European landlords wary of competing with flood of foreign investment

A record flow of investment into the European real estate market is a selling call for some players who will then buy less hotly chased assets and turn them into trophy properties.

"We have been a net seller this year," said Philippe Depoux, the chief executive of Gecina, Paris' largest publicly traded office landlord with a portfolio of €10 billion (HK$96.4 billion).

The French capital would see more than €20 billion invested in real estate this year, second in Europe only to London, Depoux said.

"Why? Because the risk premium in real estate has never been so high, nearly 300 basis points between the 10-year government bond and the minimum premium for a trophy asset," he said.

Riding on the investment frenzy, Gecina sold the Beaugrenelle shopping centre earlier this year for €700 million.

"We had a huge competition from all over the world. The right time to sell," Depoux said last week at a meeting organised by the European Public Real Estate Association and the Asia Public Real Estate Association in Hong Kong to bring together European property companies and Asian investors.

He said Gecina still had €1.1 billion of assets to dispose of, including health-care and residential properties, as it was on the way to becoming a pure office real estate investment trust.