French property volumes down 22% in H1 2013

The office sector increased its dominance in the French real estate investment market in H1 2013 as overall volumes dropped sharply, according to Savills.

The international property adviser recorded a total real estate investment volume of €6.1 bn in France in the first six months of 2013, representing a decrease of 22% on the same period last year.

Office investment in H1 2013 came to €4.1 bn, down from €5 bn in the first six months of 2012.

Savills tracked retail real estate investment of €1 bn in H1 2013, down slightly from €1.1 bn last year. The serviced property sector (homes, care homes and hospitals) saw just €600 mln of activity in H1 2013, less than half the €1.4 bn volume in H1 2012.

The industrial sector was alone in recording a year-on-year increase in H1 2013, reaching €300 mln, up from €200 mln in H1 2012.

Marie-Josée Lopes, head of research at Savills France, said: 'Buyers in France remain predominantly focused on well-located office assets which are perceived as stable investments. Overall transactional activity has slowed during the first six months of the year which we believe is mainly due to a lack of prime property available on the market, as well as a decrease in the number of larger deals.'

In terms of investors, domestic buyers accounted for 69% of turnover in the first six months of 2013 which, Savills suggests, is reflected by the decrease in deals of over €100 mln, notably those realised by Qatari purchasers that boosted the market in 2012. Consequently, the share of deals in the €50 mln to €100 mln bracket increased, accounting for 26% of deals in H1 2013, up from 13% in H1 2012.

Boris Cappelle, investment director at Savills France, commented: 'Local investors are very much leading the way in the French investment market with SCPIs and French investment funds particularly active. Going forward in the second half of the year we expect to see a return of international investors and larger deal sizes which are already under negotiation. We forecast the total investment volume in France will reach between €14 bn to €15 bn by year end, a little below last year’s €16.8 bn.'