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Key points are:
- France GDP growth should stand at the Euro zone average (-1.5%) in 2009, as the consumer spending engine is not sufficient anymore. Service job creations have turned negative since Q2 2008. French real GDP fell by 1.2% in Q4 08 (qoq), the worst result since the first oil shock in 1974.
- Within that environment, over 2008 the letting market both in Paris and the Regions remained above the last decade average even with 15% drop compared to 2007.
- The regions, in particular, continue to benefit from structural factors
- Globally, supply is not the issue in Paris and most of the Regions, unlike the 90’s crisis.
- After 3 years of increase, rents are expected to decrease, though at a lower path, one of the reason being that in real terms, they stand below that of 2001 and 1990. Industrialrents should follow the same trend.
- After two years of excessive investments (70% debt-financed) volumes have recovered their 2003-05 level.
- Tighter credit conditions and unachieved re-pricing process have slowed down the deals especially those above €100 million (from 55 in 2007 to 19 in 2008). Regions less hit than the Paris CBD/La Défense markets but have also been concerned (-35% over 2008) though with a 6 to 9 months lag.
- Unlike previous cycles, yields decompression has been rapid, e.g 175-200 bps in twelve months for prime products in the Paris CBD and between 35 to 85 bps in the main French regions.
- There will be more and more room for investors willing to have benefit from the lack of credit and of confidence, looking for prime assets at discounted prices». (CS della Società)
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