France is the world’s most visited country. High levels of commerce, combined with very high barriers to entry, makes the land in Paris extraordinarily valuable. Here are 5 shopping centres positioned to generate strong cash flows and attractive long-term capital gains for investors.
Regarded as the fashion capital of the world, Paris contributes 30% to France’s GDP. A large chunk of this revenue comes from tourism; France is the world’s most visited country and relies on visitors, particularly the shopping habits of these visitors, to fuel its service-based economy. Paris’ total retail turnover is estimated at over EUR100 billion.
But for investors (or even retailers) hoping to gain from the lucrative Parisian retail market, it’s been a clear case of first in, best dressed. Development is difficult in France due to technical and administrative burdens posed by town planning laws. Given the severely restricted supply, vacancy rates are very low, making it very difficult for new retailers wanting to enter the market. This is particularly the case in Parisian luxury precincts which command very high rents.
These high levels of commerce, combined with very high barriers to entry, makes the land in Paris extraordinarily valuable. And while a 1.8% fall in tourism is having an impact on retail sales in Paris, land values continue to rise.
The iconic Avenue des Champs-Elysees is a 1.9km shopping strip which attracts over 100 million visits annually. Number 65 is mooted to have sold in a private deal last year for EUR490m. At 5,104 sqm, this reflects a staggering sale price of EUR96,000/sqm. The property contains ten apartments, two villas and three street frontage retail tenancies leased to Tommy Hilfiger, Puig and Nike. The buildings precinct commands the highest retail rents in Paris at EUR13,000/sqm pa.
Much like the Avenue des Champ-Elysees, here are 5 more Parisian shopping destinations that attract millions of visitors every year and hold significant parcels of land in premium locations. These shopping centres are positioned to generate strong cash flows and attractive long-term capital gains for investors.
1. Les Quatre Temps shopping centre | 139,600 sqm | 42 million visits annually
Located in La Defence, the centre is owned by a publicly traded landlord and comprises of 226 stores. It is anchored by Auchan, Darty, Zara and H&M and is highly occupied.
2. Forum Des Halles shopping centre | 60,000 sqm | 34 million visits annually
Located in the heart of Paris, the centre is owned by the same publicly traded and benefits from its proximity to Paris’ most used Les Halles train station. The shopping centre has 109 stores anchored by Darty, Fnac, H&M, New Look and Forever 21.
3. Carrousel Du Louvre shopping centre | 10,200 sqm | 15 million visits annually
Owned by a publicly traded landlord, this underground shopping centre is directly connected to the Louvre museum. The centre offers a range of restaurants, mass market retailers as well as exclusive brands such as Bottega, Veneta and Chopard.
4. Beaugrenelle shopping centre | 50,000 sqm
Located a near the Eiffel Tower was developed by a publicly traded landlord and completed in 2013 and sold for EUR700 million. Sprawling over five floors, the centre is anchored by Marks and Spencer and also offers fashion brands such as Zadig & Voltaire, Maje and Sandro.
5. Italie Deux shopping centre | 56,000sqm | 11 million visits annually
The largest shopping centre on Paris Left Bank and located above the Place d’ltalie metro station. Owned by a publicly traded landlord, the centre comprises 130 stores over 3 levels. It is anchored by Le Printemps department store, Carrefour Darty and Fnac.
You may have noted these properties are all owned or developed by a publicly traded landlord. Listed property securities are a great way for investors to access profitable pockets of the property market.
Head of Global Property Securities Stephen Hayes manages the Colonial First State Global Property Securities Fund, which currently has a 1.8% exposure to French retail assets. The strategy’s focus is on urban real estate located in the world’s most economically vibrant cities. Currently, the strategy has a 36.6% exposure to shopping centres (outlet centres and shopping malls), with concentrations in the major Metropolitan Statistical Areas in the US, as well as in London, Sydney, Melbourne and Singapore.