Investment in French commercial property will probably climb by at least 6 percent this year as low yields on government debt prompt a search for alternatives, said Olivier Gerard, chairman of broker Cushman & Wakefield Inc. in France.
Spending on offices, shops and warehouses may climb to more than 16 billion euros ($22 billion), even as office leasing rates slump, he said at a press conference in Paris today. Investment in 2012 was 15.1 billion euros, short of the 10-year average, he said.
“Opportunistic funds like KKR are coming back and funds like Blackstone and Carlyle are continuing to buy,” Gerard said. “Long-term French institutional investors, insurers and sovereign-wealth funds are still in the market.”
Investors are shrugging off concerns that France’s struggling economy and rising taxes are leaving more offices empty in the greater Paris region. New office leases in the area dropped by 17 percent last year to a 10-year low, pushing the vacancy rate to 8.2 percent in 2013 from 7.4 percent a year earlier, according to Cushman & Wakefield.
“The take-up in the French market should stagnate this year,” Gerard said.