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Office assets receive the highest investments in France. In Paris alone, 81.000 new jobs are to be created. Photo: Catarina Belova / Shutterstock. Office assets receive the highest investments in France. In Paris alone, 81.000 new jobs are to be created. Photo: Catarina Belova / Shutterstock.

French Real Estate Market Sets Benchmark for First Half-year of 2018

Guillaume Joly
Guillaume Joly
Head of Research France, BNP Paribas Real Estate

France’s real estate market is flourishing. Investor demand could not be greater, and the numbers speak for themselves: compared to the first six months of 2017, investment volume has risen by 49% to 13 billion euros. This growth was generated not by mega-transactions, but a greater number of individual deals.

 

Office investments in the lead

Office investments, which accounted for 70% of the investment volume and grew by 51% over the first half-year of 2017, continued to be everybody’s darling. Comparing investment behavior in France with that of Europe as a whole and of Germany in particular, it becomes clear that the same trends are evident across all borders. The volumes vary, but the preference for office objects is obvious. In Germany, for example, the first half of the year alone saw 11.43 billion euros invested in office space.

In France, too, the mood in the markets is good, and buyers are being guided by current fundamentals, which continue to favor investments in real estate. Employment figures are continuing to rise, ensuring a steady, strong tailwind from consumer markets. Reports indicate that more than 81,000 new jobs are being created in the Paris region alone.

 

Vacancies diminishing rapidly

Given the strong demand, the vacancy rate is falling rapidly. While the vacancy rate in the Ile-de-France area is 5.6%, that of central Paris is only 2.4%. This trend is setting the stage for further increases in value, and rents are rising.

 

Retail with enormous growth

Of the overall investment volume in the first six months of this year, 15% is attributable to retail properties. France’s retail investment market is showing enormous growth, and that is in spite of inadequate supply. Compared to the same period of the previous year, the market has grown by 57% to 1.87 billion euros.

 

Widely varying rents and vacancies

While peak rents in major cities are increasing, elsewhere, particularly in mid-sized cities, they are stagnating or decreasing. Vacancy rates are also variable, with inner city values ranging from less than 5% to more than 10%.

 

Logistics: investment volume high, space take-up lower

Thanks to the extensive portfolio, logistics investments in France showed growth of 67% over the first half-year of 2017 and have now reached an overall volume of 1.1 billion euros. The space take-up, on the other hand, at 1.5 million m², has declined to a level slightly below the figure for the first half-year of 2017.

 

Predominantly domestic investors

Of all investors in French real estate, 62% are from France. Foreign investors come predominantly from the USA (19%) and Germany (11%). Asian buyers are also streaming into the French market, which concurs with the trend in other European countries.

 

Conclusion: France’s real estate market is booming

In summary, we can say that France’s real estate market in the first half-year of 2018 is closely paralleling or has already surpassed its record year of 2017. Even though buyers’ rates of return, especially in greater Paris, are relatively low, the level of investment is still high. As no downward trend is perceptible, one may assume that France’s real estate market will conclude this year with an outstanding result.

As one of Europe’s major property markets, France presents lucrative business and investment opportunities. At EXPO REAL 2018, you will find the French property sector once again at the joint stand “Club France” (click here for information in French). Have a look at our exhibitors list and conference program to prepare your trip in advance.

Club France at EXPO REAL

The Club  France pavilion – Hall C2, Stand 214 – presents a broad cross section of the French real estate sector, key players involved in the Real Estate life cycle. Developers and investors, economic regions and cities, brokers and architects, property management and consulting firms will showcase their projects.

 

A Global City and a promising South East

In 2017 the transaction volume for corporate real estate investment in France topped

26 billion euros, mostly in office property, but also in retail, hospitality, logistics and industrial property. The Paris area is grasping the lion share: ¾, with Paris La Defense, the first business district of continental Europe, acting as a powerful magnet.

The growth of the Nice Region is noteworthy due to the dramatic growth of Sophia Antipolis attracting the big names from the whole business world.

 

One of the highlights is the “Club France/Primonial REIM Conference” on October 9. Experts will discuss the Healthcare and senior housing real estate across Europe.

 

In 2018, the real estate players present within the “Club France” are:

Aden Immo,

Axel Schoenert Architectes,

Covivio,

Eiffage Immobilier,

EOL,

L’Etoile Properties,

Macogep,

Nexity (Office property),

Palladium Group,

Paris La Défense

PERIAL Asset Management,

Primonial REIM,

Sofidy SA,

Team Cote d’Azur – representing the cities of Nice and Sophia-Antipolis –

Treize Cent Treize,

Vinci Immobilier.

 

Club France highlights:

 

Club France Conference by Primonial REIM.

“Healthcare and senior housing real estate”.

October 9 – from 15:00 to 15:45 – Discussion & Networking Forum – Hall A1.

 

Club France Cocktail.

The opportunity to enjoy French savoir-vivre and make valuable contacts. Hall C2 – Stand 214

October 9 – from 17:00 to 19:00 – Club France Booth – Stand 214 – Hall C2.

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