CBRE: commercial property investment in France tops EUR 13 bn

Commercial property investment volumes in France came to EUR 13.3 bn in the first half of 2007, data from global adviser CB Richard Ellis show. With almost EUR 700 mln of commitment, service properties (student residences, health homes and hotels) continue to respond to a growing demand in a market which is held back by the lack of supply, CBRE said in its latest Paris Region report.

The global consultancy firm expects investment volumes in the country this year to be comparable to those of 2006, which registered EUR 23 bn of investments. A total of 47 portfolio transactions were recorded during the first six months of the year, compared to 27 a year earlier. At the same time, 32 transactions of more than EUR 100 mln have been recorded.

Offices remained the most sought-after type of product by investors accounting for 76% of investments during the first half of the year. This compares to 84% in 2006. In the Ile-de-France region, some 432,000 m² of light industrial premises were let or sold, a 22% rise on the same period last year. Yields continue to decline in the French market due to lack of supply, and prime yields in Paris Centre West have occasionally reached 3.6%. Low yields will make the investment market in France even more selective, while prime yields should bottom out in the well-known business markets.

In the Ile-de-France region, Paris, the Western Crescent and La Defense represented 72% of office take-up in the last six months. Average vacancy rates in the Paris region stand at 5%, stable from a year earlier. In the second quarter of 2007 rent increases started to accelerate, reaching 4%, and CBRE expects this trend to continue through the rest of 2007.