France saw around €4 bn of commercial real estate change hands in the first quarter of 2014, with offices representing the lion's share of deals, or over €2.5 bn, according to a new research released by Savills.

France saw around €4 bn of commercial real estate change hands in the first quarter of 2014, with offices representing the lion's share of deals, or over €2.5 bn, according to a new research released by Savills.

This quarter has been one of the strongest since the downturn and is significantly up on the five-year average of €3.3 bn. However, the figure does represent a decrease of 11% against Q1 2013, which was a particularly strong quarter.

Large lot sizes have dominated the investment market with nine deals exceeding €100 mln since the beginning of the year, against 12 in Q1 2013, with these large transactions representing 73% of investment turnover. The most significant deal in terms of volume was the recent acquisition of office tower Coeur Defense by US investor Lone Star for €1.3 bn.

'Overall the French investment market remains buoyant and we believe it will pick up further with several very large transactions expected to complete in the next few months that will boost the volume. By year -end we predict investment turnover will reach between €18 and €19 bn,' commented Boris Cappelle, head of investment at Savills France.

Retail investments in France have increased, accounting for 25% of the transaction volume in Q1 2014 against 15.5% in Q113. Key retail deals in the first quarter of 2014 include Aspy’s acquisition of Beaugrenelle Shopping Center in Paris’ 15th district for €688 mln and the purchase of a portfolio of 10 retail parks by US buyer Northwood Investors. Industrial transactions accounted for a 6% share of the overall investment volume, according to Savills data, against 5% in Q1 2013.

Marie-Josée Lopes, head of research at Savills France, added: 'It is currently a buyer’s market in France with significant equity available and banks lowering their interest rates. In this context, the total investment volume this year will depend on the availability of core products.'

In terms of yields, French prime office and prime high street yields stand at 4% with shopping centres at 4.75%. Prime industrial property yields currently stand at 7.25%.