Furthermore, this economic context implies on the one hand, among occupiers, a policy of cost reduction, real estate often constituting, after salaries, the largest item of expenditure, and on the other hand, a reluctance among investors, with still uncertainty about values, and persistent distortions between expectations of sellers and those of buyers.
Investment volumes in France decreased by almost 30% in 2024, with a gradual increase in activity as the year progressed, and a predominance of private funds. The share of foreign investments in real estate remains significant and represented in 2024 almost 40% of the total volume.
While the most optimistic were considering the end of the tunnel in 2025, the most realistic tend to consider that the rebound of the real estate market in France will not occur until 2026.
Offices
The office asset class is the one that remains the most deeply impacted today. Work from home, flex -office and the desire for better centrality and accessibility have resulted in increasing office vacancies in secondary areas. Paris CBD remains highly sought after, but for smaller areas, and La Défense, with very attractive rent levels, is recovering occupiers who have abandoned more distant or less well-served locations.While the supply of new offices remains low, the highest levels of prime rents in Paris CBD reach EUR 1,200 per year and per sqm.
Retail
The retail sector is marked by a rarely seen number of business failures in 2024. The most affected sectors are textiles, home equipment and F&B.Large commercial and retail parks are the main assets on which cappex will have to be initiated in order to comply with new environmental regulations linked to renewable energies.
The local elections scheduled for 2026 and the rules intended to limit land artificialization ("Zero Net Artificialization") have significantly slowed down new developments.
For high street retail, bottom line seems to have been reached but the recovery looks set to be slow and gradual.
Logistics and activities
It is the most dynamic asset class at the moment, even if a slowdown in rental demand seems to be starting.Several portfolios were exchanged in 2024 and large private players, particularly US ones, remain very active in this sector.
As with commercial complexes, these assets, given their surface area, will also be impacted by new environmental regulations.
Residential, hotels and other assets
Political uncertainties and upcoming local elections have significantly slowed down the development of new residential programs. Investors are positioning themselves on certain existing single assets, with the aim of upgrading them and selling them off by units.
Alongside traditional housing, co-living projects, student residences and senior residences are showing good dynamism and attracting the interest of investors while the health sector is stagnating.
The hotel sector also remains very dynamic, across the different classes, but we note above all a desire on the part of investors to position themselves not only on the ownership of the property but also that of the business in order to optimally capture the value of these assets.
Finally, assets that cannot be classified in traditional real estate categories and are on the border with the infrastructure sector, data centers are arousing a strong appetite from investors even though environmental issues inherent to these assets will have to be seriously considered.
NB: the figures come from the Knight Frank report entitled "French real estate markets: 2024 review & 2025 outlook"
If you would like to discuss the article further, please contact Pierre-Nicolas Sanzey.
