France: A Construction Overview

The French construction market enters 2026 with a forecast of continued structural pressure in the property sector, coupled with sustained activity in large-scale infrastructure and public procurement projects. While no major market rebound is anticipated, regulatory developments and recent case law are reshaping some aspects of risk allocation, driving demand for sophisticated construction law advice.

Residential construction remains subdued, reflecting an uncertain regulatory and fiscal environment. Ongoing discussions surrounding the 2026 Finance Act, particularly in relation to the tax treatment of investment rental property, together with rent control measures adopted by several major municipalities, continue to weigh on investor confidence. Applications for building permits remain at historically low levels, and a meaningful recovery in residential development activity in 2026 appears unlikely. The office property sector is similarly constrained: although ongoing refurbishment work to meet heightened environmental standards and post-pandemic workplace expectations persist, broader market recovery in 2026 is not anticipated.

After several years of reduced activity in these segments, market participants express growing concern regarding the financial resilience of property developers and contractors with concentrated exposure to the domestic real estate market, raising the prospect of an increase in insolvency-related disputes.

By contrast, infrastructure and energy-related construction remains comparatively resilient. Public procurement activity is expected to remain strong, supported by a pipeline of major projects in the energy sector (including EPR nuclear facilities), transport infrastructure (notably the Seine–Nord Europe Canal, the TELT project and the ongoing expansion of the Grand Paris Express) and digital infrastructure, including large-scale data centre developments (eg, Campus IA). However, regulatory uncertainty persists, particularly in relation to delays in the adoption and implementation of the third Multiannual Energy Program Act, which may affect certain renewable energy projects.

From a legal perspective, recent judicial developments are having a significant impact on liability exposure and risk management strategies. A landmark decision of the Court of Cassation in March 2025 confirmed that a deviation of more than 15% between a building’s actual environmental performance and its contractual target constitutes a defect falling within the scope of builders’ decennial liability under Article 1792 of the Civil Code. This development, combined with the introduction of stricter environmental performance requirements under the RE2025 regulations (including a 30% reduction in carbon emissions as compared with RE2020), is expected to drive an increase in claims relating to energy efficiency and carbon performance.

In addition, a May 2025 decision of the Court of Cassation recognising a duty of care on project managers in respect of climate risk prevention has further expanded the scope of professional liability. More broadly, the allocation of climate-related risks is emerging as a central issue for the sector, with legislative and judicial trends indicating a growing transfer of such risks to contractors, designers and their insurers. In this context, the French Insurance Federation has reported a notable increase in construction insurance premiums.

Technological innovation is also influencing the evolution of construction law. The growing integration of smart building technologies and predictive maintenance systems is challenging the traditional liability framework, potentially extending it to purely immaterial provisions. Questions such as whether the failure of AI-driven predictive maintenance system fall within the scope of decennial liability, treating the embedded artificial intelligence as inseparable from the works, will be raised. This developing area of case law is closely monitored by practitioners, given its potentially far-reaching implications for liability and insurance coverage.

Despite these developments, market practice in contractual documentation remains relatively stable. Public and private standard forms of works contracts (CCAG) continue to be widely used, and FIDIC-based contracts remain prevalent for infrastructure and renewable energy projects. That said, increasing attention is being paid to bespoke provisions addressing, among others, environmental performance, climate risk allocation and technology-related liabilities.

Overall, while the French construction market remains challenging in certain sectors, the evolving regulatory landscape and increasing complexity of risk allocation continue to generate demand for experienced construction law practitioners, particularly in relation to disputes, major projects and high-value infrastructure developments.