Large property deals boost French investment real estate outlook

Large property investment deals have helped increase the number of transaction in France with sales reaching ?16.8 billion, according to the latest analysis report from international property advisor Savills.

Investment transactions in 2012 saw a year on year growth of 4.5% which was above the 10 year average of ?14.2 billion.

Savills attributes this unexpected rise primarily to the return of transactions above ?100 million, partly due to an increase in the number of portfolio sales, from 14% to 36% year on year. The firm’s data records 46 deals over ?100 million in 2012, against 40 in 2011.

‘2012 was a surprisingly good year for the French investment market, which was boosted by the rise in transactions over ?100 million as well as a few deals above the ?500 million mark,’ said Boris Cappelle, head of investment at Savills France.

‘ This is mostly a result of ongoing activity from Qatari buyers interested in French trophy assets and portfolios. These portfolios include prime assets in all sectors located both in Ile de France and across the country,’ he added.

The Savills report notes that the French office market continues to dominate activity, accounting for 62% of the total investment volume in 2012 and expects prime office yields to remain at 4.25%. Retail, industrial and serviced properties accounted for 18%, 5% and 15% respectively according to the firm’s research.

Of those investments directed at serviced properties, which include hotels, student housing, care homes, serviced apartments and leisure, some 12.5% were concentrated in the hotel sector on account of several key transactions. These include the purchase of a portfolio of four French trophy hotels by Katara Hospitality for ?750 million, 52 avenue des Champs Elysées for ?515 million by Qatar Investment Authority and a portfolio of 167 French B&B hotels for ?508 million by Foncière des Murs.

Marie-Josée Lopes, head of research at Savills France confirmed that the French investment market ended 2012 looking healthy. ‘With ongoing interest from international investors and a number of significant deals already in the pipeline we expect the investment volume to reach between ?6 to ?8 billion by the end of the second half of 2013,’ he said.

Meanwhile the number of wealthy individual property investors set to leave France because of new tax legislation looks set to continue. Mayfair based estate agents Beauchamp Estates is reporting an influx of high net worth French buyers purchasing prime property in Belgravia.
Gary Hersham of Beauchamp Estates said that in recent months the firm has sold a number of apartments in Belgravia to wealthy Parisians buyers. Apartments in Chesham Place and properties in Eaton Square have been particularly popular.

‘Parisian buyers are attracted to the elegant and spacious proportions these types of residences offer in a desirable location, with superb security and concierge services, home technology and all the amenities buyers at this level of the market expect. Sales between £15 million and £30 million have...

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