LONDON May 10 (Reuters) - German fund Degi has put a Parisian office block on sale for 95 million euros ($124 million), just over half what it paid in 2008, as France's economic woes erode its status as a top European target for property investors.
The fund, owned by Aberdeen Asset Management, is selling the River Plaza complex about four miles northwest of central Paris in Asnières-sur-Seine, where tenants include L'Oreal and Fujitsu, two sources close to the deal told Reuters.
The modest price tag reflects increasing concern for France's economic health amid rising taxes, record unemployment and doubts about President Hollande's bid to revive growth through public spending.
Aberdeen Asset Management declined to comment. But other fund managers said they were re-evaluating the level of profit French property could deliver.
Property investors have a more pessimistic view on the French rental market than anywhere else in Europe including Greece, according to a survey last month by the Royal Institution of Chartered Surveyors (RICS).
"We are asking a lot more rigorous questions about what is supporting the French economy and have brought our return forecast down because of the economic malaise," said Will Rowson, chief investment officer for Europe, the Middle East and Africa at CBRE Global Investors, which manages $91 billion of real estate globally.
Axa Real Estate, which owns more than 14 billion euros of French property, forecasts the market will yield total returns - a figure that includes rental growth and rises in property values - of 4.4 percent this year versus 8.2 percent in Germany and 7.8 percent in Britain.
Funds are still buying property in the best streets of Paris and London to preserve wealth in the belief such buildings will remain highly-prized. But beyond the glitzy shopping boulevards and top business districts, Paris is losing its pulling power.
After years of strong rental growth at mall owners like Unibail-Rodamco and Klepierre, investors now worry that the economic environment will make it hard to sustain those levels of rent as leases expire.
Asnières-sur-Seine, an area that includes residential blocks and features in some Vincent Van Gogh paintings, had a vacancy rate of 26 percent in 2012 versus less than 2 percent in the Hammersmith area of west London, a similarly second-tier office district about the same distance from the centre.