2022-02-02-莱坊-Review_Outlook_-_French_Property_Market_2021_-_2022_84页_16mb

2021-2022 French Real Estate Market Review & Outlook

Core Content

The French real estate market in 2021 experienced a mixed performance, marked by a limited decrease in investment volumes compared to 2020 (-5%) and alignment with the 10-year average. The global market saw a 25% increase, but France's performance was less robust due to the impact of the health crisis and the shift in investor behavior.

Main Investment Trends

• Overall Investment Volumes: €25.1 billion in 2021, with a strong rebound in the fourth quarter (+74% quarter-on-quarter).
• Foreign Investors: Increased their presence, contributing over €11 billion, which accounted for nearly 40% of the total investment.
• French Investors: Their share decreased significantly to 54% from 60% in 2020.
• Regional Performance: The regions saw a 27% increase in investment, while the Greater Paris Region experienced a -18% year-on-year decline.
• Logistics: Achieved a record year with €6.5 billion in investment, driven by portfolio sales and the rise of last-mile logistics.
• Retail: Recorded a sharp decline of almost 30% year-on-year, reaching its lowest level since 2009. Suburbs accounted for the majority of retail investment for the first time since 2008.
• Office Market: Suffered a 15% year-on-year decline, with volumes at €15.4 billion. The Paris CBD remained popular, but overall the market is still in recovery.

Key Insights

• Diversification: Investors increasingly diversified into healthcare, residential, and alternative assets, reflecting a shift in priorities post-pandemic.
• Yield Compression: Prime yields for industrial assets dropped significantly, reaching 3.00%-3.25%, while office and retail yields remained stable.
• Sale & Leasebacks: These transactions remained popular, especially in logistics, with notable examples including AUCHAN’s sale to HINES.
• Market Resilience: The suburbs and regional markets showed resilience, with Lyon leading the regional office market and recording one of its best results.

2022 Outlook

• Positive Economic Context: Expected GDP growth of 3.6% and a stable labor market with unemployment below 8%.
• Investor Behavior: Continued preference for secure and value-added assets, with a focus on sustainability and flexibility.
• International Funds: Will remain active, with a focus on logistics and other alternative assets.
• Market Recovery: The office market is expected to continue its recovery, with increased demand across all area categories.
• Diversification Strategies: Investors are likely to increase exposure to residential, healthcare, and managed residential assets.

Asset Class Breakdown (2021)

Summary of Market Drivers

• E-Commerce and Last-Mile Logistics: Strong demand from the rise in online shopping and the need for efficient delivery systems.
• Healthcare and Residential: Grew in popularity due to the health crisis and the housing market dynamics.
• ESG Criteria: Became a significant factor, with change of use and reversibility of assets gaining importance.

Conclusion

The French real estate market in 2021 showed resilience despite the challenges posed by the health crisis. The shift in investment focus towards logistics, residential, and alternative assets is expected to continue in 2022, with a more favorable economic outlook and increased liquidity supporting further growth and diversification.