Feature: INVESTING IN FRANCE
Race to the finish Scores of developments and cities in evolution, underline that the French markets offer diverse opportunities, if investors can only keep up. Ben Cooper reports
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nyone who has been to MIPIM over the past decade can’t fail to have noticed the domineering Paris pavilion, in prime position at the Palais des Festivals. Step inside and the sheer scale of the exhibitions on display tell a story in themselves: Paris and the Grand Paris region are undergoing a phenomenal rate of development and change, the largest for 50 years. Once the long-term masterplan is complete, in the 2030s, the Paris region will have gained so much new infrastructure, transport, logistics, retail and residential space, both within the centre itself but, chiefly, in its outer rings, that it is fair to say that it won’t be the same city as it is today. “It’s going to change the face of
Paris,” says Andy Watson, partner and fund manager at Europa Capital. “There is a gigantic amount of infrastructure that is coming out now. “Even within Paris there are some massive building sites like Port Maillot near the Arc de Triomphe, which will be a spectacular hub with lots of lines going in and out of it. Each rail project will be an opportunity for residential, offices and retail.” And that is without citing one of the crown jewels of France’s current development ambitions: the vast array of new space being built across the whole Ile-deFrance region, and beyond, for the 2024 Olympics. With most of the work due for completion in December next year, including an extension of the Paris Metro to serve the
Olympic Village, things are hotting up. Not least for the canny investors and developers who can turn this global event into a unique opportunity. The grand visions being realised in Paris tell one side of the French story. The other side is about the immediate opportunities, and challenges, within the more traditional aspects of real estate investment. The pandemic has affected the dynamics of French property investment across all sectors to varying degrees. Perhaps none more so than logistics; the “winner of the pandemic”, according to Raphael Brault, head of France at AEW. He says: “The pandemic has played a catalyst role in terms of increasing emerging trends and the winners of this pandemic period are clearly first and foremost the logistics asset class. The increase of ecommerce has required a big increase in logistics.”
Paris is undergoing a powerful transformation as it prepares to host the Olympic Games in 2024
Add to this the pressures on the office sector by the radical, almost overnight revolution to work patterns, and inevitably the balance between the four key property sectors in France is shifting. Virginie Houzé, head of research at JLL France, says that the firm’s research shows offices have fallen from around 70-75% of the total investment volumes to 60-65%, with a drop for retail from 20% to between 10-15%. This fall has been made up for by gains by the logistics and industrial sector from 10% of the overall investment pie four years ago to as much as 25% today. For logistics, in real terms, says Houzé, investment volumes have increased from an average of €1.4bn per annum between 2010-2017 to an average of €4.2bn per annum between 2018 and 2021. Such has been the effect of the
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