2007 will be a two-speed year for the French property market, according to a new report issued by global property advisor CB Richard Ellis. While demand in France is expected to accelerate in the first months of the year, the second half of 2007 is more uncertain, with presidential elections likely to create a decisionless period of expectancy. Vacancy rates are expected to fall below the 5% mark, while average rental values will likely rise by 3-5% in the Paris region over the year.

2007 will be a two-speed year for the French property market, according to a new report issued by global property advisor CB Richard Ellis. While demand in France is expected to accelerate in the first months of the year, the second half of 2007 is more uncertain, with presidential elections likely to create a decisionless period of expectancy. Vacancy rates are expected to fall below the 5% mark, while average rental values will likely rise by 3-5% in the Paris region over the year.

The Paris region saw office transactions increase 31% in 2006 to a record 2.9 million m2. Supply stood at 2.5 million m2 at the beginning of 2007, with vacancy rates in the Paris region falling to 5.2%. The average vacancy rate in Paris is 3.4%, with the figure in La Défense at 5.7%.

Almost a third of the immediately available office supply is concentrated in Paris (551,000 m2) and in La Défense (176,000 m2), CB Richard Ellis said. Developers seem to have become more confident and future supply rose by 27% last year to 1,875,000 m2 on January 1, 2007. The average headline rent in the Paris region stood at EUR 307 net/m2 per annum at the beginning of the year, representing an annual increase of 2%.