Country Report France Q2-2022
“Energy-efficient buildings will become even more desirable going forward.”

Dear readers,

”The recovery of France’s office market continues apace: at around one million square metres, the total amount of office space let is 24 % higher year on year and roughly in line with the ten-year average. There is brisk demand for city centre locations, which have seen an increase of 53 %. The vacancy rate in Paris’s CBD has fallen from 4.1 % in October to its current level of 2.8 %. By contrast, with the exception of La Défense and Neuilly, things are not progressing as well in the outlying areas. The investment market performed vigorously in the second quarter, reaching volumes of EUR 7 billion. Investments in office buildings increased by 4 % and by 49 % in the logistics segment year on year. Yields remain subdued, but pressure was evident as the second quarter drew to a close, with re-negotiations taking place between due diligence and closing no longer uncommon. Prices and investment terms will be forced to adjust going forward. The market is expected to decelerate until a new balance becomes established. Companies also have to expect higher costs, e.g. as a result of ESG requirements. Energy-efficient buildings will become even more desirable going forward, and the efficient utilisation of real estate will become mandatory.”

Anne-Isabelle Carbonnières

Contact

Ms Anne-Isabelle Carbonnières
Managing Director France

Phone: +33 1 550 484 85
E-mail: Anne-Isabelle.Carbonnieres@Deutsche-Hypo.de

REECOX France down 5.6 %

The performance of REECOX France has been consistently weak since the start of the year. This negative trend persisted in April and May with losses of 1.7 % and 0.5 % respectively. A noticeable decline was also recorded in June: the REECOX fell by 3.4 % to stand at 225.6 points, bringing the total decline for the second quarter to 5.6 %. This means that the French real estate index again saw the second-largest drop of any European country.

Stock markets nosedive, business climate stable

The French stock markets sustained substantial price losses in the second quarter. The French blue-chip index CAC 40 maintained its already poor performance seen in the previous quarter, dropping back by 11.1 % to close out June at roughly 5,922.9 points. A decline of 8.4 % in June in particular played a role in this development. The real estate share index FTSE EPRA/NAREIT France recorded losses that were double that of the CAC 40, falling by 22.6 % quarter on quarter to stand at 2,313.6 points. After comparatively moderate declines in April (-4.8 %) and May (-1.9 %), the index declined by a total of 17.1 % in June. By comparison, the French business climate, as measured by the Economic Sentiment Indicator (ESI), was relatively stable, dropping by around 1.3 % to 102.8 points in the second quarter.

Synopsis of Input Variables and Real Estate Economic Situations Q2-2022

Country

Stock Index

Real Estate Economy Index

Economic Indicator

Base Interest Rate

Interest Rate 10-Year Government Bonds

Q1-2204/2205/22Q2-22Delta (%)
Q1-22 / Q2-22
DE
dodo
dodo
dodo
eq
upup
320.6
310.1
308.5
289.8
-9.6
GB
do
dodo
dodo
upup
upup
218.2
205.6
203.4
202.5
-7.2
PL
dodo
do
do
upup
upup
189.5
187.5
185.3
183.1
-3.4
NL
dodo
dodo
dodo
eq
upup
194.6
194.2
192.2
184.8
-5.0
FR
dodo
dodo
do
eq
upup
240.0
234.8
233.6
225.6
-6.0
ES
do
dodo
do
eq
upup
181.6
178.2
181.3
178.4
-1.7