VINCI - 2008 annual report

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BUSINESS REPORT PROPERTY
PROPERTY PRUDENT MANAGEMENT
IN A SEVERELY WEAKENED MARKET
VINCI Immobilier operates in the French business and
commercial (offi ce, hotel and retail space) and residential
(housing and serviced apartments) property markets.
It provides a comprehensive multi-product, multi-service
off ering in the property planning, property development
and (as of 2008, through its subsidiaries VINCI Gestion
and CDB Gestion) property management business lines,
which complement each other.
Despite the sharp downturn in its market in 2008, VINCI Immobilier
generated revenue of €558 million, close to the level achieved in 2007.
However, the company recorded a decline in its operating profi t from
ordinary activities as a result of substantial provisions booked in 2008.
Business and commercial property held up well, off setting the strong
decline in residential property.
BUSINESS PROPERTY
Thanks to the diversifi cation of its activities (offi ce, retail and hotel space),
VINCI Immobilier generated revenue of €186 million in business property
despite the sharp decline in investment, which fell to the 2005 level. This
level of activity was achieved thanks to the sale of several offi ce space
A 78,000 SQ. METRE HIGH ENVIRONMENTAL QUALITY
OFFICE COMPLEX IN BOULOGNE BILLANCOURT
In 2008, VINCI Immobilier signed a property development contract
with GE Real Estate France covering the structural renovation of the
Pont de Sèvres high-rise office complex in Boulogne Billancourt on
the outskirts of Paris. It is made up of three buildings, the tallest of
which is 110 metres high. Designed by architect Dominique Perrault,
the project will offer service-sector companies 78,000 sq. metres of
high environmental quality office space with “NF Bâtiments tertiaires
– Démarche HQE” high environmental quality certification and the
“THPE” very high energy performance label.
VINCI __ 2008 ANNUAL REPORT
operations: M1D programme in Paris (13,000 sq. metres), Belvédère in
Boulogne Billancourt (13,200 sq. metres) and Portes Sud in Toulouse
(21,200 sq. metres). During the year, four new major operations were
signed in the greater Paris area for investors GE Real Estate France (see
opposite), IVG, Carlyle and Carrefour Property, though their fi nancing
remains to be fi nalised.
The many programmes handed over during the year included: in Paris,
the fi rst part of the high-profi le Vendôme-Cambon-Capucines project
(17,000 sq. metres of offi ce space) and the Immeuble Bleu at the Porte
Maillot (15,800 sq. metres of offi ce space); in Bourg la Reine, the Centralis
building (5,300 sq. metres of offi ce space); in the French regions, the
République programme in Nancy (10,000 sq. metres of offi ce and retail
space), the Murano programme in Lyons (7,000 sq. metres of offi ce space)
and the four-star, 47-room Grand Balcon hotel in the heart of Toulouse.
RESIDENTIAL PROPERTY
The market downturn, which began in the French regions in early 2008,
accelerated in the second half and began to impact the greater Paris
area in July. It entailed a signifi cant fall in the pace of reservations and
an increasing number of withdrawals with prices levelling off and then
declining. As a result, VINCI Immobilier decided to discontinue a number
of programmes with inadequate pre-sale scores and to forgo the launch
of a number of operations with a cost price no longer suited to the market
situation.
Against this backdrop, the number of housing unit and service residence
reservations declined by 43% (1,767 in 2008, down from 3,102 in 2007).
Housing starts numbered 2,285, compared to 3,596 in 2007. Programmes
of residential properties under construction remained at a reasonable
level, accounting for 10 months of activity at the end of the year, compared
to eight months at the end of 2007.
OUTLOOK
In view of the level of orders and a more restricted approach to new
operations, VINCI Immobilier expects 2009 to be a diffi cult year in which
selling prices will continue to decline, aff ecting fees and margins. The
company took steps in 2008 that will enable it to cope with this deterioration
in the business environment.
To address the downturn, VINCI Immobilier will be honing its strategic
model, which combines selective project choice and rigorous implementation
(no programme will start construction below a minimum guaranteed
reservation level), quality of programmes and locations and property
negotiation.
In business property, a number of major offi ce and retail programmes
(totalling 100,000 sq. metres) will be handed over in 2009 and work will
start on several operations in the portfolio, subject to fi nalisation of their
fi nancing. In residential property, following an action plan initiated in
2008, VINCI Immobilier will diversify its distribution channels by setting
up a unit dedicated to property management companies so as to increase
sales to private-sector investors in addition to individual customers, and
by expanding block sales to social housing authorities and institutional
investors. The property stimulus plan initiated by the French government
at the end of 2008, which provides for an exceptional off -plan acquisition
of 30,000 housing units, should help boost activity.