Investors Targeting Real Estate In France

France is gaining ground in the commercial real estate market, with 90% of investors naming it among their top picks. This popularity has been reflected in a doubling …

France is gaining ground in the commercial real estate market, with 90% of investors naming it among their top picks. This popularity has been reflected in a doubling of investments for the second quarter of 2009. Contributing to the French revitalization were a trio of major retail transactions and the renewed appeal of property in Paris. For more on this, see the following article from Property Wire.

International commercial property investors looking for prime assets are beginning to target France, which is emerging as the second-most popular market after the UK, according to analysts.

The French investment market, which was static in the first quarter of this year after almost two years of declines in activity, now seems to be moving again. Investment levels doubled in the second quarter, the biggest increase for that period in Europe, figures from Aberdeen Property Investors show.

Its newest report highlights three key retail deals in the second quarter which were valued at more than €100 million, and increased activity in the third quarter to back up its analysis.

These included the sale of 31 Rue du Faubourt Honore, which was bought by Hennes & Maurits in April for €103.3 million.

Also in august substantial deals continued including Deka Immobilien Investment GmbH’s purchase of offices in Le Triangle Part Dieu in Lyon for €40 million, GLL Real Estate Partners buying 10 Boulevard Haussmann in Paris for €50.1 million.

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‘Nine out of 10 investors we meet cite France as a top three target country, alongside the UK and Germany,’ said Giles Wilcox, head of real-estate adviser Savills PLC’s European cross-border investment.

According to property adviser Cushman & Wakefield France has held up better than many other markets in Europe even although current investment are down compared with previous years. It says the €2.6 billion invested in the first half of 2009 represents about 37% of what was invested in the same period last year.

And while in the UK property capital returns fell 26% last year, capital returns in France fell only about 6%, according to the Investment Property Databank Index.

London is attracting investors partly because of its decline in prices but Paris is becoming more popular as well because of its historic lack of volatility and because it doesn’t rely on financial-services companies.

Its tenant mix includes manufacturing, communication, and transportation and logistics companies.

As a result, rental declines weren’t as severe as in other European cities.

Paris also has fewer properties with excessive debt levels, meaning there is likely to be less distress in that market and fewer landlords willing to cut rents.

Jones Lang LaSalle forecasts that investment activity in Ile-de-France will reach between €4 billion and €5 billion at the end of 2009, although most will come from Paris.

A large part of the demand for French property is coming from international investors with German buyers particularly active, especially open- and closed-end funds.

This article has been republished from Property Wire. You can also view this article at
Property Wire, an international real estate news site.


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