Prime office yields have started to come under pressure in Paris' CBD as a result of increasing demand for prime property in the third quarter of 2009, according to Nicolas Verdillon, CBRE's head of Capital Markets France. 'There are more buyers for core products than product itself, and the competition among investors is finally causing some yield compression in the market,' Verdillon said in an interview with PropertyEU.
Prime office yields have started to come under pressure in Paris' CBD as a result of increasing demand for prime property in the third quarter of 2009, according to Nicolas Verdillon, CBRE's head of Capital Markets France. 'There are more buyers for core products than product itself, and the competition among investors is finally causing some yield compression in the market,' Verdillon said in an interview with PropertyEU.
Prime office yields are now at less than 6% in Paris, compared to 6-6.25% six months ago, Verdillon added. Due to the lack of product, investors will be forced to readjust their investment targets in the next months and the location is likely to be the first criteria to be dropped in 2010, he added.
'Potential buyers are looking for well-let, high quality properties which are quite limited in the market at the moment,' Verdillon said. 'We anticipate that investors will refocus their priorities and become more interested in half-prime real estate which typically provides a secure income stream although is situated in secondary locations.'
While most of the rental fall has already taken place, Verdillon expects rental levels to continue to drop although more moderately through mid-2010.
