CBRE: 2007 another all-time investment high in France

A total of EUR 27 bn was invested in commercial real estate in France last year, a 17% increase on 2006's figure of EUR 23 bn, CB Richard Ellis said in a new 'Market View' research publication published on Thursday. The size of transactions rose significantly in 2007, with the French market seeing 61 deals of over EUR 100 mln, compared to 55 a year earlier. Some 84 portfolio transactions for a total of EUR 5.5 bn were also concluded in 2007, CBRE said.

Financial uncertainty did not have a strong impact on the volume of investment, CBRE noted. Investors were still attracted to the French market but the changed financial conditions led to a more select group of players entering the arena with stronger guarantees and more cash.

Offices were still the most traded type of property, accounting for 74% of total investment in 2007. This share is, however, smaller than the 84% share offices took in 2006. Retail emerged as the big winner of the year, accounting for some 14% of investment in 2007, up from just 8% a year earlier. The share of warehouses and light industrial space rose to 12% from 8% in 2006.

CBRE said that the geographic breakdown of investment proved exceptionally stable, with 63% of investment concentrated in Paris and Western Paris (La Defense and the Western Crescent).

French investors accounted for some 35% of investment activity in the French market in 2007, down from 53% in 2006. North Americans ranked second with 22% of investment, followed by the British with 12% and the Germans with 11%.

CBRE said it expects the French market to remain strong in 2008, despite the turbulence in the financial markets. Nevertheless, investment volumes are expected to fall slightly because prices are dropping as yields have started to rise again.