2020: the start of a new, Paris decade?

Jan 21, 2020 Latest News

As we head into a new decade – 100 years after the Roaring Twenties – Paris has emerged as the No 1 market for property investors. We look at why. By Georgina Power

Paris tops this year’s city ranking in Emerging Trends in Real Estate: Europe, the annual survey by PwC and the Urban Land Institute. Respondents noted the city’s ability to attract capital of all kinds from around the world.

This comes at a time when Paris has (narrowly) overtaken London as the most active commercial property market in Europe.

Total investment volumes in the French capital are at €21b in the year to date [20 November], of which just over half is accounted for by cross-border investors, calculates Real Capital Analytics.

As investors shy from the UK’s Brexit uncertainties, investment is down 32% in London while up 23% in Paris, says Real Capital Analytics, albeit that the UK remains the first port of call for new global entrants.

Why are investors attracted to Paris?

“Europe’s low rate environment continues to be real estate’s trump card … pulling more and more capital into the market,” says Real Capital Analytics in its Q3 2019 Europe Capital Trends.

Offices have accounted for 75% of investment volumes in Paris so far this year, says Real Capital Analytics, compared with 65% in London.

In addition, Paris is attractive to investors because it offers:

Opportunities to invest at scale and in a liquid
Low CBD office vacancy rates, with office yields still under pressure.
A service-focussed economy relatively protected from global trade jitters.
A city ambitious to renew itself for the 21^st century, in particular through improved mobility.

Asian investors expand in Paris

South Korean investors in particular have been active this year in Paris. They account for many of the big-ticket transactions over €500m signed so far in 2019:

Investment manager Swiss Life Asset Managers bought a portfolio of 28 office buildings valued at €1.7bn. 90% of the portfolio is in the Paris CBD in the 1^st, 2^nd, 8^th, 9^th and 10^th Seller: Terreïs.

Purchase by a joint venture between Primonial REIM and Samsung Securities/Hanwha Inv & Secs of the Lumière office building in the 12^th arrondissement for €1.22bn. Seller: Tishman Speyer.

In its first acquisition in Europe, South Korean securities firm Mirae Asset Daewoo in partnership with French asset manager Amundi Real Estate acquired Tour Majunga, the third tallest tower in the Paris region, in La Défense business district to the west of Paris for €850mn. Seller: Unibail-Rodamco-Westfield.

Samsung Securities, with La Française Real Estate Partners as a minority co-investor and as building manager, acquired the Crystal Park office building in Neuilly-sur- Seine in western Paris for €691m in its fourth acquisition in Paris. Seller: Caisse des Dépôts.

NH Investment & Securities acquired a 49% stake, valued at €365m – and based on a total asset value of €745m – in Eqho Tower in La Défense. The South Korean investor has an option to purchase the remaining 51% by the end of 2020. Seller: Caisse des Dépôts.

Full article here.