Savills has recorded a strong return of foreign buyers in the French investment market so far in 2012, particularly sovereign wealth funds from the Middle East.
Savills has recorded a strong return of foreign buyers in the French investment market so far in 2012, particularly sovereign wealth funds from the Middle East. These investors, who are primarily Qatari buyers interested in trophy assets, have boosted the number of deals exceeding €100 million in France to 31 in Q1 – Q3 2012 compared to 21 in the same period in 2011, according to Savills.
Overall Savills confirms that during the first three quarters of 2012, overseas money made up 40% of total investment in France, compared with 30% in the same period in 2011. Aside from Middle Eastern investors, Savills research shows an increase in investment levels from Chinese, Dutch, Swedish and Swiss buyers. German investors, on the other hand, have withdrawn accounting for approximately 4% of the investment share in Q1-3 2012, down from 8.5% in these quarters during 2011.
Boris Cappelle, investment director at Savills France, comments: “There has been a clear shift in the international buyers’ profile in France with Middle Eastern, especially Qatari funds, accounting for almost 15% of investment activity so far this year. However, the market does remain sensitive to wider Eurozone uncertainties and domestic investors still dominate the market. We believe the total 2012 investment volume for France will exceed the €13 billion mark, compared to €15.8 billion in 2011.”
This increased level of activity from Middle Eastern investors has furthermore marked a return to deals of €500m and above for the first time in approximately five years. Examples of such deals include the purchase of 50-52 Champs Elysées for €500m by Qatar Investment Authority and the acquisition of four hotels (Martinez, Hôtel du Louvre, Concorde Lafayette and Palais de la Méditerranée) by Katara Hospitality for €750m.
According to Savills, core investments remain the most sought after assets in France with the office sector continuing to dominate at over 60% in Q1-3, 2012, followed by retail at 22%. In terms of yields, the firm’s data records prime office and high street retail yields as low and stable at 4.5% in Q3 2012 and expects these to stay at this level to year end.
Marie-Josée Lopes, head of research at Savills France, says: “Investors are continuing to focus on core assets in key markets such as Paris and Lyon. We are also seeing interest in big retail properties and hotel assets in regional markets.”