2023-07-19-莱坊-The_investment_market_France_H1_2023_40页_5mb

Summary of H1 2023 Investment Market in France

Core Content

The H1 2023 investment market in France shows a significant slowdown compared to H1 2022 and the ten-year average. Total investment volumes decreased to €6.2 billion, down 51% from H1 2022 and 40% from the ten-year average. The number of transactions also dropped by 37% year-on-year, with the largest transactions being those over €100 million, which fell from 34 in H1 2022 to 9 in H1 2023.

The Greater Paris Region remains the dominant market, accounting for 69% of the total investment volume in H1 2023, up from 57% in H1 2022. However, the absolute volume in this region decreased by 41% year-on-year. The share of office transactions increased to 57%, compared to 52% in H1 2022, while the share of industrial transactions dropped to 15% from 25% in the previous year.

Main Trends

• Overall Market Slowdown:

  • Total investment volumes fell to €6.2 billion, the lowest since 2010.
  • Q2 2023 saw a 36% drop in investment volumes compared to Q1 2023.
  • The share of large transactions (over €100 million) fell from 34 to 9, with a corresponding decrease in their share of total investment from 50% to 30%.

• Office Market:

  • Office investment volumes decreased to €3.5 billion, down 21% from Q1 2023.
  • The share of office investment rose to 57% of total investment, driven by the sale of "Tour Sequana" to VALESCO.
  • Prime office yields increased in Paris CBD, La Défense, and Lyon, with the highest increase in Lyon (150 basis points).
  • Foreign investors accounted for 26% of the office investment, with VALESCO's purchase of "Tour Sequana" being a notable exception.

• Retail Market:

  • Retail investment volumes decreased to €1.7 billion, down 40% from H1 2022.
  • The share of retail investment increased to 28%, with the Greater Paris Region accounting for 76% of the total.
  • Shopping centres were the largest share of retail investment, with the sale of "Italie Deux" and "Passy Plaza" playing a key role.
  • The share of foreign investors in retail increased to 39%, with INGKA CENTRES and AEW leading the way.

• Industrial Market:

  • Industrial investment volumes fell to €1.5 billion, down from €2.9 billion in H1 2022.
  • The share of industrial investment decreased to 15%, attributed to the lack of sales of large logistics portfolios.

Key Information

• Foreign Investment:

  • Foreign investors accounted for 30% of total investment in H1 2023, down from 36% in H1 2022.
  • Their share in the office market was 26%, and in the retail market was 39%.

• Investor Types:

  • French investors dominated the market, accounting for 70% of the total investment volume.
  • Property companies saw an increase in their share, rising from 15% to 21%.
  • SCPIs and OPCls were less active, with SCPIs accounting for 34% of new money in Q1 2023, down from 41% in 2022.

• Market Conditions:

  • Prime office yields increased, with the prime office yield in Paris CBD at 3.50% and La Défense at 5.50%.
  • Prime retail yields also rose, with high street at 3.75% and shopping centres at 5.25%.
  • The prime logistics yield increased to 4.50%, up from 3.25% in H1 2022.

• Transactions:

  • Notable office transactions include the sale of "Sequana Tower" to VALESCO, "Millésime" to SOCIÉTÉ DE LA TOUR EIFFEL, and "70 boulevard de Courcelles" to BNP PARIBAS REIM.
  • Notable retail transactions include the sale of "Italie Deux" to INGKA CENTRES and "Passy Plaza" to AEW.

Outlook

The market is expected to continue its correction, with investors waiting for further price adjustments. The share of funds and SCPI/OPCls has fallen, while property companies have become more active. The overall market activity remains weak, especially in the large transaction category, due to financing difficulties and the need for further price adjustments.