The latest Paris commercial real estate trends are looking promising for French investors.
In fact, this part of the property market is increasing at its fastest rate in two years.
We take a look at the trends, and what they might mean for both commercial and residential properties.
More than €5.3 billion invested in commercial real estate
According to reports by BNP Paribas Real Estate, business properties have seen €5.3 billion of investment in the first quarter of this year – January to March 2022.
This is an increase of 2% compared to the same period the previous year.
By the end of 2021, the commercial market investment reached an overall total of €27.4 billion.
The hotel sector, part of the commercial property market, is also growing with €400 million of investment reported. That’s double the amount invested in 2021.
These trends strengthen the view that real estate markets are returning to normal levels following the dip created by the Covid-19 pandemic.
Commercial yields now up to 3.2%
It’s not just overall investment that’s increasing in the commercial sector.
Yields – or investor profits – are also on the rise in Paris according to recent reports by investment management company Colliers.
In the first quarter of 2020 average yields were 2.5%. A year later, they reached 3.15%.
Now, in the same period of 2022, they are peaking at 3.2%.
Paris is showing greater increases in yields than other French cities. Good news for investors here.
Predictions for Paris’ commercial real estate trends
So how is 2022 shaping up?
The reports also make predictions for the current year – and they are looking very positive too.
The upward trend will continue, and could reach investment as high as €30 billion by the end of the year.
Another report suggests some reasons why, especially when looking at the office sector.
In an independent survey, French respondents emerged as those saying an office is essential to a successful business. In fact, more than 80% of the French people surveyed saw offices this way.
In other European markets, only around 50% of respondents share this sentiment.
The connection with residential real estate
For the purposes of these reports, commercial real estate is any property not primarily used as a residence: offices, retail spaces, warehouses, and even hotels. All are ‘commercial.’
So the Paris commercial real estate trends relate solely to these types of business properties.
But we know there is a complementary effect between commercial and residential real estate. Although separate markets, there is a connection.
It means growth for business properties is a good sign for the sale of apartments and other residential real estate in the French capital.
With the commercial real estate sector looking healthy, overall health of the property market is likely to be healthier too.
Again, good news for investors in both markets.
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