Sovereign wealth funds are changing the dynamics of the French real estate investment market, attendees at the PropertyEU Investment Briefing in London heard last week.
This type of investor typically seeks prime real estate assets, Jonathan Baines, head of central London investment at Colliers International, pointed out. ‘Sovereign wealth funds invest for the long term, normally for 10 to 15 or even 20 years. This will have an effect on liquidity.’
So far this year, the Qatari sovereign wealth fund QIA has forked out more than EUR 1 bn on French real estate including central Paris office buildings and retail premises on 52-60 Avenue des Champs Elysees. According to Colliers International, the Qataris paid EUR 600 mln for the Cite du Retiro and Neo offices in Paris CBD which together comprise a total surface area of 47,000 m2. The properties were acquired from German fund manager Kanam by Invesco Real Estate which acted on behalf of the Qataris. The retail premises have a total surface area of 27,000 m2 and were purchased from Groupama.
Earlier this year, JP Morgan sealed a 55,000 m2 office deal on Avenue Hoche and Avant Seine for EUR 508 mln on behalf of a large Asian fund. Well-informed market sources say the buyer behind JP Morgan was the Hong Kong Monetary Authority and that deal marks its second in Europe. Last year the government agency bought 10 Aldermanbury Square in London.
While foreign investors in Europe are still very cautious and typically head for London first, Paris is growing in popularity and is the first port of call in France, Olivier de Molliens, deputy CEO of Paris-based Colliers International Keops, told the briefing. So far, Asian investors have been relatively scarce, but Middle Eastern investors are stepping up their presence while US and European players are also targeting the French market, he said.
Paris may rank second in Europe as an investment location, but in size it is bigger than London, De Molliens noted. While Greater London boasts a total surface area of 43 million m2, Paris Metropolitan area has a surface area of 52 million m2. The big German cities - Munich and Berlin - follow at a distance with 19 million m2 and 17 million m2 respectively.