French investment volumes tipped to reach EUR 7 bn this year

Investment in French commercial property rose by almost 90% to EUR 1.7 bn in the second quarter of 2009, compared to just EUR 0.9 bn in the first quarter of the year, a new research report issued by real estate advisor BNP Paribas shows.

The increase in transaction volumes is the first in over a year of investment decline, and could be interpreted as the first sign of market recovery. However, BNP Paribas pointed out that transactional activity in the first quarter is generally lower than the rest of the year, and suggested caution in interpreting the figure too positively.

The property broker expects a progressive but moderate increase in investment volumes in the second half of the year, with a forecast investment volume of EUR 6 to 7 bn for the whole of 2009. This compares to the estimated EUR 13 bn and EUR 28 bn of transactional activity reported in France in 2008 and 2007 respectively.

The growth in the second quarter of 2009 was mostly attributable to the return of larger transactions. In fact, the over EUR 200 mln acquisition by MGPA of the 'Trois Quartiers' building in the first arrondissement has not been seen in the Paris' business district for over a year. Also other regions have become more active, with the acquisition by TMW Pramerica of 'le 31' commercial centre in Lille for EUR 160 mln, and the transfer by Casino to Mercialys of a regional commercial portfolio for a total of EUR 334 mln.

The retail sector accounted for the lion's share of commercial property investment, reaching a third of the total investment volumes. Although prime shopping centres have been more resilient, secondary assets such as retail parks have shown a substantial slowdown, the broker said.

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