Thus appear the first signs of tension on the offer

The Council of Ile-de-France market remains dynamic offer diversified, reasonable rents and a volume of transactions important which cannot hide a shift to new buildings, to the key, adverse impacts on the value of the former heritage. The request placed in Paris and its region was in late October of 2.2 million square meters, including half on new surfaces, foreshadowing for 2006 a level even higher than in 2005, established to 2.165.000 square metres, which exceeds the 2.5 million metres square... without however 2000 (2.750.000 square metres).

"2006 has practically not been slow in the placed application which, month after month, enrolled at unusual levels, confirms Jacques Bagge, Director of Jones Lang LaSalle France." "The explosion of the request placed in Ile-de-France creates inflation of the rental values or a collapse of the offer", said Jean-Michel Ciuch, Director of studies and expertise in Credit Foncier, for which the market is squarely "a mirror for both sides." He supports his comments stating that the stock has not declined in the third quarter, of the order of 3.6 million sqm to a year end of September, while were commercialized almost 600,000 m2 during this period, or an increase in the transactions of 32 over the same period of 2005, according to figures of Atisreal. NET consumption of offices thus remains too small eyes. "Announced, vacancy rate increased from 5.9 in September 2005 to 5.2 in the region, does not reflect the reality, because it does not take account any of the available potential supply," he said.

Renewal of the offer

Indeed, the slow decline of the offer is the result of the importance of housing starts. The volume of these ongoing projects in Ile-de-France has increased by 10 in a year to represent 950,000 square metres. "The renewal of the offer is today important and marks a major difference with the previous cycle of the years 1999-2000, where the few housing starts had not ensured a renewal of this offer", said Christophe Pineau, Director of studies and research of Atisreal. Thus, the rental market is currently more balanced for the greatest happiness the greater security of investors. "In fact, rental supply of quality in Paris is reduced, since there remains only 200,000 square metres of new market in 2007 and 2008 offices, prevents Philipppe Leigniel, Chairman of DTZ.". And the situation is little better today on the West and defence.

Thus appear the first signs of tension on the offer. In this context, many professionals anticipate a slight but constant growth of rents in the coming months. For the time being, more that a resumption of the increase, Credit Foncier observes the maintenance at the signing of leases of important accompanying measures with a medium gap between facial rent and unchanged economic rent for a year. Franchises awarded in rentals after renovations in buildings haussmanniens generally settled in a month by year firm commitment for a six-neuf year lease. This corresponds to a discount of 12, recognizes Atisreal, indicating a gradual reduction of benefits granted to tenants candidates. Laurent Lehmann, Deputy Director of CB Richard Ellis, attributes this trend reversal at a sustained demand. "Strong sign lease catches motivated by extensions of surfaces have doubled from one year to the other", he said. Successive increases in the ICC confront indexed rent of the current leases to those charged today for offices recently delivered. Transactions for the years 1999-2000 are indeed disturbing mechanical increases due to continuous increases in the construction index justifying corporate moves when the owners refuse a renegotiation. CB Richard Ellis gives the example of a rent contracted in 2001 to 675 euros the square metre per year which now exceeds 800 euros, while the new buildings in the central district of Paris business are offered for lease "only" 530 euros.

Investment records

The market for investment in real estate business French, still in progress, amounted to 22 billion euros at end of October, compared to 19.2 billion for the year 2005. "It will exceed certainly 25 billion this year, prognostic Alain Béchade, Vice President Atisreal." However, this amount must be compared to the more than 70 billion euros invested in Germany to the title of 2006 and the more than 100 billion euros expected at the United Kingdom. "The depth of these markets comes from the ancient presence of pension funds in each of these countries and short funds today," said the specialist.

"It is when buying France, because the rental market indicators are encouraging for years."

upcoming. "The margin of increase in rent is well", goes Etienne Prongué, responsible for international investment in Atisreal noting that many investors show interest in building in Vefa (sale in future state of completion), figures in support. Sponsors sales have doubled in the first nine months of 2006 compared with the year 2004. This Council is currently negotiating 50,000 meters square under construction, located in 33.300 square metres to Rueil-Malmaison intended for the Head Office of Schneider Electric and 16,000 square metres in Paris, near the station of the East, to the SNCF.

"Or find suitable them, secure and available, some choose indirect investments in funds, of land or more sophisticated such as real estate, derivatives financial instruments which, in full expansion to the United Kingdom, should soon develop into France", observes Christian de Kerangal, Executive Director of IPD France.

Volumes invested but this proportion is evolving Offices remain assets preferred by investors, totaling 78 of the commitments in the hexagon. Sector is the most active Paris West, in the CBD, the Western business district and the defence. It is moderated by large operations, including assignments of significant portfolios involved much, according to the Board Cushman & Wakefield, the increase in volumes, representing alone more than 5 billion euros. "The acceleration of the arbitrations, favored by the lower real yields and rising market values, also contributed to the increase in the volume and size of assignments", argues Robert Lipscomb, President of the Council for the France.

Basic solids

Indeed, a quarantine to transactions over EUR 100 million were recorded, representing 61 of the total volume invested, among which 19 transactions of more than EUR 200 million, including three over 500 million and one exceeding $ 1 billion. Atisreal assesses for its share to about 70 of the investment volume assignments and transactions of over EUR 100 million. Among these jewels: the sale of Tower Adria by Deutsche Bank to Testa for approximately 560 million or the transfer of the portfolio of KanAm to Lucette (Morgan Stanley) Mines, "suspecting" in a week and signed to 1,177 billion euros. Gecina assigned so-called Ile-de-France "Castor and Pollux" portfolios to Inovalis, a manager of funds mainly Middle Eastern, for EUR 310 million. New is the strength of the French, and in particular of the land return opted for the SIIC status. They had purchased for 2 billion "stone of company" in 2005 and already 6.35 billion euros during the first nine months of 2006.

By nationality, the actors in the hexagon are leaders in their market, contributing to 44 of commitments. Americans are once again the first foreigners with 20 of the capital employed, pulling the market upwards with higher than EUR 100 million transactions. However, the Germans are indented. Their funds are less offensive this year and lose market share, fallen from 13 per cent of the total in 2005 to only 4 on the first three quarters of 2006. The Spanish focus on Golden Triangle trophies or make their market through of SIIC which they hold close to 50 of the market capitalization.

"Council of Ile-de-France market long worn by the decline in the rate is now supported by the hope of rising rents, says Adrien Mory, head of the Department marketing investment Atisreal." The turmoil on the market of investment already, naturally, led initial yields rates to decline. """Bonus yields today set to 4.5 in Paris QCA and 5 in first Crown", continued the specialist. "Rates of return are dangerously low and does not pay the risks inherent in the possession of real estate assets." "Even if the rental market is experiencing a significant improvement in the application", warns Robert Waterland, Director General of the SIIC company of the Eiffel Tower. The Council of Ile-de-France market remains for the majority of specialists healthier than those of London and Madrid, where yields are lower. In London, due to expectations of strong increases in rents and the abundance of capital seeking to move. Madrid, says Benedict of the Passage, President of Jones Lang LaSalle for southern Europe, "as a result of the fierce competition between local actors and the absence of available products". "Paris reached finally the degree of maturity of the London market with this quality does not depend on a single category of users, as it is more the case in the City", concludes Jacques Bagge. All professionals argue that the dynamism of their market is based on a basic solid and consistent.