According to Savills, prime office yields in the French commercial property market are forecast to reach 6% by the end of the first quarter in 2009. In addition, upward pressure on yields is expected to continue gradually throughout the year across all commercial property sectors.

In terms of general investor activity the report notes that, while this has been muted over the last 12 months, particularly in the first part of 2009, there was a small revival recorded during the last quarter of 2008, which saw the total for the year increase to €13.9bn. The report predicts that investment volumes for commercial property in France for 2009 will be in the range of €10-11bn.

Lydia Brissy, from Savills European research team, said: “It is the smaller lot sizes that are currently driving the investment market for all sectors, which has mainly been dictated by difficulty in obtaining debt. However, we expect larger transactions to reappear in the French market towards the end of 2009 as a predicted increase in sale and leaseback opportunities emerges.”

Headline rents throughout all property sectors have come under pressure and this is forecast to continue during 2009.

Brissy said: “Vacancy rates across all sectors will inevitably grow throughout 2009 according to Savills, although this oversupply situation will subsequently ease rapidly in the course of 2010 as limited investment activity and restrained access to financing is rapidly shrinking the development pipeline.”