International real estate advisor Savills expects the annual turnover in France to total €14bn by the end of the year, up from €13.3bn in 2010, bringing the volume back to just below the 10-year average of €14.2bn. Despite a quiet first quarter, with an anticipated €1.8bn transacted, the firm expects investors to take advantage of the current high demand for prime stock to put their assets on the market, thereby creating investment opportunities.
In 2011 Savills expects domestic investors to remain as the main market players but believes the share of cross border investments will increase gradually throughout the year. These parties dominated the market in 2010 and accounted for more than 63% of total investment volume in Q4 2010
Lydia Brissy, head of research at Savills France, says: “Domestic investors know the market like the back of their hand, allowing them to take an aggressive position in terms of pricing. While they will remain the key market players in 2011 we expect appetite from foreign investors to grow.”
In terms of yields, Savills reports that in 2010 prime yields were forced down by a rising level of demand and lack of stock. The firm believes that the prime office Central Business District (CBD) yield, which currently stands at 4.5%, will drop to approximately 4.3% by the end of Q1 2011 as buyers adopt an aggressive approach.
Savills also predicts that while offices will continue to be the main target asset, investment in French retail assets will continue to increase as this sector is seen as increasingly transparent with attractive yields compared with other asset types, at 5% for shopping centres and 6% for retail parks in prime locations.
For further information, please contact:
Lydia Brissy, Savills France, +33 (0) 1 44 51 73 88
Florence Lefaucheux, Savills France, +33 (0) 1 44 51 73 70
Victoria Cambridge, Savills press office, +44 (0) 20 7409 8940