Expo Real 4 Oct. 2017 – The election of President Emmanuel Macron is ushering in a sea change in foreign perceptions of France, and external investment is returning to Paris and other major cities, a panel at Expo Real said. Winning the summer 2024 Olympics was icing on the cake.
The panel – Stephan von Barczy, investment head at JLL France, David Clifford, director of fund management for Swiss Life France, Arthur Jaeger, head of hotels at Vinci Immobilier, and Didier Unglik, founder and head of L’Étoile Properties – agreed that foreign investors are coming back in force. Many had been put off by the policies of the former socialist governments of President François Hollande, in particular the wealth tax and labour laws that hindered employment pickup and therefore demand for office space. In the Paris region rents are, after many years of stagnation, beginning to tighten, and in some cases rise. Paris, they noted, has the highest rents of major cities on the European mainland, even if levels are still roughly half those in London.
Clifford cited the return of firms such as JP Morgan, EQT and CBRE Investors. “I see increasing confidence going forward because this is the first time I have seen a French president come in and actually do what he said he would… Macron has already managed to push through changes in the labour laws which in France is incredible. The growth in office space demand we are seeing is due to the Macron effect, two words that we will hear a lot more going forward.”
He added: “There is a sea change in perceptions of France, and the best time to come in is when most people don’t yet see this sea change. Just like on the stock market, it is best to invest at the bottom of the cycle.”
Von Barczy noted that investment volumes in the Paris Ile de France region have been running at some €20bn in the last two years, but the absence of a wide spread of assets for sale means the market will probably not reach that high in 2017. That said, “there is a large number of very big assets on the market, and this is creating some tension,” he added.
“The first signs of commercial rental growth are coming through now but it is very diverse with regard to areas.” JLL measures the average office vacancy countrywide at 6-8% but in Paris at just 2-3%, “depending on which market in the region you are in… Globally we are starting to see the first econommic rent rises, either a decrease in the incentives offered or even price rises.”
Unglik said most of his company’s new clients are mainly attracted to Germany and Poland, where the firm has long been active, and now also Spain. “Most came to Paris in the past but they were not happy with the politics, and were facing a lot of competition because the market was very active.” But he added: “Since June there is a new trend; there is interest, plus winning the Olympics which is a new booster. Over the last few weeks we have seen strong demand from German investors and others from outside France… Over the last few weeks it’s like a new market.”
Jaeger said that the Paris hotel market is now very powerful, and is for long-term investors. “The prices are still very high because of the quality of the offer.” But he added there are opportunities around Paris, especially in converting office buildings to hotel use. Though the last 12 months have been difficult due to terrorist attacks, tourist concern is easing now.