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BNP Paribas Real Estate comments on the Immostat indicators

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Ile-de-France offices and Investment in France: H1 2019 figures and the latest outlook

Office take-up in Île-de-France came in at 1,101,800 m² over the first six months of 2019, down 19% over one year. Although the market for large units (over 5,000 m²) is still slowing, totalling 349,000 m² for 34 transactions, several significant deals of over 40,000 m² should boost the transaction volume by the end of the year. Of note this quarter are the lease of 12,300 m² of offices by Orange in the Résonance building in Bagneux - and more specifically just 300m from the future Grand Paris Express station. Meanwhile, the trend for medium-sized units (2,000-5,000 m²) remains very robust, up 18% over one year. A piece of good news is that “the backlog of demand is intensifying, in keeping with the healthy employment figures for Île-de-France (around 68,000 jobs expected to be created in 2019) and occupiers’ latest expectations” observes Éric Siesse, Deputy General Manager in charge of office letting in Île-de-France for BNP Paribas Real Estate Transaction France. All told, this suggests take-up of around 2.4 million m² for the full year 2019, so still higher than the 10-year average” forecasts Éric Siesse.

At the end of Q2 2019, “the vacancy rate for offices in Île-de-France is still very low (5.3%)” emphasises Éric Siesse. It is still historically low in Paris Inner City (2.3%). Consequently, developers/investors have resumed operations. The amount of office supply under construction has been rising markedly for several quarters, reaching 1.6 million m² as of July 1, 2019 across the whole of the Paris region.

Investment in commercial real estate in France came in at a very good level, with € 13.7bn invested in H1 2019. This half-year assesment also shows a notable presence of international players (36% of the total) and more particularly the return of Korean investors (16%). “There has been no change in the prime yields for retail (2.50%), offices (3.00%) or logistics (4.50%) over the last three months. Nevertheless, further contractions of between 10 and 20 basis points are expected for the most core assets”, forecasts Olivier Ambrosiali, Deputy General Manager in charge of the sales division for BNP Paribas Real Estate Transaction France.

Meanwhile, the 10-year OAT fell again at the end of June 2019 (0.01% vs 0.30% three months previously). “The historically low bond yields and the bright prospects of the letting market should yet again be propitious for investment. As such, we forecast investment in commercial real estate of between € 32bn and € 35bn over the full year 2019” adds Olivier Ambrosiali.

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