“Fewer deals, but bigger transactions”

Etienne Marcot was appointed head of PATRIZIA France in 2016. The real estate expert has over thirty years’ experience in the industry, and, with his wealth of knowledge, we decided to speak to him about the current trends and developments of the French and European real estate markets.

Etienne, can you tell us a little bit about the situation on the French real estate market?

Right now, we’re experiencing historical highs and lows on the French market. The highs include the total equity available for French real estate and the capital value on which properties are traded today. For instance, we have just passed an average price of 10,000 euros per square metre for residential real estate in Paris – it’s frightening. As for the lows, in terms of prime commercial properties, offices are being traded below three per cent and retail below two per cent yield. It’s a trend we haven’t seen before and which looks set to continue.

But positively, vacancy rate on office stock in La Défense is below five per cent and in Paris’ CBD the rate is three per cent.

Do you think there’s a storm coming?

Everything is in place for a storm to come, but there’s not one headed for us just yet. I think the reason is that the interest rate level across the world – and the eurozone – is low, and it’s expected to remain low for the next 2-3 years at least. As long as this continues, there’s no stormy weather on its way.

In demand: vacancy rates for office space in Paris reach a low point.

French investors are increasingly looking abroad. Is this because they’re not getting the returns they’re used to?

It’s not that they don’t get the returns, they don’t get the assets. There is too much equity available. The more the market performs, from a pricing perspective, the less people sell. Total investment volume increases, but the number of investments decreases. There are fewer deals available and fewer vendors. This is why French investors are eyeing other markets, particularly Germany.

“Right now, we’re experiencing historical highs and lows on the French market.”

Etienne Marcot, Head of PATRIZIA France & Belgium

What’s your advice for French investors in this respect?

With the PATRIZIA pan-European product, indirect investment is possible – that’s the model of at least two of our forthcoming products. Secondly, they have to look closely for opportunities. I think the best way to deal with French investors outside of France is through funds and offering them strategies that they are not able to implement themselves. So, generally, a discretionary model would work well.

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