Retail assets have accounted for 31.5% of total commercial investment in France since January 2010, according to property adviser Savills. This represents a record high volume of EUR 2.5 bn, up 247% compared to the same time period in 2009.
Sales of shopping centres and malls accounted for 64% of the market, totalling EUR 1.6 bn, including the acquisitions of Cap 3000 by Altaréa/ABP/Predica for EUR 450 mln, 75% of Espace Saint Quentin bought by Allianz and 51% acquired in O'Parinor by Korean pension fund NPS. Retail warehouses and retail parks saw a six-fold rise in investment to EUR 592 mln in Q3 2010 from EUR 103 mln in Q3 2009 .
Christophe Gouny, head of Savills retail in France, said: 'French household spending has remained positive with 1.2% annual growth and a 3% rise in shopping centre turnover. With rental supply and demand levels remaining relatively balanced, rents reflect this and therefore the investors are keen to buy into this market. In fact we have seen a big vote of confidence from French investors who closed 62% of the deals this year.'
Savills reports that investor demand has led to downward pressure on yields. Prime shopping centre yields have moved to 5.50% from 6.00% over twelve months and secondary centres are at 6.50%. Retail parks yields for both prime and secondary yields decreased by 100 basis points over year to respectively 6.25 % and 7.50 %, meanwhile high street yields also moved down from 5.50 % to 5.25 %.
In terms of rents, supply and demand levels remained relatively balanced - prime rents remained stable. The best retail parks have achieved EUR 185/m2/year with prime rental values for shopping centres at EUR 2,000/m2/year (shops <50m2). In secondary locations, rental values stabilised at on average 25% lower than in 2008 achieving EUR 120/m2/year on retail parks and EUR 1,185/m2/year for shopping centres (units <50 m2). On average, high street rents in Paris stand at EUR 2,000/m2/year but can reach a high of EUR 10,000/m2/year for the most popular Parisian streets such as Champs Elysées.