LONDON May 10 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
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.