The France real estate report examines the commercial office, retail, industrial and construction segments throughout the country in the context of continuing economic struggles.
Covering the entire country, with a data focus on the principal cities of Paris, Nice and Marseille, the report covers rental market performance in terms of rates and yields over the past 24 months and examines how best to maximise returns in the commercial real estate market, while minimising investment risk and exploring the impact of the eurozone crisis on a market already characterised by relative stagnation.
In general, prevailing economic sentiment in France remains subdued as consumers cut spending in the face of slow growth, high unemployment and austerity measures. A US$25bn package of tax increases and spending cuts for 2012 and 2013 failed to defend France's AAA credit rating. As a result, despite certain bright spots such as high-end retail and the upcoming UEFA football championship in 2016, we maintain a bearish outlook for France's commercial real estate sector, particularly over the short term.
- The fate of the eurozone's second largest economy will draw increasingly into focus this year, as France attempts to rein in its fiscal deficit to meet EU targets against a backdrop of flatlining economic activity. While President Francois Hollande has made some encouraging steps aimed at restoring France's lost competitiveness, major concerns over France's economic future continue to linger. While we adjusted up our year-end estimate for French real GDP growth in 2012 to 0.0%, from a previous estimate of -0.2%, we have downgraded our forecast for 2013 to a meagre 0.4%, in light of the challenging environment that France faces this year.
- Latest available estimates from the French National Institute for Statistics and Economic Studies indicate that the domestic construction sector failed to post any recovery in 2012, despite four consecutive years of contraction between 2008 and 2011. The industry contracted by 0.4% year-on-year (y-o-y) in real value terms in 2012, severely underperforming our already cautious expectations for a 0.6% y-o-y rise.