Â鶹ӳ»­

Europe's largest property asset manager AXA Real Estate is downsizing its French portfolio due to concerns about the economy in its home market.

The Paris-based company is reducing its exposure in France in favour of Germany, the UK and Scandinavia over the next two years due to the ‘poor fundamentals’ of the French economy and a failure to introduce a ‘comprehensive reform’ package, a company spokesman confirmed.

In an interview with the Financial Times, CEO Pierre Vaquier said France was suffering from 'a conjunction of issues' that made it less attractive. 'The fundamentals of the economy are poor and there has been a lack of comprehensive reform compared to what has been done elsewhere in Europe; France is becoming a middle of the pack economy.'

Vaquier also fears that international investors will shun France in the medium to longer term in response to a move by president Francois Hollande to raise capital gains tax. He believes the increase will also negatively affect real estate fundamentals, leading to higher vacancies and stunting rental growth.

AXA already made a move last year to reduce its dependence on its home market. In 2012, Germany accounted for €1.2 bn or 41% of AXA Real Estate’s total acquisitions, while France made up only 11%, or €314 mln. Last year, France was again the most active market in terms of sales, accounting for 47% of the total, or €980 mln (2011: 67% or €1.4 bn).