Property FRANCE Market Trends MARCH - 2021
TABLE OF CONTENTS
INTRODUCTION
4 Main trends
5 Summary data
THE ÎLE-DE-FRANCE OFFICE RENTAL MARKET
8 Submarkets
10 Take-up strongly impacted by the health crisis and a cautious attitude among prospective users
19 An overall rise in vacancy rates
22 An increase in large-surface supply under construction
23 Rental values are difficult to analyse, due to the low number of transactions
THE FRENCH INVESTMENT MARKET
28 Following 2019 record performances, there has been a decline in all value ranges, especially for deals of over € 300 million
32 New properties: increased investment volumes in vacant buildings and speculative acquisitions
33 Sharper sales slump for portfolios than for single assets
34 Decrease in investment in all asset categories
37 Investment funds remain the main players in the market
39 No location was spared by the downturn but Paris Center West and the Inner Suburbs have shown better resilience
42 Prime yields lower in several markets
CONCLUSION
This report has been written by Catella based on information from MBE Conseil and Catella Property. The assessment was concluded on March 2021. This report is based on information that we believe is reliable. Whilst every effort has been made to ensure its accuracy, we cannot offer any guarantee that it contains no factual errors and accept no responsibility for any liabilities that may arise as a result of such errors. Photo credits: Shoootin / Mateya Lux / Elise Robaglia / Laurent de Broca / Luc Boegly / Maurine Tric / Unsplach / Pexels Legally responsible publishers: Isabelle Ramond and Jérôme Kaplan Design by: www.thalamus-ic.fr To subscribe to Catella’s research, please email your request to: [email protected] INTRODUCTION
MAIN TRENDS
ECONOMY: UNCERTAINTIES REMAIN
Drop in employment in France: 29.3% en 2020 Drop in corporate margins
in 2020 vs - 1.8% 8% en 2020 + 2.1% in 2019 Unemployment rate: vs 7.9% en 2019 vs 8.5% en 2018 Limited impact on employment levels in 2020. Rise in job losses in 2021? Fear of an increase in 2021
Estimated growth rate: 2022 rate:
- 8.3% + 5% + 5% in 2020 in 2021
RENTAL MARKET TAKES A HIT… BUT INVESTMENT MARKET RESILIENT
01. RENTAL MARKET: sharp downturn in take-up, rising vacancies, no impact on headline rents in IDF
Decrease in take-up: drop in take-up under - 36% 5,000 sq.m 1,321,000 sq.m drop in take-up over - 54% 5,000 sq.m - 45% in 2020 decrease in large-surface (drop similar to 1990 crisis) - 46% preletting
Vacancy Sharp increase in Oversupply in La Défense, rate in 4.2 % vacancy in Paris PériDéfense and Paris: (6.4 % in Île-de-France) the Emerging North
FUTURE 823,000 sq.m Increase SUPPLY: under construction but not yet from 2022 commercialised of + 27%
€789/sq.m average rent for new buildings €930/sq.m RENTS top rental value in Paris in Paris CBD, driven upwards RISE 7.5 % CBD IN PARIS CBD by higher top values in 2020
4 Property Market Trends – France – March 2021 02. INVESTMENT MARKET: downturn less severe than in the rental market
LOWER investment volume RETURN TO A LEVEL €23.6 Bn in 2020 CLOSE TO THE TEN-YEAR AVERAGE (€ 25.3 Bn) (- 38 % compared to 2019)
SEVENTH YEAR WITH MORE THAN - 29% €20 BILLION INVESTED IN INVESTMENT IN PARIS CBD
FRANCE
5 TRANSACTIONS 59 % valued over €500 Mn, (i.e. €3.8 Bn in 2020), representing 16% of total investment volume
US / CAN / GB Continued strong transaction activity in the 20 % GERMANY €100 – €300 Mn range 10 % -10% compared to 2019
60 TRANSACTIONS French investors represent the largest share between €100 – €300 Mn. in 2020 of investment volume, ahead of North American, UK representing 49% of total investment volume and German investors. No direct Asian investments
PRIME YIELD IN PARIS IN 2020 2.8% 3% threshold broken
SUMMARY DATA Office market in Île-de-France in 2020
TOTAL STOCK TAKE-UP VACANCY RATE TOP RENT PRIME RENT sq.m sq.m % €/sq.m/p.a % Paris CBD 8,796,300 229,000 4.00 % 930 2.80 % West CBD 7,249,700 294,000 9.00 % 540 3.25 % Paris secondary BDs 4,188,500 92,000 4.40 % 595 3.40 % Emerging North 2,867,900 115,000 14.40 % 430 3.80 % East District 1,631,500 32,000 2.40 % 360 4.20 % South District 1,871,300 48,000 5.90 % 360 3.67 % Boucle Nord 780,500 16,000 12.70 % 260 5.40 % PériDéfense 4,082,600 159,000 12.9 % 430 4.10 % Greater Paris 58,445,300 1,321,000 6.30 % - -
Source: MBE Conseil/Catella Property/Knight Frank/Immostat
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SUBMARKETS
Île-de-France office stock: 58.4 million sq.m in 2020
Airport Roissy Charles de Gaulle