Investment in French commercial property continues to soar

A recent survey shows that investors plowed €16 billion into French commercial property during the first three quarters of 2014. This is an increase of 45% over the same period in 2013, and already 5% more than the total amount invested last year.

The Paris region is the driver of the economy. This is reflected in the volume invested there in 2014 to date: €12.1 billion, an increase of 46% over the same period in 2013. This represents 76% of total investment in France. Of the 29 transactions in France over €100 million, 27 were in the Paris region.

The number of transactions in France overall has fallen by 20% compared with the same period in 2013 (255 compared with 317). But this is more than offset by the increased number of large transactions.

Foreign investments accounted for 40% of the total volume invested in France since January this year. The profile of foreign investors is diverse, as are their interests in different types of property.

American buyers lead the game, seeking assets with high value added potential. German investors seek office buildings in Paris, while Middle Eastern buyers continue to target high-end commercial properties.

In terms of the market share of different types of assets:

• €9.9 billion have been invested in offices in France, 62% of total investment volume. The Paris region took the lion’s share (€9.2 billion) with some substantial deals.
• Retail investments have boomed at €4.9 billion, breaking the 2007 record of €4.8 billion. This is due to large company reorganizations, high volumes of quality retail stock coming onto the market, and the targeting of celebrated Paris shopping streets by foreign investors.
• €1.2 billion were invested in the industrial market, an increase of 7% over the same period in 2013.

Although the French economy is slow to take off, the lettings market has also boomed in inner Paris. And this is expected to strengthen in the coming months.

As for the outlook, the survey concludes that the 4^th quarter is usually a promising time for big deals. The estimated investment volume for 2014 as a whole is €20 billion. The market is expected to remain buoyant in 2015.

Crédit Photo – GO69