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BNP Paribas Real Estate comments on the Immostat indicators

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Île-de-France Offices and Investment in France: Q3 2019 figures and outlook

 

Rental market: take-up should reach 2.3 million m² in IDF by end 2019

 

Office take-up in Île-de-France came in at 1,655,000 m² over the first nine months of 2019, a fall of 11% over one year. The market for large units (over 5,000 m²) is still slowing, totalling just 529,000 m² across 50 transactions. Meanwhile, the segment of small and medium-sized units (< 5,000 m²) remains very buoyant with over 1.1 million m² taken up since the beginning of the year. The good news: ”economic uncertainties have not disrupted the healthy employment trend in Ile-de-France with around 70,000 jobs expected to be created in 2019. Moreover, these figures are in line with the healthy trend for requests recorded by our sales teams” indicates Éric Siesse, Deputy General Manager in charge of Office rentals for Ile-de-France for BNP Paribas Real Estate Transaction France. All told, this suggests to us that take-up for the full year 2019 should come in at around 2.3 million m² for the whole of 2019, i.e. close to the average for the last 10 years” forecasts Éric Siesse.

 

At the end of Q3 2019, “the immediate vacancy rate for offices in Île-de-France was still close to its historical low point (5.1 %)” emphasised Éric Siesse. Paris CBD still has a historically low vacancy rate (1.4%). Accordingly, developers/investors have resumed operations over the past few quarters. The supply of offices under construction has stalled after rising for several quarters and stood at 1.5 million m² as of October 1, 2019 for the whole of the Paris Region.

 

Investment should come in at over € 34bn by the end of the year

 

Investment in commercial real estate in France is at a good level with € 23.8bn invested over the first nine months of 2019 (+21% over one year). A noteworthy point this year is the presence of international buyers (43% of investment) and more particularly the return of Korean investors (19%). On the segment of deals over € 100m, there have already been over 54 deals since the beginning of this year. This healthy trend also stems from the acquisition of several office assets in Île-de-France (€ 15.8bn).

 

Over Q3 2018, “prime yields for retail (2.50 %) and offices (3.00 %) haven’t changed over the past quarter. Only the logistics segment continues to show a declining prime yield (4.2%, a fall of 30 basis points)” observes Olivier Ambrosiali, Deputy General Manager in charge of the Sales and Investment division for BNP Paribas Real Estate Transaction France. At the same time, the 10-year OAT yield fell again at the end of September 2019 (-0.27 %) and contributed to the very healthy real estate investment figure. “In these conditions, investment in commercial real estate in France should exceed the historical threshold of € 34bn in 2019”, forecasts Olivier Ambrosiali.

PR Immostat Indicators Q3 2019
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