UNDETERRED by a stagnant local economy and falling rents, yield-starved investors are pouring capital into France’s commercial real estate market at the fastest rate since the start of the financial crisis.

    Investors ploughed 10.7 billion euros (US$14.34 billion) into French office, retail, logistics and industrial properties in the first half of the year, up 73 percent from the same period last year, real estate adviser CBRE said.

    Enjoying the best start to the year since 2007, French commercial real estate investment could hit 20 billion euros for 2014 as a whole, the fastest growth of any major European market, it forecast.

    The boom, focused mainly on the capital Paris, is all the more striking given France’s fragile economic recovery, with business confidence lagging much of the rest of Europe and its companies still in a cost-cutting retrenchment mode.

    “The investment market does not reflect companies’ financial health nor the macroeconomic context,” said Vincent Bollaert, head of office investment at Cushman and Wakefield. “This is a long-term investors’ market with a lot of money.”

    London’s commercial property market may be bigger, but with rising prices pushing rental yields there ever lower, deep-pocketed foreign investors are increasingly looking at Paris, the second most liquid regional market in Europe.

    Rental yields in London’s prime West End have fallen as low as 3.75 percent, while they are about 4.0-4.25 percent in Paris’s central business district, rising to around 6.75 percent in the La Defense center west of Paris, according to CBRE.

    Despite declines, the short-term attraction for investors is a yield well above record low rates on government bonds, but the longer term appeal is that rental income is widely expected to grow as the French economy begins to gain momentum.(SD-Agencies)