French commercial property investment to climb over €15 billion

Investment in French commercial property is forecast to climb over €15 billion in the third quarter of 2014, according to Savills, 10 per cent higher than the same period last year.

Savills also predicts that the total investment in France's commercial real estate during 2014 will reach €21 billion, 19 per cent up year-on-year.

The forecast is driven by rising transaction volumes this year so far, which in turn have been fuelled by bigger deals. Indeed, there have been five transactions this year already worth over €500 million, while none take place in that bracket in 2013.

Boris Cappelle, director of Investment at Savills France, comments: “While we have seen an increase in appetite from overseas investors in France, it is important to note that this is mainly for big ticket and landmark buildings with domestic investors remaining far more active in terms of the number of overall deals done.”

Lydia Brissy, director of Savills European Research, adds: “We expect international investors to continue to expand their activities in France, particularly Asian funds from China. As a result of this more competitive market for prime assets, we predict that the prime office yields could harden by 20bps taking them to 3.6% by the end of the year.”