French love affair with property could end

Written by Paola Barozza

The wealthy in France are expected to reduce their exposure to property in the coming years, with alternative investments and fixed income expected to benefit.

It is estimated that French high-net-worths had 24% of their money invested in property in 2011, up from 19% four years earlier – a result partly caused by French residential property values rising in spite of the recession.

In those four years, a period in which UK house prices fell by 31%, French residential property values rose 0.7% on average, according to data provider Timetric.

But the tide is set to turn, with Timetric predicting real estate will make up only 21% of the average high-net-worth portfolio by 2015.

The research firm predicts the average allocation to alternatives will creep up to 7.2% by that date while fixed income will become the largest sector allocation, accounting for 24% of the average portfolio. Business interests and equities will each account for about a fifth of the average portfolio, according to the firm’s forecasts.

As in many countries, figures for average house prices in France mask a varied picture. Between 2001 and 2011, property in Paris rose in value by a stunning 240%, making the city the top-performing prime market in Europe. Elsewhere in the country, property values have stagnated or declined.

Source : Funds Europe 18/04/2013