A new record for French retail investment in 2010 (FR)
Friday 19 November 2010
According to Savills, retail assets have accounted for 31.5% of total commercial investment in France since January 2010. This represents a record high volume of €2.5 billion, up 247% compared to the same time period in 2009.
The international real estate advisor records that sales of shopping centers and malls accounted for 64% of the market, totaling €1.6 billion, including the acquisitions of Cap 3000 by Altaréa/ABP/Predica for €450 million, 75% of Espace Saint Quentin bought by Allianz and 51% acquired in O’Parinor by Korean pension fund, NPS. In comparison although the high street lettings market maintained good demand, very few investors are willing to sell these assets and so transactions have been limited to €302 million. However, retail warehouses and retail parks saw a six fold rise in investment from €103 million in Q3 2009 to €592 million in Q3 2010.
Christophe Gouny, head of Savills retail in France, says: “French household spending has remained positive with 1.2% annual growth and a 3% rise in shopping center turnover. With rental supply and demand levels remaining relatively balanced, rents reflect this and therefore the investors are keen to buy into this market. In fact we have seen a big confidence from French investors who closed 62% of the deals this year.”
Savills research reports that investor demand has led to downward pressure on yields. Prime shopping center yields have moved to 5.50% from 6.00% over twelve months and secondary centres are at 6.50%. Retail parks yields for both prime and secondary yields decreased by 100 basis points over year to respectively 6.25 % and 7.50 %, meanwhile high street yields also moved down from 5.50 % to 5.25 %.
In terms of rents, supply and demand levels remained relatively balanced - prime rents remained stable. The best retail parks have achieved €185/m²/year with prime rental values for shopping centers at €2,000/m²/year (shops <50 m²). In secondary locations, rental values stabilized at on average 25% lower than in 2008 achieving €120/m²/year on retail parks and €1,185/m²/year for shopping centers (units <50 m²). On average, high street rents in Paris stand at €2,000/m²/year but can reach a high of €10,000/m²/year for the most popular Parisian streets such as Champs Elysées.