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Press release

27 JAN 2022

Investors return to commercial property market in France

  • Investment enquiries in France increased at fastest rate in almost two years
  • Improvement driven by strong investor demand for industrial property
  • Retail sector in France continues to experience significant challenges
  • Overall market sentiment lags more buoyant European neighbours

Investors returned to the commercial property market in France in stronger numbers during Q4 2021 than in any quarter since the beginning of 2020, according to new data from the Royal Institution of Chartered Surveyors (RICS) Global Commercial Property Monitor.

A net balance of +14% of respondents in France said that they saw a rise in enquiries from investors in the three-month period, driven by strong demand for industrial property. This was a marked improvement from -3% of respondents in the previous quarter.

However, whilst sentiment amongst investors improved, sentiment amongst occupiers was less positive, with the survey’s Occupier Sentiment Index coming in at -10% for France in the quarter, dragged down by the ongoing challenges in the retail sector.

And overall sentiment in the commercial property market in France was seen to be less optimistic than in more buoyant European neighbours such as the Netherlands, Portugal and Spain.

The survey’s overall Commercial Property Sentiment Index was at -3 for France in Q4 compared to +19 for Portugal and +18 for The Netherlands. Belgium was at the other end of the spectrum with a reading of -18.

It should be noted though that conditions within the market in France remain polarised at the sector level, with feedback from respondents continuing to signal a very challenging picture for retail and a much more robust picture for the industrial sector.

In terms of the office sector, interestingly, French respondents were amongst the world’s most likely to say that office space is essential to a company being able to operate successfully. Almost 80% of French respondents said so, compared to about half that number in the Netherlands for instance.

The overall picture in France was similar to the story overall in Europe, with sentiment improving but divergence between sectors. Commenting Tarrant Parsons, Economist from RICS said: “Investment demand growth accelerated across much of the continent during Q4 according to the latest GCPM results. Unsurprisingly, industrials continue to lead the way, with strong investor appetite across the sector driving aggregate twelve-month capital value expectations to their highest level since the series was formed in 2013. Interestingly, demand also now seems to be picking up steam within the office sector, both from domestic and international buyers. Perhaps likely to support the outlook for offices going forward, an overwhelming majority of respondents across the two largest European markets Germany and France still deem office space as essential for businesses to operate successfully. That said, there is also a strong signal from the Q4 feedback that more flexible or local office space is attracting strong demand growth at this point in time.”


Sample of comments from respondents:

Economy doing well, unemployment down. I detect general attitudes of either (a) get it done now or (b) wait and see. Inflation is largely commented on and a great pretext for waiting; plus of course the next COVID wave - my impression is that the fear of COVID is largely accepted as totals are lower, even as infections gallop past 40.000 a day. – Paris

Small cities in the country have seen the highest increase since the Covid crisis started. Migration of people is real for a better life quality. -Velizy

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Chris Harrison co RICS: +44 77 6641 7550