France Property News

French investment market hits ?16.8 billion in 2012, reflecting 4.5% annual increase

French investment market hits ?16.8 billion in 2012, reflecting 4.5% annual increase
According to Savills, ?16.8 billion of investment transactions were completed in France during 2012, marking a year-on-year growth of 4.5% and coming in above the 10-year average of ?14.2 billion. The international real estate advisor attributes this unexpected rise primarily to the return of transactions above ?100 million, partly due to an increase in the number of portfolio sales, from 14% to 36% year-on-year. The firm’s data records 46 deals over ?100 million in 2012, against 40 in 2011.

Boris Cappelle, head of investment at Savills France, says: "2012 was a surprisingly good year for the French investment market, which was boosted by the rise in transactions over ?100 million as well as a few deals above the ?500 million mark. This is mostly a result of ongoing activity from Qatari buyers interested in French trophy assets and portfolios. These portfolios include prime assets in all sectors located both in Ile-de-France and across the country.”

Savills notes that the French office market continues to dominate activity, accounting for 62% of the total investment volume in 2012 and expects prime office yields to remain at 4.25%. Retail, industrial and serviced properties accounted for 18%, 5% and 15% respectively according to the firm’s research. Of those investments directed at serviced-properties (which include hotels, student housing, care homes, serviced-apartments and leisure), 12.5% were concentrated in the hotel sector on account of several key transactions. These include the purchase of a portfolio of four French trophy hotels by Katara Hospitality for ?750 million, 52 avenue des Champs Elysées for ?515 million by Qatar Investment Authority and a portfolio of 167 French B&B hotels for ?508 million by Foncière des Murs.

Marie-Josée Lopes, head of research at Savills France, comments: "The French investment market ended 2012 looking healthy. With ongoing interest from international investors and a number of significant deals already in the pipeline we expect the investment volume to reach between ?6 to 8 billion by the end of H1 2013."