Is the glass half empty or half full? At the close of Q1 2021, the French commercial real estate investment market was certainly still underperforming by pre-pandemic and pre-lockdown standards – we might recall that Q1 2020 saw investment volumes hit record heights. Nonetheless, it still overshot the ten-year average, quite a feat in a climate of so much lingering uncertainty. Its capacity to bounce back from this crisis cannot be in doubt.

In brief: what's been happening in the market?

• By the end of Q1 2021, France’s overall investment volume was on the cusp of reaching five billion euros. The market has moved onto more solid ground and remains ahead of the tenyear average, despite a 37% slump.
  
  
• International investors continue to pile in; unlike previous crises, the pandemic has not triggered a flight and consequent fallback on domestic demand.
  
  
• Activity is being hampered by a lack of supply, particularly in core office property, logistics and serviced accommodation. Opportunities harboured by France’s main regional cities are attracting growing interest.
  
  
• Prime yields remain at record low levels. There’s even some patent yield compression going on in the logistics market. On the flip side, risk is likely to be more generously rewarded, leading to a higher yield spread.

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