Olivier Durix, Managing Director of offers and customers at Bouygues Immobilier, describes the evolution of the residential market, which has been shaken up in recent years by the arrival of new hybrid offers that meet new needs, particularly those arising from the health crisis.
Today I'm going to talk about property services, and in particular Bouygues Immobilier's approach to the services associated with residential property. At DOC, we are working on new property products and our consumption patterns for the residential and commercial property of tomorrow.
As a source of inspiration, I would like to introduce Benedetto Vigna, General Manager of Ferrari, who said that he did not sell cars but emotions. Something that is easy to do when you are in ultra luxury but behind it is the idea that what matters most is the experience that the brand is selling. By analogy in real estate, if we dream a little it's as if we were no longer selling m² but experiences. If this is something that seems obvious in the hotel industry, it is a little less so in the residential sector, as we are starting from a long way off.
The economic models have undergone successive evolutions, we have gone from an agrarian economy to an industrial economy, then to a service economy and now to an experiential economy. That is to say, the focus is on providing a unique, memorable experience that is as authentic as possible.
Associated with this is a fundamental trend in real estate to DIY (Do It Yourself). In a recent survey we conducted, 80% of French people said that they practiced DIY, for several reasons. Firstly, because it saves money, but above all it is a source of pleasure, meaning and satisfaction.
Thus, new economic models are leading to profound transformations in production and consumption patterns, notably consumption without ownership. Associated with this, there is a great phenomenon of re-use with new forms of governance.
Real estate, by its very nature, is the place where these experiences are to be had. To respond to these new expectations, we must encourage and stimulate them. That is to say, we need to give more importance to the living environment, to the experience of life, to bring out new models of living and working, and to create products that are much more beautiful, designed, green and that encourage the generation of these experiences.
Between traditional rental and full ownership, there are models that are being created to meet these expectations. Not all square metres are equal, indeed, a square metre in the sun is not worth the same as one on the ground floor of a residential building. Furthermore, the temporary use of a square metre does not have the same value as having exclusive possession, i.e. ownership.
Another theme is the need for customisation, because we are all different and our expectations are not the same. Brands have taken this on board by offering a wide range of solutions to meet consumers' expectations as closely as possible. Our needs also evolve over the course of our lives and are much less linear than before. Indeed, our expectations are not the same when we are 20 or 60 years old. Life courses have become more complex and flexible and family and professional trajectories are more marked by discontinuity.
Faced with all this, in the residential sector we have a housing offer which is nevertheless rather monolithic under the effect of many regulatory, financial, technical and even political constraints. Today, the offer is very homogeneous, it responds well to 80% of the market but it does not meet all the needs. This is a criticism that I had already formulated when the Girometti-Leclercq report came out, which, in addition to the PLU and other regulations, froze the typologies of housing spaces and surfaces in a residential market that is extremely standardised. It is therefore difficult to reinvent ourselves.
We have understood the new trends in real estate and we see offers appearing to respond to these initial observations. In the neighbourhoods, we are seeing the emergence of third places, hybrid models that offer new experiences and therefore adapt their needs to those of the territories and the inhabitants.
The first serviced models that we know of in the residential sector are, on the one hand, student residences and, on the other, senior residences with a tenant who bears the management and operating risk or investors. It is therefore a rental offer with a service base and access to more or less à la carte services. In both cases, as a tenant I am looking for spaces that are operated in town centres or living areas where I can take advantage of these neighbourhood and residence services.
At Bouygues Immobilier, it was through this first service component that we set foot in serviced real estate in 2014 with the senior residences of Jardins d'Arcadie, a company that operates senior residences. It was through this component that we won a first global contract in 2019 to develop a dozen post office centres for Poste Immo with an initial location in Carcassonne.
On the office side, coworking has radically changed things since it allows, in the face of a relatively traditional lease market, to offer flexible spaces with experience, customisation and, above all, the possibility of managing one's risk over time according to one's needs. We are therefore touching on the flexibility of leases and spaces. By sacrificing a little of the surface area of my private spaces, I have access, according to my needs, to common services that are more trendy, where I can live a real experience from the reception to the connection with my ecosystem.
Here again, coworking business models are constantly evolving. For example, with Wojo, the brand that we developed with Accor, we carried out our first asset-light operation in the 19th arrondissement of Paris, whereas until now we had a leasehold development model. We can see that the trend is accelerating on the market and that it is upsetting the world of the traditional office, which has been hit by the health crisis with the development of teleworking.
In this case, Wojo is becoming an office operator that operates and generates flows on behalf of a third party and provides its users with experiences. On the same principle, we are now developing hybrid operating models that are somewhere between a firm lease, a precarious lease and an asset light.
The latest addition to the Wojo family is located in Montparnasse, where we have just opened a 14,000 sq. m. space in the 14th district. In a few figures, Wojo has 15 sites, dozens of solutions in Accor group hotels, 90,000 m² under operation, 6,000 office positions and the recent takeover of the mama works sites in Bordeaux and Lyon.
Coworking means coliving. Here too we realised that the rental market was very complicated, rather expensive and that the experience was rather poor. We therefore worked on a flexible housing offer that responds to these issues as well as to the tensions on the rental market. At a previous Hospitality Asset Forum, I was able to present the product on which we have worked on the allocation of m² according to use and to which we add maximum value.
Since then we have worked on the business model by creating a wall and floor platform where, together with a partner, we will operate the projects in which we invest ourselves, with the prospect of a first site in Bordeaux opening next year. This will be followed by several projects throughout France to reach 2,500 beds under management by 2025.
In housing, we can also work on a better experience and this is what we have done with Logis, a flexible and modular housing offer. Our approach, as with coliving, has been to adopt a product approach by designing spaces through use and developing services and products that focus on determining a target.
For example, we realised that not everyone had fled Paris during the lockdown, as many wanted to stay in the city, so we developed an offer aimed at committed urbanites. From then on, we wanted to work on the feeling of space, not to lose any m² and to make the housing configurable, which was the opposite of the famous Girometti-Leclercq report.
Throughout the design process, we put our clients at the heart of the project, because in defining this target we understood their uses and expectations. Each time we involved them in the production and design cycle of our product by taking into account their opinions and by attaching services that matched their needs.
We therefore condensed all of these topics and applied them to the residential sector for the first time, bringing together personalisation, experience and services. Based on this target, but also on the problem of communities that need to retain people, we have created this first housing that is totally configurable and modular, these are lofts. Tomorrow, this housing will be fully operational because it is a turnkey build-to-rent solution for investors.
The first projects are in Reims, Clichy, Tours and Bordeaux. Our ultimate project is to combine this hybrid branded mixed-use building offer. As early as 2015 we worked on a concept called "Pop Up Life". Although there are concept buildings today, there are no mixed-use products as such, so this will be our next battle at Bouygues Immobilier, which will enable us to combine spaces where services can be shared, exchanges and flows multiplied while respecting uses and providing experiences. The work-housing combo is within reach, and we can see that investors are paying more and more attention to this type of product, which is often more resilient to the ups and downs of more traditional markets.
To implement all this, we created the DOC, which allows us to have devised a process for creating offers. We listen to our clients to imagine, promote and bring to life offers in order to make them sustainable and desirable. We capture the need, we develop the offers and above all we incubate them to then put them on the market. We therefore follow the entire process.
Our ultimate ambition is for our customers to become lifetime customers of Bouygues Immobilier throughout the process of finding and relating to residential property.
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