France鈥檚 real estate market is tipped to bounce back following the country鈥檚 final presidential election round this weekend.
Europe鈥檚 second largest commercial investment market is, according to Fidelity International, set to enjoy favourable leasing activity and investor appetite after a tentative first quarter.
En Marche! candidate Emmanuel Macron 鈥� a visitor to last year鈥檚 MIPIM in Cannes 鈥� is now favourite for the presidency, although he has to take on Front National鈥檚 Marine Le Pen.
The pre-election quarter saw real estate investment down 30% on its long-term average to 鈧�3.6bn.
Iryna Pylypchuk, senior European real estate analyst at Fidelity International, says French fundamentals remain strong, with a return to normal transaction levels expected post election.
Commercial real estate investment, she said, is expected to return to a quarterly norm of around 鈧�6bn to 鈧�9bn.
鈥淥ccupier market fundamentals are solid and, in most markets, the letting activity is in-line or just above the long-term average,鈥� Pylypchuk said. 鈥淪pace under construction, especially in the office sector remains muted.鈥�
Speaking at the , Jos茅 Luis Pellicer, head of research at Property Investment Managers, said the prospect of Le Pen becoming president had 鈥渦nknown implications鈥� for real estate.
The Netherlands鈥� recent election of Mark Rutte as prime minister 鈥� followed by the probable election in France of centrist Macron, could, as INREV chief executive Matthias Thomas told the association鈥檚 delegates, 鈥渞edress the balance鈥�.
The Dutch economy, Fidelity said, kept the momentum even after coalition negotiations started in mid March, with 2017 GDP growth expectations revised upwards to 2.1% in April.
In France, 鈥檚 global head of research, Philippe Ithurbide, said that, if polls are accurate and Macron prevails, 鈥渕uch of the uncertainty will be lifted and we can now look at France and the French markets with a much lower risk premium, concentrating on the fundamentals鈥�.
Conversely, a Le Pen victory would result in 鈥渟ignificant depreciation of the new currency in circulation鈥�. A loss of both purchasing power and competitiveness of firms would lead to the destruction of jobs and production.
According to Green Street Advisors, the result of France鈥檚 second-round presidential election will move real estate stocks come Monday morning. Risk to real estate investment trust (REIT) share prices appears 鈥渁symmetric鈥�, given polls are saying that Macron will win comfortably.
鈥淣o matter how much we try to purely focus on real estate fundamentals when picking stocks, sometimes political noise is just too loud to ignore,鈥� the firm said in a note this week.
With Macron the favourite, Green Street said it is 鈥渦nlikely to know what the market turmoil a Le Pen victory would instigate on Monday morning鈥�.
