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Inside the Market / Market Stats

2014 was a dynamic year for French commercial property

Beaugrenelle_Shopping_Center,_Paris_April_12,_2014

 €23.8 billion was invested in the French commercial real estate market during 2014, according to the latest figures. This is an increase of 57% over the 2013 total of €15.1 billion and makes 2014 the third best year on record after 2007 and 2006. Much of that investment was in the capital: for each euro invested in French commercial property, 74 cents went to the Paris market.

A number of very big transactions by institutions with a large investment capacity helped to swell the figures. Overall, 23 transactions of more than €200 million were recorded, totaling €11.9 billion.

The Ile-de-France region, which includes Paris, remains the preferred market of investors. This accounted for €17 billion of transactions, 71% of the total and 53% higher than in 2013.

Demand for office properties was particularly high in the capital. Transactions in Paris amounted to €14.4 billion, 44% of the total in France. Investors favored prime properties with long leases already in place.

Large deals include the purchase of Le Madeleine office and retail complex in the 1st arrondissement (district) by Norway’s oil fund for €425.6 million. Other major   acquisitions were a property in the Rue Blanche in the 9th arrondissement (district) bought by Oxford Properties for €263 million. And the Tour Blanche in the Défense business district was recently sold for €161 million.

The retail property market was particularly dynamic and had its best year ever. A total of €7.7 billion was invested in France in 2014, beating by 60% the previous record of €4.8 billion in 2007.

The retail market was boosted by very large transactions, for example the large shopping mall portfolio divested by Klépierre and Gecina’s sale of the Beaugrenelle shopping center for €700 million. The main shopping streets of Paris continued to see sustained demand for retail rentals.

Industrial real estate also saw an increase in activity. €1.7 billion was invested, an increase of 13% on 2013.

Foreign investors accounted for €8 billion (34%) of the sums invested, an increase of 54% over the previous year. European investors were the most active, followed by American and Middle Eastern purchasers.

French economic growth was slow in 2014 and gradual improvement is forecast for 2015. However, commercial property experts predict that the French market will be as dynamic this year as it was in 2014. The demand for prime properties in Paris greatly exceeds supply. And institutional investors with large amounts of available capital see commercial property as a secure long-term investment.

Photo Credit – DXR

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