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Investment volumes in the French commercial real estate market are set to exceed €15 billion, a 10% increase compared to the same period in 2013, according to the latest industry report. The latest research report from covering the third quarter of 2014 estimates that the year-end total investment volume for the French market will reach €21 billion, which is a 19% rise on the figure recorded at the end of 2013. Savills notes that these increased transaction volumes have been driven by larger transactions over €500 million with 2014 already seeing five deals in this bracket take place with none recorded above this figure in 2013. The volume of portfolio deals in France has also risen by 58% against the first three quarters of 2013. While other European cities, such as the UK, have seen investor demand move out to more regional cities, Savills research shows that investors in France continue to concentrate on Paris IDF, which has so far this year seen 67% of the national investment volume. When analysing specific market sectors, Savills found that offices continued to dominate accounting for 56% of the total investment volume in France so far this year. However, the firm highlights that the share of retail assets is growing and now accounts for 26% of the investment volume compared to 18% previously. The share of retail portfolio sales has also been boosted this year by the Carrefour acquisition of 57 shopping centres for €1.98 billion which is the biggest deal recorded this year. In terms of demand, Savills confirms that overseas investors have increased their appetite for commercial real estate in France accounting for 43% since the beginning of the year, which is an 8% increase on the same period in 2013. US equity funds have been particularly active with Lone Star acquiring Coeur Defense for €1.3 billion in what was the second largest transaction recorded this year. Savills notes that Middle Eastern investors were also prominent representing 9% of total investment transactions in France compared with 7% in 2013. ‘While we have seen an increase in appetite from overseas investors in France, it is important to note that this is mainly for big ticket and landmark buildings with domestic investors remaining far more active in terms of the number of overall deals done,’ said Boris Cappelle, director of investment at Savills France. Lydia Brissy, director of Savills European Research, expects international investors to continue to expand their activities in France, particularly Asian funds from China. ‘As a result of this more competitive market for prime assets, we predict that the prime office yields could harden by 20bps taking them to 3.6% by the end of the year,’ she explained. Continue reading →
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