RCA: iconic Grand Paris infrastructure project propelled France to record €42 billion in 2019 real estate investment

Total real estate investment transactions in France were €41.6 billion in 2019, 7% higher than in 2018 and a new record. Paris (€28.4 billion +9% year-on-year) overtook London (€25.7 billion -22% YoY) in 2019 in transactions volume for the first time to debut as Europe’s largest metropolitan market.

More than €7 billion was spent in the Paris office market in the last three months of 2019, contributing to a total of more than €20 billion in this property sector for the year overall. Parisian offices were Europe’s number one real estate asset class by deal volume in 2019 with cross-border buyers accounting for more than 50% of transactions. South Korea investors were the biggest cross-border source of capital.

RCA’s Hedonic Series shows that strong demand pushed down Paris office yields by an average of 20 basis points in the fourth quarter of 2019 versus a year prior. Yields also compressed by a similar amount in the leading German office city markets and were down in London for the same period.  

Tom Leahy, RCA’s Senior Director of EMEA Analytics, explains:

“Paris has received a huge boost from the Grand Paris infrastructure plan, as domestic and international investors position themselves in advance of the first set of major station openings on the network in 2024. Parisian offices became Europe’s largest single property investment sector last year, with 50% of the capital coming from overseas, and South Korean investors alone spending €4 billion on these assets. The strong competition and high prices being paid in Paris also appear to be playing a part in diverting domestic investors to other centres with resilIent occupier sectors, notably France’s second-largest commercial real estate market Lyon, where investment volume doubled in 2019 compared with the previous year.” 

According to RCA’s ECT 2019 report, the top three buyers in the French market in 2019 were: Primonial REIM, Amundi and SCPI Priopierre.

The largest single property deals in the French market in 2019 were:

  1. Lumiere in 12th arrondissement – acquired by joint-venture between Hanwha Investment, Samsung SRA and Primonial REIM for €1.2b.
  2. Tour Majunga in La Defense – acquired by Mirae Asset and Amundi for €850m
  3. Crystal Park in Neuilly-sur-Seine – acquired by La Francaise on behalf of Samsung Securities for €691m.

james.wallace@realassetmedia.com