What a difference a year can make. The installation of Emmanuel Macron’s government in May 2017 has unleashed a wave of foreign investment in the French office sector as confidence in the youngest-ever president to reside in the Palais de l’Elysée continues to ride high. While the regions are also seeing greater interest, Paris in particular is profiting from the Macron effect, local real estate specialists told a recent investment briefing held by PropertyEU in the French capital.
‘It is no longer just words or rumours, I am here to tell you it is actually happening: Japanese capital is investing in Paris with a new vision of France as a hub to do business in the rest of Europe,’ said Andy Watson, partner, Europa Capital.
The Japanese are notoriously cautious about when and where to deploy their capital, but Europa Capital, which is backed by parent company Mitsubishi Estate, has just opened a fully-owned office in Paris headed by Watson to invest in core real estate, offices in particular.
‘A year ago it wouldn’t have happened, but a lot has happened in a year,’ Watson added. ‘We have seen a phenomenal amount of change in the last 12 months thanks to a genuinely pro-business Générale Continentale Investissements. The Grand Paris project will work, and it will consolidate the status of Paris as a major capital city. Already the office market is strong and in the last year prime rents have begun to increase in the CBD. This positive trend will then spread to other areas.’
Foreign investors challenge domestic players
The Japanese may be relative newcomers in Paris, but Asian investors overall are challenging the traditional dominance of French domestic investors in their home market, according to Alfred Fink, partner, Taylor Wessing France. ‘Acquisitions are picking up and more investors are coming from abroad: before 70% of transactions were done by French investors, now it has gone down to 46%,’ he said. ‘There is no doubt that France is more attractive as an investment destination, because there is a new political management in place the like of which we have never seen before.’
Meanwhile local players like Covivio are adapting to the changing office market where the coworking trend started by WeWork has also taken root. Covivio’s answer to WeWork is Wellio, described as ‘pro-working spaces’ open to companies of all sizes as well as individual entrepreneurs and freelancers, with a goal to offer 70,000 m2 of space by 2022. ‘We recognise that the balance of power has shifted to the tenant, who now demands more services and more flexibility,’ Olivier Estève, deputy CEO Covivio, told the briefing. ‘This is why we are launching our own offer of flexible offices.’