Skies darken over French real estate

Prospects for the French real estate market have worsened in the past 12 months and the outlook for 2013 is darkening, according to Olivier Mege, deputy managing director for Southern Europe and France at IPD. 'We expect investment volumes to go down vis-à-vis 2011-12,' he said at PropertyEU's recent Outlook 2013 Investment Briefing in Paris.

While capital values are still growing slightly at CBD office locations, that may change in the next year, he predicted. 'Unemployment will grow in 2013 and that will affect take-up and rents.' Nevertheless, offices alongside retail and residential were the best performing segments in the last year: 'Where should investors go in 2013? I would still say Paris CBD offices.'

The macro-economic forecasts for France have deteriorated in recent months, keynote speaker Mahdi Mokrane said. Citing a recent cover story in The Economist, Mokrane pointed out that France is currently being viewed as 'the time-bomb at the heart of Europe'.

Another statement made earlier this year on the cover of The Economist that France is still in denial was even more to the point, he added. 'The focus is now France as the sick man of Europe.'

The political climate is not helping matters. Following the French presidential elections earlier this year, uncertainty still exists regarding possible changes to the fiscal regime, conceded Nicolas Verdillon, director of capital markets at CBRE. Nevertheless, the real estate market as a whole is still performing well, he maintained. 'If we look at the results so far, they are still pretty good. There has only been a slight decrease since last year.'

The full story appears in the December issue of PropertyEU Magazine. Click on the link below to subscribe