Outlook 2025: competition for deals returns to French market

Competition for deals is set to return to the French market as foreign investors start deploying capital again, delegates heard at Real Asset Media’s Outlook 2025- France briefing, which was held recently at Taylor Wessing’s offices in Paris.

Laurie Lagarde, Head of EMEA Logistics Operator Division, CBRE IM

“We are seeing re-allocations of capital from offices into logistics and core investors are coming back,” said Laurie Lagarde, head of EMEA logistics operator division, CBRE Investment Management. “There will be a real battle for space at the end of Q1 2025.”

The fundamentals of the logistics market are good, she said, as supply has been and will continue to be constrained, leading to favourable supply/demand dynamics, sustained rents and positive income returns.

“We know that developing an asset is not easy anywhere in Europe, and that the big e-commerce companies are looking at additional space everywhere, including France, for their future needs” Lagarde said. “E-commerce penetration will rise across Europe going forward, as online shopping evolves, and we are nowhere near US levels yet.”

Another driving factor for logistics is nearshoring, as more companies that had outsourced to China and other countries and had huge problems with their supply chains now bring production lines closer to their customer base.

“The nearshoring and reshoring trends are being amplified now by the concern about trade wars and the US imposing tariffs,” Lagarde said. “International investors are diluting risk by spreading out geographically and Europe can offer this. We can see a lot of activity in the UK right now as the market stabilises, but France is also one of the preferred strategies, amongst others.”

Logistics, but also residential in all its forms, hospitality and some segments of retail are the  sectors that are attracting investors’ interest.

Béatrice de Quinsonas Drouas, Director of Research, BPCE Real Estate Solutions

“Outlets and retail parks have done very well, they have low vacancy rates and stable rents, and the high street has also performed,” said Béatrice de Quinsonas Drouas, director of research, BPCE Real Estate Solutions. “Luxury and discount work well, the problem is everything in the middle: the retailers need to work harder to give customers a reason to go to the shops instead of buying online.”

Hospitality has also defied the slowdown trend this year as deals were done to cater for growing high-end tourism.

“We have had several big-money 5-star hotel transactions in France in the last few months, and US investors cannot find enough assets to buy,” said Alfred Fink, partner, Taylor Wessing. “American capital, mainly big family offices from New York, is looking to buy assets in Paris, in the South of France and the Alps. Also UK investors are really willing to return to France now to do investments, even enter into joint ventures and provide additional equity where needed.”

Investors notoriously want a stable and predictable environment and the UK at the moment has the edge, but two years ago the situation was reversed, so things can evolve and improve.

In any case the current political instability is unlikely to damage the French market, said Benjamin Cartier-Bresson, head of Paris office, Berlin Hyp: “What matters when buying a property or financing a property is how the property will perform. And what is happening in France will not really change things if you have a good property that is well let.”

Geopolitical risk is everywhere and everyone has to learn to live with it. It is all relative, and the French market has liquidity and solidity in its favour.

“I would say that we are still in a strong position,” said Cartier-Bresson. “The good old recipe for France is a centralised country and large assets where you can invest a lot of money with very good visibility in terms of the rental income generated. That will work again and again.”

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