French investment volumes up by 90% in Q2

Commercial property investment in French real estate increased by 90% to around EUR 1.43 bn in the second quarter of 2009 compared to the previous three-month period, according to a new research report issued by international property advisor Savills.

Although the figure represents an increase on Q1, the total investment turnover for the first half of 2009 (EUR 2.2 bn) remains 71% lower than the same period in 2008 (EUR 8 bn), the broker added.

Take-up in the office and industrial property segments decreased over the year, with rental activity in the industrial-warehouse sector falling by 41% year-on-year to 350,000 m² in Q2. The office market also reported an annual regression in take-up of 7% over 2008. In terms of rental values, the office market saw a 25% decline in prime rents for Paris CBD from EUR 761 per m² in 2008 to EUR 606 per m² in 2009. Rents have remained relatively stable in the retail and industrial markets although there has been downward pressures on values.

'The French investment market is showing positive signs of growth and we have seen some easing of upward pressure on yields,' said Herve Blanchet of Savills' Paris Office. 'Whilst the investment market is improving, the letting market continues to experience a decline in demand and an increase in availability, consequently overall recovery may be slow.'