Despite suffering the consequences of an unexpected pandemic, the 2020 investment market performed reasonably well. Commercial real estate investment totalled €23 billion excluding duty, i.e. a 39% y-o-y decrease.
Key events of the past year include: Paris CBD investment was equal to that in other sectors of Paris; Western CBD investment has clearly contracted, largely due to the absence of even a single transaction in La Défense; €100-300 million segment proved resilient; the market has shifted to domestic investors and those from neighbouring countries; finally, prime yields have again fallen in the country's most highly sought after sectors such as the Paris CBD, Western CBD (excluding La Défense) and Lyon.
What is in store for 2021?
The market should progressively rebound after Q1, which is likely to record a decline compared with Q1 2020.
A number of causal factors must be carefully monitored: changes in the leasing market, which may suffer a long-term impact from the pandemic; collections by SCPIs and Life Insurance Companies' unit linked account; foreign investor presence on the French market, given the numerous challenges (Brexit, border closures, etc.); and a potential yield inversion as low yields persist for Parisian assets whereas yields are increasing for some inner and outer rim sectors.
Despite suffering the consequences of an unexpected pandemic, the 2020 investment market performed reasonably well.