France has seen competition for office and retail assets grow to such an extent that it has become difficult for traditional players in the market to secure new product, leading industry executives told delegates of a conference on France on the first day of the Expo Real fair in Munich.
France has seen competition for office and retail assets grow to such an extent that it has become difficult for traditional players in the market to secure new product, leading industry executives told delegates of a conference on France on the first day of the Expo Real fair in Munich.
‘We have only made one investment in France this year the acquisition of Natixis headquarters in Paris and we are looking at new retail investments but there is huge competition in the market and this has impacted prices substantially. We cannot do deals at any price,’ said Sebastien Chemouny, head of asset management and portfolio management at Allianz Real Estate.
Historically, Paris has been the single largest market for Allianz Real Estate, which has roughly 60% of its €7 bn office portfolio located in the French capital.
Allianz Real Estate is not the only property investor which has been forced to reduced its spending in Paris because of 'excessive' competition in the market. French REIT Gecina has recently announced that it would cut its investment target for the year from an initial €1 bn to just €300 mln.
Pramerica Real Estate Investors also finds that pricing has become very aggressive in Paris. ‘We’ve seen a lot of newcomers coming in and competition is huge,’? added PREI’s head of France Jocelyn de Verdelon. ’On the other hand’, he added, ’It is hard to lose money in Paris, because the market is very liquid on the investment side and at the same time it offers much stability in both cap rates and rental values. If you are a long term investor in the market, it remains a very interesting investment destination.’
