The French Investment Market - May 2020
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As in 2019, the investment market had a record Q1 in 2020. Historically low interest rates have fuelled the significant number of major transactions concluded in the quarter. Investors are prioritising real estate as an asset category and consequently increasing their investments.
However, the global health crisis will undeniably impact the real estate market in Q2, and the start of a global economic recovery is still a few months away.
Short-term investment market depth will depend on how quickly prices change based on supply and demand. Should the current trend of treading water end relatively quickly, there will be a healthy rotation of assets between investors.
Over the past 30 years, crises have proven the catalyst for several successive real estate cycles. Despite a number of sudden breaking points, the long-term real estate market trend has been persistent, and even increased, investment. This long-term trend can be sustained in coming years if market fundamentals remain under control in the months ahead: a soft landing for prime rent values, marginal and balanced increase in vacancy rates, phased future availability in sectors where there is a potential for excess supply, and a sustained minimum spread between prime and 10-year treasury bond yields.
Despite the lockdown, the current period is already proving a catalyst for new priorities in terms of building design, use and mutability. As a result of these changes, the occupier-investor partnership will undoubtedly once again take centre stage for a new status quo!
As in 2019, the investment market had a record Q1 in 2020. Historically low interest rates have fuelled the significant number of major transactions concluded in the quarter.