French property returns remain resilient, says IPD

IPD said that its French Property Index showed a total return of 17.8% for 2007, a drop compared to the previous year's result of 21.9%, but still impressive over the history of the index. Property outperformed the equity and bond markets in 2007, which returned 5.1% and 1.8% respectively.

In 2007 the income return on All Property fell slightly to 5.4% compared to 5.7% in 2006. Capital growth also dropped to 11.8% compared to 15.4% in the previous year. Over three years the total return on All Property remains strong at 18.3%. The Retail sector was the top performing sector in 2007 with a total return of 22.4%, driven by strong capital growth for the third consecutive year. The Office sector came second with a total return of 18.2%, followed by Industrials at 14.3%. The weaker performance by the Industrial sector was mainly due to relatively low capital growth over the year, of 7.3%.

The French property returns are particularly impressive in a global context, according to IPD. In comparison to other IPD country indices already released for 2007, the French results are in the upper section of the group. Norway posted the highest figures in Europe with 18.3% total return in 2007, while Sweden came second with 14.9%, followed by Portugal (12.4%), Finland (11.3%), Netherlands (11.3%), Denmark (10.2%), Ireland (9.9%), and the UK (-3.4%).

'Despite slightly weaker performance this year compared to last, the French property market has proven itself to be resilient, delivering a strong return in 2007. This was mainly driven by solid performance in the first few months of the year, combined with a positive yield impact from the Retail sector', said Christian De Kerangal, managing director of IPD France.

The total value of the properties covered by the IPD France Databank results was EUR108.3bn at December 2007, representing approximately 57% of the total property assets held by financial institutions and property companies.