French commercial sector sees strong recovery

The increase follows a cumulative decline in values over 2008 and 2009 of -12.7%, and while the recovering returns in 2010 remain below the levels seen before the downturn in 2008, annualized total return over a three-year period was positive, at 2.4%.

Income return saw a decline in 2010 of 30 basis points, partly offset by capital growth, while rental values continued to decline, at -0.3%, a shallower rate than 2009’s -0.8%. Yield compression of 40 basis points, to 5.9%, helped to drive capital growth.

‘After two years of negative movements, the real estate sector in France has posted a strong recovery in values for 2010, following the trends seen in other European countries,’ said Stephanie Galiègue, managing director of IPD France and Southern Europe.

‘Results, as with the rest of Europe, are very much location and asset specific. Investors are showing a preference for secure assets with good income, in a central and stable location. Thus we are starting to see the emergence of a two tiered system, as demand for these assets increases their value, and the rest of the market lags behind,’ she added.

Source: Property Wire