Investor Interest Wanes in French Commercial Property

Investor Interest Wanes in French Commercial Property

Commercial News » Europe Commercial News Edition | By Francys Vallecillo | September 11, 2013 10:57 AM ET

Commercial property investment volumes in France fell for the first time since 2009, due to increased selectivity and an absence of non-European, cross-border investors. 

"The French market lost a little of its appeal for cross-border investors during [the first half of 2013] due to a lack of genuine opportunities and the general sluggishness of the economy," Marie-Josée Lopes, head of research Savills, said in a recent report.

During the first half of the year, investment volumes fell 22 percent from last year. A total of €6.1 billion was invested in commercial property during the first six months, compared to €7.8 billion last year.  

Office property investments, the leading sector for the market in France, fell 19 percent during the first half from last year. However, the market share remains strong, accounting for 68 percent of the overall commercial market by mid-2013 compared to 65 percent last year. 

The share of investments targeting retail property increased to 17 percent from 14 percent last year. During the first half, there were 10 retail property deals between €10 million and €100 million compared to six deals in that range last year. Three retail property deals exceeded €100 million during the first six months. 

Logistics property accounted for 5 percent of all investments during the first half, compared to 3 percent last year. 

Property investment from foreign funds decreased during the first half, with French investors accounting for 69 percent of all investments. Germany represented eight percent of investments, other European countries accounted for 14 percent and investors from the U.S. represented 7 percent of the market, Savills reports. 

The firm expects the return of sovereign wealth funds in the next six months. Savills predicts investment volumes will reach between €14 and €15 billion in 2013. 

"Despite disappointing investment volumes in the first half, there still continues to be strong investors demand," Boris Cappelle, director investment Savills, said in the report. "We expect the market to pick up in the second half primarily due to the signing of several mega deals."


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