French Property Returns Lowest Since GFC in 2020

All Property; Standing Investments

Source: MSCI France Annual Property Index

French property recorded a total return of 3.2 percent p.a. at December 2020, according to the MSCI France Annual Property Index. While this marked a sharp decline from the 8.4 percent recorded in 2019, the 2020 return remained well above the low of -1.5 percent recorded during the Global Financial Crisis.

The 2020 total return comprised an income return of 3.8 percent (down 30bps from December 2019) and a capital growth of -0.6 percent. It was the first negative capital growth recorded by the index since 2009 as the reversionary yield weakened on an all property level. Sector level results for the French real estate market in 2020 were mixed.

The industrial (+12.3 percent) and residential (+6.5 percent) sectors outperformed as positive sentiment reflected in a returns-enhancing yield impact. Meanwhile, retail (-3.6 percent) and hotels (-5.4 percent), both hard hit by the effects of the COVID-19 pandemic, recorded negative rental growth. Offices delivered a positive return overall, but location proved a key differentiator as Paris City assets outperformed those further afield.

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