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Inside the Market / Market Stats

Commercial Property Sector Sees Booming 2016: Prospects for 2017?

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By end of year, around 28 billion euros will have been invested in commercial property, including office buildings and retail space. This is 13% higher than in 2015, and the question is, will 2017 continue this trend? 

The last quarter of 2015 was a record-breaking one for the industry, and the new year carried on the pace. Now, the second half of this year will finish with 12.3 billion euros of investment, while our current quarter (4th) is expected to see 8 billion euros in total.

More than three-quarters or 77% of investment is from France, while the rest is foreign direct investment: British capital represents 12%, while East Asian funds will make up 4% of the 28 billion euro figure (just over a billion euros).

The various areas within commercial property saw vastly differing performances. For example, retail and shopping space saw falls compared to 2015’s figures, while logistics performed strongly, growth 71% higher than in 2015. The hotel industry varied from region to region: down in Paris, Nice and Cannes, but up in Lille, Nantes, Bordeaux and Toulouse.

Paris Region

The “Grand Paris Office Crane Survey”, was conducted by Deloitte and focused on the capital region. It found that in the six months from April to September, there was a 20% increase in commercial and office space construction on the same period last year. This figure translates into 1.56 million m2 of property in Paris. “Commercial property construction is finally reaching pre-2008 levels,” said Olivier Gerarduzzi, of Deloitte.

Half a million m2 of construction also began during this period, 40% in Paris and the rest in Petit and Grand-Couronne (greater Paris regions).

More of the same in 2017?

This depends. The year will be a turbulent one, with Brexit negotiations set to begin and French and German national elections. However, commercial construction projects have very long time frames so are unlikely to be significantly affected in the short term by the results.

More important to the market will be how much interest rates rise: most have now resigned themselves to the fact they will. And above all, points out Daniel Loic of real estate developers Nexity, the employment rate will have to pick up for 2017 to maintain the market’s strong performance.

image © Falcon® Photography | Flickr

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