The French retail and logistics sectors offer the best opportunities for investors as economic growth, business morale and consumer confidence pick up strongly, delegates were told at PropertyEU's latest France Investment Briefing.
The French retail and logistics sectors offer the best opportunities for investors as economic growth, business morale and consumer confidence pick up strongly, delegates were told at PropertyEU's latest France Investment Briefing.
‘The French retail sales index is higher than in any other EU country,’ Vanessa Muscara, senior research analyst at M&G Real Estate, told the event on Tuesday. ‘As core, long-term investors, retail is our bet on France and we expect rents to grow. Retail warehousing and the supply chain outside of Paris also have very good prospects for long-term rental growth.’
Some foreign investors have already spotted the opportunity, as shown earlier this year by China Investment Corporation’s decision to pay €1.3bn, above the asking price, to bag the Celsius retail portfolio from CBRE, which includes La Vache Noir shopping centre outside Paris, a mall in Toulouse and others. The deal was done in partnership with AEW Europe.
‘The positive thing about the retail story is that there is a demand base that is solid and is getting stronger, not just in Paris but in all the regional cities in France, as shopping centres are in demand in all towns with over 100,000 inhabitants,’ said Marcus Cieleback, Head of Research at Patrizia Immobilien.
The strength of the logistics sector is directly linked to that of retail, as there has been a marked increase in online shopping. The combination of shops and e-commerce has grown particularly strongly this year, as more and more French people choose to shop online and then collect their purchases from the store. This has had a positive impact both on shopping centres and on warehouses and distribution centres on the edge of towns.
‘There has been a strong increase in value in logistics because of rental growth, and it is just about the only sector in France that has already seen rental growth,’ said Nathalie Charles, regional head of asset management and transactions, Southern Europe, real assets at AXA Investment Managers. ‘But to invest in logistics you have to have knowledge on the ground or a local partner, and you must also be happy with smaller deals.’
Things are moving fast in the sector, she said: ‘I spoke to Amazon recently and they had a map of France at night, with concentrations of light in many places, and they told me that is where they are going to invest.’
