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France - Real Estate - 2023 A Golden Opportunity for Korean Institutional Investors

Updated: Apr 18, 2024


Despite global disruptions and economic challenges, France remains a major player in the institutional real estate investment scene, faring better than most other European markets.


While 2023 has seen significant shifts in the real estate landscape, with traditional sectors like offices and retail losing their appeal and the residential sector experiencing a downturn compared to the past two years, these changes have given rise to thriving new real estate niches.

Emerging niches benefiting from this transformation:


1. Education: The growth in the number of students, especially in the private sector, has enhanced the attractiveness of educational real estate. Significant investments in this sector, particularly in Paris, are underway, including a recent venture by Immovalor in the heart of Paris.


2. Data Centers: The digital power has significantly increased between 2020 and 2023, making data centers a rapidly expanding asset class. The demand for these centers has surged during the health crisis, and this trend is expected to continue. While eligible land is scarce, and sites with the necessary power are in high demand, operators and digital giants are seeking more. Rumor has it that a massive project is under consideration in Bouches-du-Rhône for a global leader...


3. Life Sciences: Investments in biotechnology startups doubled between 2020 and 2021, reaching €1.6 billion. 2022 and 2023 continue to see growth, with 2023 marking a shift in funding for early-stage startups, exemplified by Carmat, which recently struggled for survival and received a €7 million capital increase, mostly from its historical financial shareholders. Companies in this sector are looking to establish themselves in major cities to attract international talent, especially since the billion-dollar partnership between Brookfield and Novaxia.




4. Coliving: Coliving has become an attractive alternative to traditional housing, offering shared spaces while maintaining individual living areas. Real estate giants such as Altarea, Bouygues, and Vinci have shown interest in this trend. Furthermore, institutional investors still have resources unlike in the residential sector. Changes in family structure and niches (single-parent, intergenerational) suggest a prosperous market.






5. Ehpad (Etablissements d'Hébergement pour Personnes Agées Dépendantes): With the aging French population, there is an inevitable increase in demand for specialized housing for the elderly. Private and institutional investors are increasingly investing in this sector, as seen in the record transaction between Primonial and Icade Santé in July 2023 (€1.4 billion).





Why should Korean institutional investors consider this market?



The current price decline offers an attractive entry opportunity for investors. With a medium-term recovery expected, investors can anticipate a buffer effect, minimizing risks while maximizing potential returns on investment. Furthermore, France, although geographically small, boasts highly commercial and attractive areas, ensuring a constant demand for real estate.


Conclusion



The year 2023 has witnessed a significant transformation in the global real estate sector, and France, despite some challenges in traditional sectors, remains Europe's top performer. New investment opportunities have emerged, making it an ideal time for Korean institutional investors to capitalize on the French real estate market.



In the near future, Yposkesi, a SK pharmteco company, is currently in the process of expanding its Corbeil-Essonnes plant near Paris, with an investment of approximately €60 million (US$62.3 million). The expanded facility will enable Yposkesi to provide support to clients and projects from early stages through large-scale batch manufacturing, including the potential production of commercial batches. Several projects are under consideration for placement in this facility in 2024 or 2025.


By investing now, they can not only benefit from attractive entry prices but also position their portfolios for strong future returns. The Paris Korean Club and companies like Anavim Advisory, experienced in working with foreign investors thanks to its global market vision and access to Off-Market assets, can help seize the best opportunities.


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