that when construction goes, everything goes. This bodes well when we look at your order book: more than 15 billion euros at the end of 2023.

Olivier Roussin: For our construction assets, indeed. Half of this backlog is made up of very large infrastructure projects. And the good news is that there are also a lot of “normal” activities, business, construction of schools, hospitals, public systems, factories to make batteries, factories to run data centers. A notebook which is ultimately extremely well filled.

And is this private and public order?

Private and public. In a period where we may have the feeling that real estate is not doing well, we could say that it is the same for construction, but in fact no. And that’s why we insisted on the fact that there were certainly big projects, but that the other half were projects that we do “normally”, so that it was rather auspicious.

If we consider that the period is difficult, it is because real estate is not doing well. It’s even a collapse. Reservations in residential are down 25%, 70% for commercial activity. Have you ever experienced this?

No, it really is an extremely brutal shock, with a drop in demands. The need is still there. Simply, the various purchasers are desolved by the increase in interest rates and they have lost significant purchasing power. So the market has slowed down considerably. In the tertiary sector, that is to say office buildings, it is different. The market has stopped, so it’s not that it’s slowed down, it’s that there’s no market at all.

This immobility, for once, is completely new.

These are things that we have not experienced in these proportions for the last twenty years.

Have you made any decisions following this inaction, this decline, even when we look at commercial activity?

It is clear that the tertiary economy, offices, will not restart in 2024, maybe not even in 2025. They stopped because interest rates are high and it is more interesting for a investor to place his money in a financial product rather than placing it in an office building. And then you have a second phenomenon in offices, which is that teleworking is not yet in a completely definitive regime in companies, so that companies do not know precisely what they need. This brought the tertiary market to a standstill and that is a fact. And that’s why I think it will last at least all of 2024, and maybe longer.

And it’s not just specific to France?

Indeed, it is rather global, since the interest rate problem is almost global. It is therefore a phenomenon which is widely distributed. On the other hand, the residential situation is very different from one country to another. In France, the purchasing system is done with fixed rates. Rates have actually gone up and we have a whole bunch of customers who can no longer obtain the loan that would allow them to buy.

So it’s a loan problem?

We have offers. But we no longer have customers to buy them. We had a period where we had a lot of customers and we were short of land. We lacked products because there were fewer building permits. That’s the 2020-21 period. And then in mid-2022, building permits become available a little. This is the moment when the credit closes.

And what do you think should be done?

I think that without a specific market recovery measure, the market will not recover on its own. We need to introduce specific elements, measures that will bring investors back to the market. But it won’t just go back and wait for interest rates, because interest rates will come down very slowly.

Is public intervention necessary?

Public intervention which would consist of saying that we must increase the zero-rate loan, for example, will cost too much in the current context, it does not seem reasonable. What has already proven itself on many occasions is to relaunch rental investment by using systems such as Scellier and Pinel. With all these things, it starts again extremely quickly.

Except that public finances, you know what they are today, so it is not current.

When you have a Pinel type investment, when you have less money coming in, it’s not the same as taking money out.

Last activity that we have not yet talked about: telecoms. You say you are interested in buying La Poste’s telecoms business which is for sale. For what ?

Because La Poste has a very particular profile. Firstly, it is a range of customers who are rather established in the rural world, which is an area in which we are not very developed. And above all, when you acquire La Poste Mobile, you simultaneously sign a distribution partnership contract with La Poste. And postal workers have demonstrated in the history of La Poste Mobile that they were excellent salespeople and that they managed, through the proximity they had with their customers, to keep them extremely satisfied. The churn rate is quite low. This makes it a network that has interesting value.

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