Investment Market Update

France : encouraging start to the year - Q1 2013

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With investments amounting to €2.9 billion in Q1 2013, the commercial real estate investment market saw an encouraging start to 2013. This is the best performance for this market since 2009 with a volume above the average for a first quarter.

Investors risk aversion remained high at the beginning of the year due to continued uncertainty in the financial and economic climate, both in Europe and in France. As a result, acquisitions remained focussed on secured or low-risk assets mainly located in the Paris CBD for the Greater Paris Region and in Lyon for regional markets.

Offices retained the biggest market share with over 2/3 of investments in Q1 2013 volume and almost €1.9 billion. Retail came in second rank with over €650 million in acquisitions.

Seven transactions were recorded for values in excess of €100 million in Q1 2013 for a total volume of €900 million. These prove that there is still a high level of available liquidity targeting the French market. One of the main transactions in Q1 2013 was PRAMERICA’s acquisition of 118 Avenue des Champs Elysées in Paris 8th, an asset comprising both retail space and offices, for an estimated €135 million.

Foreign investors displayed more of a wait-and-see approach than usual at the beginning of the year. In Q1 they invested less than €700 million or only 22% of investments. German funds in liquidation continued to sell assets; particularly worthy of note was DEGI’s disposal of “Tour Mirabeau” in the 15th district for a price close to €200 million.

Prime yields remained stable in Q1 2013 and for the Greater Paris Region stood at between 4.50% for office assets in the Paris CBD and 7.35% for logistics platforms. These could see a slight contraction by the end of year.

Q1 2013 performance leaves us confident that the investment market should perform well throughout 2013. We therefore confirm our forecast for an investment volume of €14 billion for 2013.

Source : DTZ (Groupe UGL)

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Mots-clés : DTZ