Paris - opportunities for overseas investors
France is the third largest real estate investment market in Europe, of which Paris accounts for around 80 per cent. As an established international office and retail destination, Paris fulfils the key requirements for overseas investors: a highly liquid market offering large, prime assets. Its attractiveness has already been demonstrated; over the year to date overseas purchasers have accounted for 75 per cent of all commercial real estate transactions over 100 million euros.
As the second largest office market globally, Paris has a high level of transparency with a diversified occupier base; more than 30 per cent of the Fortune 500 companies have a presence here. Its diversity has resulted in less rental volatility than markets such as London, attracting investors such as Norges and Generali, which acquired a 50 per cent stake in a portfolio of five Parisian office buildings for 275 million euros. In fact, offices have accounted for several of the largest deals in the third quarter of 2012; ADIA (UAE) purchased an office building for around 250 million euros, while German investor UNION returned to the market, picking up CityZen for 240 million euros.
Paris is perhaps best known for its high-end retail and is one of the most recognisable shopping destinations in the world. The luxury Parisian streets have a reputation for possessing some of the highest real estate rental levels globally. These are maintained by high footfall – over 130 million shoppers walk up and down each year – and a vacancy rate, which is close to zero per cent.
Investor appetite for retail assets in Paris from overseas buyers has been proven by the completion of two trophy asset deals earlier this year. Swedish investor Ramsbury purchased Faubourg One, home to retailers such as Burberry and Moschino, for 165 million euros, while the Virgin flagship on the Champs Elyseés was acquired by a Middle Eastern investor for over 500 million euros in the largest single asset deal in France since 2007.