One of Europe's largest real estate asset managers believes value can be found in Paris offices.
Aviva Investors says although Paris doesn’t have clusters of the scale and global importance of some of London’s, it is arguably home to a more diverse range of significant industry clusters.
Paris is the global headquarters of 29 of the 31 French companies listed in the Fortune Global 500. After London, Paris hosts the second-largest number of company headquarters in Europe.
At a macro level, the technology-inspired rise of the knowledge economy in recent decades has facilitated the development of global supply chains; at a micro level, it allows much greater possibilities for remote working and the development of the sharing economy, Aviva said.
Despite the doubts over the future of offices, Aviva Investors believes the best office assets in locations underpinned by robust fundamentals will continue to thrive and find support from investors.
Clusters and scale
Although Paris doesn’t have clusters of the scale and global importance of some of London’s, it is arguably home to a more diverse range of significant industry clusters. Scale is another of Paris’s outstanding attributes.
With a population of c.12 million in the Greater Paris region, it is one of Western Europe’s largest megacities. It is the largest regional economy in Europe, accounting for 4.5% of GDP for the EU28. Reflecting the centralised nature of economic activity, it accounts for 30.3% of French GDP, despite representing 18.2% of the population.
Paris also enjoys other major advantages with easy access to some of Europe’s other major regional economies, strong and transparent local governance, established international connections through trade and its diversified international population.
“Grand Paris” is the largest and most ambitious infrastructure project in Europe, which envisages four new metro lines encompassing 200 kilometres of new track and 68 new stations.
More than one million new housing units are expected at a rate of about 70,000 per year over the project’s lifetime (2015-30). The project also identifies clusters as a key enabler of success and driver of the development of new economic centres. “Grand Paris” could be potentially transformative for real estate markets in the Greater Paris region, with the office sector specifically well positioned to benefit.
Paris also boasts a diverse office occupier base, with decent affordability strengthening occupier demand. ‘In fact, given its talent and scale credentials, the Greater Paris market appears noticeably cheap in a global context, from both an occupier and investor’s perspective,’ Aviva said.
