French property re-appears on Henderson radar

Henderson Global Investors believes investment the French property market once again looks attractive and the firm is exploring opportunities to recommence investment.

Henderson said it will focus its attention on prime Parisian offices and France-wide prime retail assets, both of which it believes are beginning to offer real value, having fallen 30-40% since the market peak in the summer of 2007.

For prime Paris offices, Henderson is forecasting that in the second half of 2009, net initial yields will stabilise between 6-6.5%, unless there is some significant and unexpected deterioration in the current economic conditions.

'After London, Paris stands out as the next best core European market to offer good opportunities,' said Andy Schofield, research manager at Henderson Global Investors.

'Should the current economic outlook remain unchanged, we would expect yields to stabilise at between 6% to 6.5%. However, these yields are only likely to be achieved for assets in prime locations and those with secure tenants on long leases let at current market rents. Such properties constitute only a small part of the market and, with a limited number of investors currently focussed on this segment, we anticipate that yields on these assets will eventually shift inwards. However, we expect this trend will contrast with that of the majority of other secondary assets which fail to meet these criteria'.

Henderson said it also views the French retail market positively.