According to international real estate advisor Savills, Q2 09 commercial investment in France has increased by 90% compared to Q1. Savills latest bulletin recorded 1.43 billion investment deals in the French commercial market this quarter. Whilst this represents a quarter on quarter increase, the total investment turnover for H1 09, which is 2.2 billion, remains 71% lower than H1 08 (8 billion).
Herve Blanchet, Savills Paris Office, comments: "The French investment market is showing positive signs of growth and we have seen some easing of upward pressure on yields. Whilst the investment market is improving the lettings market continues to experience a decline in demand and an increase in availability, consequently overall recovery may be slow."
The French lettings market, according to Savills, has experienced a year on year decrease in activity. Take up for the industrial warehouse market was 350,000 m² (3.8 million ft²) in Q2, resulting in a midyear take up of nearly 700,000 m² (7.5 million ft²). This represents a 41% fall over the same period last year. The office market also reported an annual regression in take up of 7% over 2008. Quarter on quarter, availabilities also increased in both the office and industrial markets. Immediate supply reached 3.2 m² (35 million ft²) in the office market equating to a 25% increase. Industrial warehousing availability jumped by 41% to 2.7 million m² (29 million ft²).
In terms of rental values, the office market saw a 25% decline in prime rents for Paris CBD from 761 per m² (70 per ft²) in 2008 to 606 m² (56 ft²) in 2009. During the same period, the average rent in the Ile-de-France had a much smaller decrease of only 2.2% from 315 m² (29 ft²) to 308 m² (28 ft²). The bulletin reports that rents have remained relatively stable quarter on quarter in the retail and industrial markets although there has been downward pressures on values. The firm finds that rents for prime retail parks and prime shopping centres have stayed constant over the past 12 months from Q3 08.
Lydia Brissy, Savills Research Europe, commented: "There was a renewed optimism in Q2 created by an increase in retail activity. In April, retail sales rose by 0.9% and in June shopping centre activity, as measured by footfall was up by 1.9%. However, the investment activity is restrained by the lack of suitable product available."