France’s commercial property sector dips again in H1
France’s commercial property sector dipped over the last half year, according to data released by the IPD France Biannual Property Index.
Stéphanie Galiègue, managing director, IPD France and Southern Europe said the status quo for commercial capital values was due to stabilizing market rental values and an increase in vacant office space.
In H1 2012 capital value in the office sector decreased by -0.8%. This figure combined with an income return of 2.8% at 30 June 2012, shows the total return for offices at just 2%, lower than the previous six month period.
Capital growth in the sector achieved positive growth in 2010, but has been on a continuous slide since then.
As before, the French retail sector stood out as the best performer with a H1 return of 4.2%, due to rent and yield maintenance. Its capital growth (+1.4%) is above other categories.
For the first time in three years, office performance falls below that of logistics’ assets, and that of industrial assets (+2.3%). Offices in the Paris Central District (CBD) achieved capital growth of +1.0% after escaping the rise of initial yields observed for offices located in Ile de France.
Capital growth for logistic assets and industrial assets remained the weakest (-1.4%), but their income return remained solid, in particular due to rental increases of +2.1% over the last six months, with a total return for the light industry sector at 2.3% at 30th June 2012.
The IPD biannual index is based on 1 160 commercial properties with, a value of €28.2bn, across 24 portfolios, at 30 June 2012. Retail represents 43% of total asset value of analyzed assets in the Biannual Index against 44% for offices, 7% for logistics and industrials and 5% for other sectors.