Paris commercial property deals hit lowest level in 13 years

SALES of Paris commercial real estate continued to plunge in the third quarter, hitting the lowest level in more than 13 years as rising interest rates have upended the industry.

Total deals for properties including offices, retail space and warehouses in the greater Paris area sank 78 per cent from a year earlier to just 1.1 billion euros (S$1.6 billion), according to statistics provider Immostat. That’s the lowest figure since the first quarter of 2010.

Property markets across Europe have ground to a halt as rising rates have increased financing costs and hit valuations. But owners are reluctant to lower their expectations after a decade of rising prices, creating wide divergence between prospective buyers and sellers.

The drop in the French capital contributed to a decline of 74 per cent for total commercial real estate deal volume in the country to 2 billion euros in the third quarter, according to Immostat.

The average price paid for office space in the greater Paris area fell to 6,930 euros per square meter, a decrease of 16 per cent on a year ago and the lowest level in over four years. The price has been dropping for four consecutive quarters.

Immostat’s figures only include deals by investors who seek to earn rent income from the properties.  BLOOMBERG