According to Savills data €2.5 billion was invested in French commercial real estate in the first quarter of 2013, which is level with the same period in 2012. The international real estate advisor notes that investment volumes in the retail and serviced property sectors (hotels, care homes) fared particularly well rising respectively by 119% and 85% compared with Q1 2012.
These two sectors significantly boosted the market in the first quarter of 2013 accounting for four of the seven deals of over €100 million. Furthermore, these market segments represented a significant portion of regional portfolio sales, with the acquisition of four health establishments by Icade Santé for €175 million and CNP Assurances’ purchase of a €160 million portfolio of regional retail assets.
Boris Cappelle, Head of Investment at Savills France, says: "The investment market remained stable in the first quarter of 2013 with a particularly good performance in the retail and serviced property sectors as investors look beyond traditional office assets to diversify their portfolios. Nonetheless, overall investors are keeping to their long-term strategies and continuing to prioritize core assets. We expect to see steady market activity over the coming months and forecast an investment volume of between €5 and €6 billion in France for H1.”
Overall the office sector continued to dominate the French investment volume in Q1 2013, accounting for 55% of market share at €1.4 billion. The firm notes that this represents a year-on-year (y-o-y) decrease of 26% from €1.9 billion in Q1 2012 and attributes this in part to a growing investor trend to diversify portfolios. Investment into French industrial property totaled €104 million in the first quarter according to Savills research, up from €74 million in the same period in 2012.
The firm’s data reveals that core asset transactions represent 89% of the Q1 2013 investment volume in France, against 84% in the same period in 2012 and 77% in Q1 2011. Overall 27% of the investment volume in this period was concentrated in Paris CBD, where yields contracted by 25 bps and were recorded at 4% at the end of March.
Marie-Josée Lopes, head of research at Savills France, comments: “The French investment market remains dynamic largely due to activity from core funds and SCPIs - French REITS - with access to finance, whilst insurance firms and sovereign wealth funds continue to look for opportunities in France.”
Domestic investors continued to dominate market share in Q1 2013, accounting for 79% of turnover, against 81% in the same period in 2012. US buyers were the largest international investor group in the first quarter of the year, making up 10% of the investment volume in this period, with Italian, Belgian and German investors each accounting for 3% and the UK and Basque Country making up 1% each. In contrast, in Q1 2012 German investors accounted for 8%, Basque Country 5%, the UK 4% and Belgium 1% with no investment recorded by US buyers.