The commercial property market in France dropped for the first time since 2009, due to the sluggish economy and increased selectivity of investors. In the first six months of the year, investment volumes were down 22 percent from 2012 levels, according to a report released by Savills. From January to June, €6.1 billion was invested in commercial property, compared to last year’s figure of €7.8 billion.
Office property fell by 19 per cent on a year to year basis. Its market share remained strong, however, and accounted for 68 per cent of the commercial market by midyear. In 2012, it accounted for 65 per cent of market activity.
The number of investors targeting retail properties increased to 17 per cent from 14 percent this year. During the first six months, there were 10 retail property deals worth between €10 million and €100 million. In 2012, there were six transactions in that range. Three retail property deals were completed that exceeded €100 million during the first six months of the year.
Logistics property accounted for five per cent of investments in the first half, compared with three per cent last year.
Property investment from offshore buyers were down during the first half of the year. French investors accounted for 69 per cent of all investments. German investors bought eight per cent of commercial properties, and buyers from other European countries accounted for 14 per cent of other investments. Investors from the U.S. were responsible for seven per cent of purchases, according to the Savills report.
The firm predicts the return of sovereign wealth funds over the next six months. It has said that it expects investment volumes will reach €14 and €15 billion this year.
Boris Cappelle, the director of investment at Savills, said in the report that despite disappointing investment volumes in the first half, investor demand remains strong. He expects the market to pick up in the second half of the year largely due to the signing of a number of mega deals.
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