Review 2019 Outlook 2020 - French Property Markets - Knight Frank

 
Review 2019 Outlook 2020 - French Property Markets - Knight Frank
Review 2019
Outlook 2020
  French Property Markets
Review 2019 Outlook 2020 - French Property Markets - Knight Frank
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Investment   Office   Retail
Review 2019 Outlook 2020 - French Property Markets - Knight Frank
Investment
            2019 REVIEW
            AND 2020 OUTLOOK

            FRANCE

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Review 2019 Outlook 2020 - French Property Markets - Knight Frank
Investment
            2019 HIGHLIGHTS
            AN EXCEPTIONAL YEAR
            LARGE TRANSACTIONS: INCREASINGLY DECISIVE
            GREATER PARIS REGION: EVER HIGHER
            THE SUCCESS OF THE REGIONS
            OFFICES: CONSOLIDATED DOMINANCE
            EXAMPLES OF OFFICE TRANSACTIONS ˃ €400 M IN 2019
            LA DÉFENSE: 2ND BEST YEAR IN HISTORY
            FORWARD FUNDING SALES: THE INNER SUBURBS ARE THE FRONT-RUNNERS
            A GRAND PARIS EFFECT
            FUNDS AND SCPI/OPCIS ARE DRIVING THE MARKET
            A FAIRLY BALANCED MARKET
            THE YEAR OF THE SOUTH KOREANS
            RETAIL: GOOD RESULTS
            RETAIL: MORE BALANCED ACTIVITY
            RETAIL: VERY TARGETED INVESTOR APPETITE
            LOGISTICS: RECORD BROKEN!
            YIELDS: FURTHER DECREASES
            KEY TRENDS IN 2020

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Review 2019 Outlook 2020 - French Property Markets - Knight Frank
KNIGHT F R AN K                                                                            2019 REVIEW AND 2020 OUTLOOK   I NV E S TM E NT

    2019 highlights

              • Several records beaten: France, Greater Paris Region, regions / Lyon, offices, logistics…

                          • A year of mega-deals

                              • Dynamism of savings collectors and foreign funds

                                    • Renewed vigour of retail

                                        • Continued yield compression

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Review 2019 Outlook 2020 - French Property Markets - Knight Frank
KNIGHT F R AN K                                                                                                                            2019 REVIEW AND 2020 OUTLOOK                 I NV E S TM E NT

    An exceptional year
      The French corporate real estate investment
                                                        The 2018 record has been shattered!
      market reached new highs in 2019, continuing
                                                        Change in investment volumes in France,
      the phase of strong growth that began in          All asset types (offices, retail, industrial), in billions of euros
      2014. 35.4 billion euros was invested in
      France in 2019, a 16% increase year-on-                                                                                                               2014 – 2018
      year and an all-time record. The sums                                                                                                     €26.85 billion / year

                                                                                                                                                                                              €35.4
      invested in France have increased by almost
      50% in five years!

                                                           €28.5
      While France has many structural advantages,
                                                                                                       2009 – 2013

                                                                                                                                                                                 €30.5
      it also benefits from a particularly favourable
      economic climate. The low interest rate                                              €13.2 billion / year

                                                                                                                                                                         €27.9
      context has taken hold over the long
      term, prompting investors to step up the
      pace of asset diversification and place
      greater emphasis on real estate.

                                                           2007        2008         2009        2010        2011        2012   2013      2014      2015        2016      2017    2018          2019

                                                                                           Investment volumes in France        2009-2013 average          2014-2018 average

      Source: Knight Frank

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Review 2019 Outlook 2020 - French Property Markets - Knight Frank
KNIGHT F R AN K                                                                                                               2019 REVIEW AND 2020 OUTLOOK    I NV E S TM E NT

    Large transactions : increasingly decisive
    84 transactions above 100 million euros
                                                A year of mega-deals
    were completed in 2019 compared to 77

                                                                                                                                     770
                                                Breakdown of investment volumes in France by size bracket
    in 2018. They account for 65% of all
    investment volumes in France,
    compared with 61% the previous year.                                                                                             transactions
                                                 100%
                                                                                                                                     (879 in 2018)
    It was the mega deals that made                                  20%                                    21%
    the difference: transactions in
    excess of 200 million euros in 2019
                                                  80%                                                                                35 > €200 M
    totalled 16.3 billion euros,                                      19%                                   14%                      (33 in 2018)
    compared with 12.4 billion in 2018.                                                                                               =
                                                                                                            19%                      €16.3 B
                                                  60%
    Most of them were carried out in the
    Greater Paris Region, such as the sale in                        20%
    the 4th quarter to SOGECAP of "Sways",        40%                                                                                (12.4 in 2018)
    the future headquarters of Canal + in                                                                                             =
                                                                                                                                     46%
    Issy-les-Moulineaux, and the sale to GIC
    of "PB6" in La Défense.                       20%                 41%                                   46%
                                                                                                                                     of volume
                                                                                                                                     (41 % in 2018)
                                                   0%

                                                                                                                                     24%
                                                                        2018                                2019

                                                            More than €200 M    €100-200 M     €50-100 M    Less than €50 M                                     =
                                                                                                                                     Share of volumes
                                                                                                                                     invested in portfolios
    Source: Knight Frank
                                                                                                                                     (24 % in 2018)

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Review 2019 Outlook 2020 - French Property Markets - Knight Frank
KNIGHT F R AN K                                                                                                                         2019 REVIEW AND 2020 OUTLOOK                    I NV E S TM E NT

    Greater Paris Region: ever higher
    The Greater Paris Region accounted           25 billion euro threshold crossed for the first time
    for the majority of large transactions and   Breakdown of volumes invested in the Greater Paris Region, all asset types
    consolidated its leadership in 2019:         In billions of euros
    last year, 26.6 billion euros were
    invested in all transactions                  € 30                                                                                                                                          80%
    combined, an unprecedented
    amount and 75% of investment                                                                                                                                                                78%
    activity in France. This volume was           € 25
    mainly invested in offices (83%), ahead                                                                                                                                           75%       76%
    of retail and industrial premises.
                                                  € 20                                                                                                                                          74%

                                                                                                                                                                                                72%
                                                  € 15                                                                                                         72%        73%
                                                                                                                                                                                                70%

                                                  € 10                                                                                                                                          68%

                                                                                                                                                                                                66%

                                                                                                                                                                                      €26.65
                                                                                                                                                                 €20.2
                                                   €5

                                                                                                                                                                           €22.1
                                                                                                                                                                                                64%

     Source: Knight Frank
                                                    €                                                                                                                                           62%
                                                          2007      2008      2009       2010      2011       2012    2013      2014       2015       2016       2017       2018      2019

                                                                        Greater Paris Region investment volumes          Share of Greater Paris Region in French investment volumes

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Review 2019 Outlook 2020 - French Property Markets - Knight Frank
KNIGHT F R AN K                                                                                                                                 2019 REVIEW AND 2020 OUTLOOK               I NV E S TM E NT

    The success of the regions
    The mega-deal effect also played a role in the         Historic performance for the Lyon market
    regions, notably due to the numerous portfolio         Breakdown of volumes invested in the regions, all asset types
    acquisitions. Two very large deals in particular       In billions of euros
    boosted volumes in Q4 2019: Argan's purchase of
    the "Cargo" portfolio and ADIA's sale of 38 mixed-      € 10                                                                                     30%
    use assets located in Lyon. This transaction, the
                                                                                                                                      24%
                                                                                                                                                              Breakdown of investment volume by asset type
    largest ever recorded in Lyon, ended an                                                                                                                            Rhône-Alpes region, in 2019
    exceptional year in 2019. With €2.1 billion invested                                                                                             25%
    in 2019 in the Rhône-Alpes region,                       €8

    France's second largest region shattered its
                                                                                                                       19%                           20%
    record thanks to the proliferation of large
                                                             €6                                                                                                       24%
    transactions and the growing appetite of French
    and foreign investors, mainly from North America,                                                                                                15%
    Germany and the UK. This change of scale in
    the investment market mirrors that of the
                                                                                                                                                                                                 57%
                                                             €4
    rental market, as 2019 was also a record                                                                                                         10%
    year in terms of take-up of office space in                                                                                                                     19%
    Lyon.
                                                             €2

                                                                                                                                       €2.10
                                                                                                                           €1.57
                                                                                                                                                     5%

                                                              €                                                                                      0%
                                                                      2014         2015          2016       2017           2018        2019
     Source: Knight Frank                                                                                                                                               Offices   Retail    Industrial
                                                                      Amounts invested in the regions    Rhône-Alpes          Share of Rhône-Alpes

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Review 2019 Outlook 2020 - French Property Markets - Knight Frank
KNIGHT F R AN K                                                                                                                        2019 REVIEW AND 2020 OUTLOOK            I NV E S TM E NT

    Offices: consolidated dominance
     In 2018, offices improved on their             Seventh consecutive year of growth
     previous 2007 record by 13 per cent. The       Change in office investment volumes in France, in billions of euros
     increase was also 13% in 2019, with 25
     billion euros invested in offices in France,                                                                                                Breakdown of investment volumes in France,
                                                                                                                                                                by asset type
     making the past year the best in history.
     However, their share of the total sums
                                                                                        Regions           Greater Paris Region            100%
     invested in France fell from one year to          € 30
     the next due to the sharp increase in the                                                                                   €25                  9%             12%              14%
                                                                                                                                           90%
     amounts invested in logistics, and the
                                                                                                                                                                     15%
                                                       € 25
     renewed vigour of the retail sector.                                                                                                  80%       23%                              15%
                                                                                                                                           70%
     Paris is an exception in the office market:       € 20
     activity slowed there in 2019, with                                                                                                   60%
     15 transactions in excess of 100
     million euros compared to 28 in                   € 15                                                                                50%
     2018. This decline is partly due to the
                                                                                                                                           40%
     lack of supply and landlords' desire to                                                                                                                         73%
                                                                                                                                                     68%                              71%
     retain their Parisian assets. Indeed,             € 10
                                                                                                                                           30%
     despite the high level of market values,
     the strength of the rental market and the                                                                                             20%
                                                         €5
     historically low vacancy rates make it
                                                                                                                                           10%
     possible to envisage further increases.
                                                          €                                                                                 0%
                                                              2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019                   10-year average     2018              2019
     Source: Knight Frank                                                          lle-de-France        Régions                                        Offices      Retail       Industrial

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KNIGHT F R AN K                                                                                                            2019 REVIEW AND 2020 OUTLOOK                I NV E S TM E NT

                                                                                     Examples of office transactions
                                                                                                 ˃ €400 M in 2019

 Swiss Life | Texas portfolio, Paris    Primonial / Samsung | Lumière, Paris 12th   Amundi / Mirae | Majunga Tower, La Défense       La Française / Samsung | Crystal Park, Neuilly

 Sogecap | Sways, Issy-les-Moulineaux   GIC | PB6 Tower, La Défense                 Apicil | To-Lyon Tower, Lyon                     Amundi / La Française REP / CAVP
                                                                                                                                     West Bridge, Levallois-Perret

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KNIGHT F R AN K                                                                                                                          2019 REVIEW AND 2020 OUTLOOK                      I NV E S TM E NT

    La Défense : 2nd best year in history
     3.6 billion euros was invested in offices in La       Very close to the 2007 record
     Défense in around a dozen transactions. The           Change in office investment volumes in La Défense
     increase is 45% year-on-year and gave the             In billions of euros
     business district its second best
     performance after 2007. La Défense owes this
                                                          €5                                                                                                                                      25%
     increase to Asian investors, who were behind five
     of the eight transactions of more than 100 million
     euros in 2019, two of which were for more than
     500 million euros (sale of the Majunga Tower to      €4
                                                                                                                                                                                    €3.6          20%
     the South Koreans MIRAE ASSET DAEWOO, in
     association with AMUNDI, and the purchase of                                                                                                                         €2.45
     the PB6 Tower by GIC, a Singapore sovereign
     fund).                                               €3                                                                                                                                      15%
                                                                                                                                                                                       16%
     Other sectors in the West also did well, such as
     Neuilly-Levallois, whose activity benefited in the                                                                                                                     13%
     fourth quarter from the sale of iconic headquarter   €2                                                                                                                                      10%
     buildings (West Bridge and the Semaphore in
     Levallois), and the Péri-Défense market.

                                                          €1                                                                                                                                      5%

                                                          €                                                                                                                                       0%
                                                                2007      2008      2009      2010     2011     2012       2013   2014       2015      2016       2017       2018       2019
     Source: Knight Frank
                                                                 Investment volumes - La Défense       Transactions > €200 M      La Défense share of Greater Paris Region office investment volumes

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KNIGHT F R AN K                                                                                                                                        2019 REVIEW AND 2020 OUTLOOK              I NV E S TM E NT

    Forward funding sales: the Inner Suburbs are the front-runners
     The increase in forward funding sale               Change in forward funding sale investment volumes in the Greater Paris Region,
     investment volumes continued in 2019, notably      Individual transactions ≥ €20 M, in billions of euros
     to the benefit of the Inner Suburbs. The towns                                                                                                                         Geographical breakdown
                                                                                                                                                                             of Greater Paris Region
     closest to Paris and with the best transport
                                                                                                                                                                           office forward funding sales
     links remain very popular, partly because they

                                                                                                                                               26 24
                                                         € 4,000                                                                                                30       Individual transactions ≥ €20 M
     are best placed to take advantage of the                                                                                                                          Share as a %, out of the total number
     relocation decisions of Parisian occupiers.
                                                                                                                                                                25
     The crucial importance of public
     transport is also reflected in the growing
                                                         € 3,000
                                                                                                                                                                                 4%             12%
     success of the future Grand Paris hubs.                                                                                                                    20
     Saint-Denis and Saint-Ouen are particularly
     popular as several major deadlines approach,                                                                                                                                                         13%
     including the extension of line 14 North and the    € 2,000                                                                                                15
     2024 Olympic Games, and major urban
                                                                                                                                      15
                                                                                                                                                                     46%
     projects such as the Docks de Saint-Ouen and
     the Pleyel project in Saint-Denis move forward.                                                                                                            10
     As such, almost 900 million euros was               € 1,000
     invested in 2019 in these two towns of Seine-
     Saint-Denis, including approximately 400                                                                                                                   5
                                                                                                                                                                                                      25%

                                                                                                                                               €3.28
                                                                                                                                       €2.63

                                                                                                                                                       €3.55
     million euros in the 4th quarter for the
     acquisition by CDC and ALLIANZ of the "V2"
     and "V3" projects in Saint-Ouen.                        €0                                                                                                 0    Paris CBD             Paris outside CBD
                                                                   2009    2010    2011    2012       2013     2014    2015    2016   2017     2018    2019          Western Crescent      Inner Suburbs
                                                                                                                                                                     Outer Suburbs
                                                                   Forward sales investment volumes          Of which speculative     Number of forward sales
     Source: Knight Frank

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KNIGHT F R AN K                                                                                                                 2019 REVIEW AND 2020 OUTLOOK       I NV E S TM E NT

                                                                                                                                            Le Mesnil

    A Grand Paris effect                                                                                                                    -Amelot

                                                                                                    Triangle de Gonesse
       Office transactions > €20M 2017-2019 in the
       Greater Paris Region (excluding Inner Paris)                                       Le Bourget Aéroport

       Grand Paris Express                                                                  Saint-Denis
                                                                                            Pleyel
       rollout schedule
                                                                                Mairie de                      Le Bourget RER
                                                                   Nanterre                                                             Clichy -
                                                                                Saint-Ouen
                                                                    La Folie                                                            Montfermeil

           2020-2021
                                                                                                                          Val de Fontenay

                                                                                                                                            Noisy-Champs
           2024-2025
                                                                    Pont de
                                                                     Sèvres
           2027                                                                                                                                            By volume category
                                                                               Villejuif Institut                                                              €20 – 50 M
                                                      Versailles               Gustave Roussy
                                                      Chantiers                                                                                                €50 – 100 M
           2030                                                                                                                                                €100 – 200 M

       Source: Knight Frank
                                                                                                                                                               €200 – 400 M
                                                                                                     Aéroport d’Orly                                           > 400 M€
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KNIGHT F R AN K                                                                                                                2019 REVIEW AND 2020 OUTLOOK         I NV E S TM E NT

    A fairly balanced market

                                                                                          Investment volumes in France by investor type
     The dynamism of the major French                                                           All asset types, in billions of euros
     savings collectors is a good indication of
     the appeal of the real estate market.        € 16
     SCPI/OPCI funds enjoyed record                                                                   2018      2019
     levels of inflows and accounted for
                                                  € 14
     24% of total investment volumes in
     France in 2019, after 19% in 2018.
     They are second only to investment funds     € 12
     - whose dominance is due in particular to
     very large transactions undertaken by        € 10
     foreign investors - and ahead of insurers,
     down slightly from 2018.                      €8

                                                   €6

                                                   €4

                                                   €2

                                                    €
                                                         Funds   Property companies   SCPI/OPCIs       Private investors   Insurance companies   Sovereign funds   Others

     Source: Knight Frank

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KNIGHT F R AN K                                                                                                                          2019 REVIEW AND 2020 OUTLOOK                  I NV E S TM E NT

    A fairly balanced market
     As a result of the dynamism of SCPI/OPCIs,     Change in the share of French and foreign investors
     and the major transactions carried out by      Out of all investment volumes in France, all asset types
                                                                                                                                                       Breakdown of investment volume by nationality
     other types of domestic players (property                                                                                                              Out of total investment volume in France,
     companies, insurers, etc.), the share of                                                                                                                                           all asset types
     French investors increased slightly in 2019.   100%
     They accounted for 55% of investment                                                                                                      2018              2019
     volumes in France last year, after 54% in
     2018. The exceptional performance of
                                                    90%
                                                              61%                  54%                  55%
     the French market also owes much to                                                                                                                              8%
                                                    80%
                                                                                                                                                               7%
     the increase in the amounts
     committed by foreign investors. They
                                                                                                                                            54% 55%
                                                    70%
                                                                                                                                                            Outside of € zone
     have been continually increasing in                                                                                 18%
     volume since 2017 and reached 15.8             60%                                                                         13%                          12%      9%
                                                                                                                                                                                             10%
     billion euros in 2019, a 14% increase                                                                                                                                             1%
                                                    50%
     year-on-year. North Americans are in first                                                                                                              Europeans (€)
     place, accounting for 28% of the volume                                                                           North Americans        French                                    Koreans
                                                    40%
     invested by foreigners last year. They are
     fond of offices, industrial and retail         30%
     premises, and are equally keen on secure
                                                                                                                                                                                     7%
     assets and higher-risk transactions.           20%
                                                                                  46%                  45%                                                                                  5%
                                                             39%                                                                                                                       Others
                                                    10%

                                                     0%
                                                           10-year average              2018               2019

     Source: Knight Frank
                                                           Share of foreign investors      Share of French investors

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KNIGHT F R AN K                                                                                                                  2019 REVIEW AND 2020 OUTLOOK                       I NV E S TM E NT

    The year of the South Koreans
     Having led the London market            29% of foreign investments
     in 2018, South Koreans were             Investment volumes by foreigners in the Greater Paris Region
     behind some of the biggest              All asset types, in billions of euros
     transactions in the Greater                                                                                                         Geographical breakdown of South Korean
     Paris Region last year: they                                                                                                      investment volumes between 2010 and 2019
     accounted for 29% of foreign            € 14                                                                         35%                 Share as a %, all asset types
     investment volumes in 2019 in the                                                                            29%
     Greater Paris Region, compared          € 12                                                                         30%
     with barely 3% in 2018, and were
     ahead of the Germans and the            € 10                                                                         25%
     British.
                                                                                                                                                                                      Inner
                                                                                                                                                                                     Suburbs
                                                                                                                                             La                                       5%
                                              €8                                                                          20%              Défense
     Unlike the Americans, the South                                                                                                       28%
     Koreans' appetite is almost                                                                                                                       Paris
                                              €6                                                                          15%                          CBD
     exclusively for Core and large office                                                                                                             16%
     complexes in Paris and the main                                                                                            Western
                                              €4                                                                          10%
     office sectors of the western                                                                                              Crescent                              Rest of
                                                                                                                                 34%                                Inner Paris
                                                                                                                   €3.4                                                9%
     Greater Paris Region.
                                              €2                                                                          5%

                                               €                                                                          0%
                                                    2010   2011   2012   2013   2014   2015   2016   2017   2018   2019                                                            Outer
                                                                                                                                                                                  Suburbs
                                                                           Foreign investors                                                                                       8%
                                                                           Korean investors
                                                                           Korean's share of foreign investment

     Source: Knight Frank

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KNIGHT F R AN K                                                                                                                                 2019 REVIEW AND 2020 OUTLOOK         I NV E S TM E NT

    Retail: good results
     Retail did not set a new                                                     More than 5 billion euros
     record in 2019, however,                                              Change in retail investment volumes in France
     with 5.3 billion euros                                                In billions of euros, all retail formats combined
     invested in France, the
     increase is 12% over one
     year and 18% compared
     to the ten-year average.
                                       €9                                                                                                                    35%          + 12%
     This result actually makes        €8                                                                                                                                      Year-on-year
                                                                                                                                                             30%
     2019 the third best year in
                                       €7
     history and confirms that
                                                                                                                                                             25%
     retail is still a must, even if
     investors remain cautious.
                                       €6                                                                                                            €5.3
                                       €5                                                                                                                    20%

                                       €4                                                                                                                    15%

                                       €3

                                       €2
                                                                                                                                                     15%
                                                                                                                                                             10%          + 18%
                                                                                                                                                             5%           10-year average
                                       €1

                                       €                                                                                                                     0%
                                            2007   2008   2009   2010      2011     2012      2013    2014      2015     2016     2017        2018    2019
     Source: Knight Frank
                                                           French retail investment volumes                             Share of retail (%)

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KNIGHT F R AN K                                                                                                                             2019 REVIEW AND 2020 OUTLOOK               I NV E S TM E NT

    Retail: more balanced activity
     As with office and industrial space, 2019        Shopping centres:                                                                                       Key role of large transactions
     was a year of large transactions.                a recovery that needs to be confirmed                                                                              Share of transactions > €100 M
     Transactions over 100 million euros              Retail investment volumes in France                                                                Out of all retail investment volumes in France
     accounted for 55% of retail investment in        Breakdown by asset type
     France last year, compared with an average
     of 46% over the past ten years. Several                 5%                            6%
     market segments benefited, such as
     shopping centres (sale to AXA of 50% and              18%
                                                                                                                          16%
                                                                                                                                                     2019                          2018
     75% of the shares in "Passage du Havre"                                            24%
                                                                                                                       13%
     and "Italie 2" respectively) and large retail
     distribution (Casino portfolios).                                                   10%                            18%
     Nevertheless, it was retail streets that
                                                          40%
     were the main beneficiaries of the
     surge in large transactions, with
     volumes that amounted to 2.8 billion euros
     in 2019, all transaction sizes included.
                                                                                                                                                                     55%                           51%
                                                                                        60%
                                                                                                                       53%
                                                          37%

                                                     10-year average                      2018                            2019

     Source: Knight Frank                                High street          Shopping centres             Retail parks           Others*         Transactions over €100 M

                                                     *Factory outlet centres, hypermarkets and supermarkets, non-divisible portfolios

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KNIGHT F R AN K                                                                                                                      2019 REVIEW AND 2020 OUTLOOK           I NV E S TM E NT

    Retail: very targeted investor appetite
     Several very large high street retail transactions
                                                                       High street assets remain the priority target
     were recorded in the 4th quarter, including the                            High street investment volumes in France
     sale to NORGES BANK of 79 Champs-Élysées,                                              In billions of euros
     the future NIKE flagship store, and the purchase
     by AMUNDI / CREDIT AGRICOLE of a portfolio of
     mixed assets in Lyon, mainly comprised of retail      €4                                                                                                               70%

     properties. This transaction slightly rebalanced
     the geographical distribution of investment
                                                                                                                                                            60%
                                                                                                                                                                            60%
     amounts, even though they remain clearly
                                                                                                                                                                    53%
     concentrated in Paris (70% of the sums                €3
     invested in high street assets in 2019).                                                                                                                               50%

     The ranking of the capital's districts did not
                                                                                                                                                                            40%
     change either. The sale of the future NIKE
     flagship store reinforced the leading                 €2
     position of avenue des Champs-Élysées,                                                                                                                                 30%
     whilst new acquisitions of luxury boutiques and
     the purchase by BNP PARIBAS REIM of 51-53
     Haussmann consolidated the position of the                                                                                                                             20%
                                                           €1
     other streets in the Parisian top 5: the Rue Saint-

                                                                                                                                                                    €2.80
                                                                                                                                                            €2.86
     Honoré / Place Vendôme sector, Avenue                                                                                                                                  10%
     Montaigne, the Opéra/Haussmann district and
     Rue du Faubourg Saint-Honoré.
                                                           €                                                                                                                0%
                                                                2009     2010       2011      2012        2013       2014     2015       2016        2017   2018    2019
     Source: Knight Frank
                                                                                             High street investment volumes      High street share (%)
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KNIGHT F R AN K                                                                                                                                2019 REVIEW AND 2020 OUTLOOK               I NV E S TM E NT

    Logistics: record broken!
                                                                                                                                                      Logistics investment volumes by nationality
     Investment volumes in                                                                                                                                         In France, in 2019
     industrial property reached an                              XXL portfolios are driving the market
                                                                                                                                                                                                    19%
                                                                 Change in industrial real estate investment volumes
     unprecedented 5.1 billion
                                                                            In France, in billions of euros
     euros in 2019, exceeding the
     amounts invested in 2018 by                                                                                                                                6% 1%                               Argan

     44%, as well as the previous
                                           €6                                                                 76%        80%                                                                        (Cargo Portfolio)

     record set in 2017 by 12%. With
                                                                                                                 67% 58%
                                                                                                                                         70%
     this result, industrial premises      €5
     accounted for 14% of the total
                                                                                                                                         60%
     sums invested in France, still far
     behind offices (71%) but very close   €4                                                                                                  29%                                                   43%
                                                                                                                                         50%
     to retail (15%). This strong
     performance is mainly due to the
                                           €3                                                                                            40%
     logistics market's surge, and the
     sale of warehouse portfolios.
                                                                                                                                         30%
     These increased over the months,      €2
     with eight transactions of more
     than 100 million euros recorded in                                                                                                  20%

                                                                                                                €4.57

                                                                                                                         €3.62
     2019, including seven in the

                                                                                                                                 €5.12
                                                                                                                                                       11%
                                           €1
     second half of the year.                                                                                                            10%
                                                                                                                                                                              10%
                                           €                                                                                             0%
                                                                                                                                                      France                      € zone
     Source: Knight Frank                       2009    2010    2011     2012    2013   2014   2015   2016      2017     2018     2019
                                                                                                                                                      Europe outside € zone       North America
                                                                                                                                                      Asia/Middle East            Others
                                                       Industrial investment volumes      Logistics          Share of portfolios (%)

           1      2   3
                                                                                                                                                                                                                  21
KNIGHT F R AN K                                                                                                                                                              2019 REVIEW AND 2020 OUTLOOK   I NV E S TM E NT

    Yields: further decreases
     Institutional investors'       Change in prime yields
                                                                                                                                                                                                 2010-2019 change
     enthusiasm for logistics
     as a diversification tool                                                                                                                                                                                LOGISTICS
     contributed to a further      9.00%
     compression of prime yields                                                                                                                                                                              - - 39%
     in this market sector. They
                                   8.00%
     have decreased by more
     than 300 basis points since
     2013 and are now close to     7.00%
     4% for the best assets on
     the main North-South axis.    6.00%
                                                                                                                                                                                                               HIGH STREET
     With regard to high street
     properties, rates remain
     below 3% for the best         5.00%                                                                                                                                                                          - 39%
     assets, while offices have
     seen a slight                                                                                                                                                         4.25%
                                   4.00%
     compression with rates
     also below 3% in Paris.                                                                                                                                               2.90%
                                   3.00%
                                                                                                                                                                                                              OFFICES
                                                                                                                                                                           2.75%
                                   2.00%                                                                                                                                                                      - - 42%
                                           2002

                                                  2003

                                                         2004

                                                                2005

                                                                       2006

                                                                              2007

                                                                                     2008

                                                                                            2009

                                                                                                     2010

                                                                                                            2011

                                                                                                                   2012

                                                                                                                          2013

                                                                                                                                 2014

                                                                                                                                        2015

                                                                                                                                               2016

                                                                                                                                                      2017

                                                                                                                                                             2018

                                                                                                                                                                    2019
     Source: Knight Frank

                                                         Offices (Paris CBD)                       High street (Paris)                  Logistics (Greater Paris Region)

          1       2   3
                                                                                                                                                                                                                               22
KNIGHT F R AN K                                                                                                                                                                                                                                       2019 REVIEW AND 2020 OUTLOOK                                                             I NV E S TM E NT

    Key trends in 2020: real estate’s advantage continues

     Monetary policies remain accommodating                                     Prime yields / bond yields spread
     for the time being, particularly in Europe                                 (as a %)
     where the ECB has not changed its
     strategy since Christine Lagarde took over                                                                                   Prime yields / bond yields spread                                                           Greater Paris Region investment volumes
     as head of the institution. In 2020, as in                            30                                                                                                                                                                                                                                                                         4.00%
     recent years, the real estate sector
     will therefore benefit from the low                                                                                                                                                                                                                                        Real estate advantage
     interest rate context, as it has in                                   25                                                                                                                                                                                                                                                                         2.00%

     recent years. Coupled with investors'
     caution, this should continue to work in
                                                                           20                                                                                                                                                                                                                                                                         0.00%
     favour of assets that have good
     fundamentals and provide stable and
                                                    In billions of euros

                                                                                                 Bond advantage
     secure income. The shortage of prime                                  15                                                                                                                                                                                                                                                                         -2.00%
     supply and the compression of yields will
     also favour diversification assets. Finally,
     some investors may take on more risk,                                 10                                                                                                                                                                                                                                                                         -4.00%
     although they will remain highly selective,
     targeting the types of assets and
     geographic sectors least exposed to a                                 5                                                                                                                                                                                                                                                                          -6.00%
     change in economic conditions.

                                                                           0                                                                                                                                                                                                                                                                          -8.00%
                                                                                 1983
                                                                                        1984
                                                                                               1985
                                                                                                      1986
                                                                                                             1987
                                                                                                                    1988
                                                                                                                           1989
                                                                                                                                   1990
                                                                                                                                          1991
                                                                                                                                                 1992
                                                                                                                                                        1993
                                                                                                                                                               1994
                                                                                                                                                                      1995
                                                                                                                                                                             1996
                                                                                                                                                                                    1997
                                                                                                                                                                                           1998
                                                                                                                                                                                                  1999
                                                                                                                                                                                                         2000
                                                                                                                                                                                                                2001
                                                                                                                                                                                                                       2002
                                                                                                                                                                                                                               2003
                                                                                                                                                                                                                                      2004
                                                                                                                                                                                                                                             2005
                                                                                                                                                                                                                                                    2006
                                                                                                                                                                                                                                                           2007
                                                                                                                                                                                                                                                                  2008
                                                                                                                                                                                                                                                                         2009
                                                                                                                                                                                                                                                                                2010
                                                                                                                                                                                                                                                                                       2011
                                                                                                                                                                                                                                                                                              2012
                                                                                                                                                                                                                                                                                                     2013
                                                                                                                                                                                                                                                                                                            2014
                                                                                                                                                                                                                                                                                                                   2015
                                                                                                                                                                                                                                                                                                                          2016
                                                                                                                                                                                                                                                                                                                                 2017
                                                                                                                                                                                                                                                                                                                                        2018
                                                                                                                                                                                                                                                                                                                                               2019
     Source: Knight Frank/Banque de France

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                                                                                                                                                                                                                                                                                                                                                                  23
KNIGHT F R AN K                                                                                                      2019 REVIEW AND 2020 OUTLOOK          I NV E S TM E NT

          Key trends                                                                        Risks are
                                                                                            always present
          in 2020                                                                           • Economic slowdown
                                                                                            • Social and geopolitical tensions

              Activity drivers                                                              Questions
              •   Growing interest in the Grand Paris project sectors and regional cities   • Continued decrease in prime yields?
              •   Interest rates: persistently low                                          • Shortage of office supply: what impact on investment volumes and
              •   Dynamism of international capital flows                                     investors' acquisition criteria?
              •   Fund-raising: record after record?                                        • Will investors take more risk?
              •   Investors' search for diversification                                     • Confirmation of renewed interest in retail?

          1        2    3
                                                                                                                                                                              24
2019 REVIEW

Offices
            AND 2020 OUTLOOK

            GREATER PARIS REGION
            LETTINGS MARKET

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                                   25
Offices
            2019 HIGHLIGHTS
            A GOOD YEAR
            LARGE TRANSACTIONS: DOWN ON PREVIOUS YEAR
            PARIS: DOWN, BUT RESISTANT
            NEW SPACE, ALWAYS POPULAR
            IMMEDIATE SUPPLY: STABILISING
            RENTS: RECORD(S) BROKEN
            REBALANCE IN SIGHT?
            AND IN THE FUTURE?
            WHAT IMPACT ON THE MOBILITY OF LARGE COMPANIES?
            10 YEARS OF LARGE COMPANY MOVEMENTS: TOP 10
            10 YEARS OF LARGE COMPANY MOVEMENTS: INNER PARIS
            10 YEARS OF LARGE COMPANY MOVEMENTS: SUBURBAN OFFICE MARKETS
            WHAT CHANGED IN 10 YEARS: AN OVERVIEW
            COWORKING: MORE MODERATE DEVELOPMENT
            COWORKING: PARIS, STILL WAY AHEAD
            THE YEAR OF NEXT40 COMPANIES: EXAMPLES OF LETTINGS TRANSACTIONS
            THE YEAR OF NEXT40 COMPANIES: HIGHLIGHTS
            BREXIT: CONCLUSION IN 2020 ?
            KEY TRENDS IN 2020

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K N I G H T F R AN K                                                                 2019 REVIEW AND 2020 OUTLOOK    OFFICE
                                                                                                                    LETTINGS

      2019 highlights

                       • Respectable results: + 5 % above the ten-year average

                           • Letting volumes limited by the lack of supply

                                • Paris, always in demand

                                      • Two growing trends: coworking and new tech

                                          • Suburbs: increasing success of the future Grand Paris hubs

             1     2   3
                                                                                                                               27
K N I G H T F R AN K                                                                                                                              2019 REVIEW AND 2020 OUTLOOK                OFFICE
                                                                                                                                                                                             LETTINGS

      A good year
      After an excellent performance in      3000000                                       Change in take-up in the Greater Paris Region                                       100
      2018, and six years of consecutive
      increase in take-up, activity in the
                                                                                                                                                                               90
      Greater Paris Region office market
      contracted in 2019. Just over          2500000

                                                                                                                                                                                     -9%
                                                                                                                                                                               80
      690,000 sq m were let or sold to
      occupiers in Q4 2019. This volume                                                                                                                          69
      brings the total take-up of office                                                                                                                                       70
      space over the past year to
                                             2000000                                                                                                                                 Year-on-year
      2,372,000 sq m, down 9%                                                                                                                                                  60
      compared to 2018. This result
      is still respectable and is 5%         1500000                                                                                                                           50
      above the average of the last
      ten years.                                                                                                                                                               40

                                                                                                                                                                                     +5%
                                             1000000
                                                                                                                                                                               30

                                                                                                                                                                   2 372 000
                                                                                                                                                                               20
                                                                                                                                                                                     10-year average
                                              500000

                                                                                                                                                                               10

                                                   0                                                                                                                           0
      Source: Knight Frank                             2006   2007      2008   2009    2010    2011    2012     2013     2014   2015       2016    2017   2018    2019

                                                       Take up (sq m)                 Average office take-up 2009-2018                 Number of transactions > 5,000 sq m

             1     2    3
                                                                                                                                                                                                        28
K N I G H T F R AN K                                                                                               2019 REVIEW AND 2020 OUTLOOK     OFFICE
                                                                                                                                                   LETTINGS

      Large transactions: down on previous year
      Partly due to the lack of available supply in
      certain office sectors, the slowdown in 2019        Resistance of intermediate sized areas
      affected all area categories. Small areas             Take-up by area category in the Greater Paris Region
      under 1,000 sq m recorded a decrease of
                                                                                                                               69
                                                                         Out of total volume in sq m

      8% year-on-year, while medium-sized areas
      (1,000 to 5,000 sq m) held up slightly better
      (-6%). The decrease is more pronounced             16%
                                                                                  9%                    15%               transactions
      for large areas, both in number and in                                                                                  > 5,000 sq m
      volume. Accordingly, there were 69
                                                                                29%                                            (83 in 2018)
      transactions over 5,000 sq m (compared             24%                                            21%
      with 83 in 2018) and take-up of 865,000 sq
      m in 2019, compared with almost one million
      sq m in 2018. This area category now                                                                                           =
      represents only 36% of total take-up in
      2019 after 38% in 2018, even though                30%                    34%                     36%            865,490 SQ M
      several large transactions were recorded in                                                                         (975,871 sq m in 2018)
      the last quarter (CANAL + in "Sways" in Issy-
      les-Moulineaux, etc.).                                                                                                         =

                                                         30%                    28%                     28%
                                                                                                                                 36 %
                                                                                                                                of volume
      Source: Knight Frank                                                                                                    (38 % in 2018)
                                                      10-year average             2018                      2019

                                                         < 1,000 sq m                       1,000 to 5,000 sq m
                                                         5,000 to 20,000 sq m               > 20,000 sq m

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                                                                                                                                                              29
K N I G H T F R AN K                                                                                                                  2019 REVIEW AND 2020 OUTLOOK              OFFICE
                                                                                                                                                                               LETTINGS

      Paris: down, but resistant
      The very severe shortage of                                   A dynamic year in the Inner Suburbs                                         Paris: a decrease
      available areas has weighed on                              Share of each geographical sector in total take-up                            that needs putting into perspective
      the Paris market results: take-up                        In the Greater Paris Region, out of total volume in sq m                         Change in take-up, by volume
      volume there reached just under                                                                                                           Between 2018 and 2019
      840,000 sq m in 2019, down 20%                                                    Outer Suburbs

                                                                                                                                                                        -14%
      compared to 2018 and down 4%
      compared to the ten-year average.                                                   2019                                                   Paris CBD
      The Central Business District (CBD)               Inner Suburbs
                                                                                            12%
                                                                                                                                                                        -25%
      accounted for nearly half of this total:
      driven by coworking operators, who                                                                                                         Paris outside CBD
      were the source of five of the twelve
                                                                        18%               14%                             Paris CBD

                                                                                                                                                                        +16%
      transactions above 5,000 sq m in
      2019, the CBD remains the driving                                    15%                            17%
      force of the Paris market, despite a                                                             18%                                       La Défense

      14% drop compared to 2018.

      Two sectors show an increase. In the
      Inner Suburbs, activity is up 9%
                                                                                          2018
                                                                                                                                                 Western Crescent        -1%
                                                                           25%
                                                                                                                                                                         +9%
      owing to the dynamism of large
                                                                                                    23%
      transactions (14 transactions over         Western Crescent                                            19%                                 Inner Suburbs
      5,000 sq m, including six over                                    27%             5%

                                                                                                                                                                        -18%
      20,000 sq m). La Défense shows                                                                                      Paris outside CBD
      an increase of 16%.
                                                                                              7%                                                 Outer Suburbs

     Source: Knight Frank

                                                                          La Défense

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                                                                                                                                                                                          30
K N I G H T F R AN K                                                                                                      2019 REVIEW AND 2020 OUTLOOK                     OFFICE
                                                                                                                                                                          LETTINGS

      New space, always popular
      In 2019, demand from large occupiers                  Grade A: 70 % of take-up                          Pre-lettings: almost 80 %
      was overwhelmingly for new,                  Take-up by building quality, in the Greater Paris Region   Change in pre-lettings in the Greater Paris Region
      redeveloped office space. These                    % of volume of transactions > 5,000 sq m             % of number of transactions > 5,000 sq m undertaken
      accounted for 70% of total take-up                                                                      on new or redeveloped supply
      over 5,000 sq m, reflecting the
                                                                                                                   Share of transactions let at delivery or after
      priority given by companies to                                                                               Share of pre-let transactions                                80
                                                                                                                                                                                80%
      the efficiency and quality of their
                                                          Second                                                                                               78%
      workspaces. This taste for                                                                                                                                       76%
                                                           hand                                                                           73%
      new/redeveloped offices is also                                                                                                                                           60
                                                                                                                                                                                60%
      reflected in a high level of pre-lettings:
      almost 80% of Grade A office                       18%                                                          51%
                                                                                                                                                                                40
                                                                                                                                                                                40%
      space over 5,000 sq m let in 2019
      in the Greater Paris Region was
                                                   Renovated
      let prior to delivery. This                                                                                                                                               20
                                                                                                                                                                                20%
      phenomenon is particularly
      pronounced in certain established            12%                          New/Redeveloped                                                                                 0
      office sectors, notably in Paris (89%).

                                                                                     70%                                                                                        -20
                                                                                                                                                                                20%

                                                                                                                                                                                -40
                                                                                                                                                                                40%

                                                                                                                                                                                -60
                                                                                                                                                                                60%

                                                                                                                                                                                80%
                                                                                                                                                                                -80
                                                                                                                      2016                 2017                 2018   2019

             1     2     3
                                                                                                                                                                                      31
K N I G H T F R AN K                                                                                                                     2019 REVIEW AND 2020 OUTLOOK              OFFICE
                                                                                                                                                                                  LETTINGS

      Immediate supply: stabilising
       The volume of immediate supply of      10-year low
       office space totalled 2,737,000 sq
                                              Change in immediate supply and vacancy rate
       m in the Greater Paris Region at the   In the Greater Paris Region, as a %
       end of 2019, down 5% year-on-
       year. Office stock is therefore

                                                                                                                                                                           5%
                                               4,500,000 sq m                                                                                                     9
       stabilising after several years
       of sharp decline
                                               4,000,000 sq m                                                  7.7 %                                              8
       (-28% between the end of 2014
       and the end of 2018). The vacancy                                                                                                                              Vacancy rate in the
       rate is now 5% and is at its lowest
                                               3,500,000 sq m                                                                                                     7     Greater Paris
       level since 2008, although the                                                                                                                                     Region

                                                                                                                                               5.0 %
                                                                                                                                                                            End 2019
       situation remains highly contrasted     3,000,000 sq m                                                                                                     6
       between the various office sectors
       in the Paris region. The limited        2,500,000 sq m                                                                                                     5
       number of deliveries of
       available projects, and very            2,000,000 sq m
                                                                5.5 %                                                                                             4
       high occupier demand,
       continued to deplete the Inner
       Paris market, with a vacancy rate
       of just 2.1% at the end of 2019.
                                               1,500,000 sq m                                                                                                     3
                                                                                                                                                                        2.1%
                                               1,000,000 sq m                                                                                                     2     Vacancy rate in
                                                                                                                                                                         Inner Paris

                                                                                                                                                      2,737,000
                                                                                                                                                                           End 2019
                                                500,000 sq m                                                                                                      1
     Source: Knight Frank
                                                      0 sq m                                                                                                      0
                                                                2008   2009   2010     2011    2012     2013   2014   2015       2016   2017   2018   2019

                                                                                     Immediate supply (sq m)      Vacancy rate

             1     2   3                                                                                                                                                                     32
K N I G H T F R AN K                                                                    2019 REVIEW AND 2020 OUTLOOK                      OFFICE
                                                                                                                                         LETTINGS

      Rents: record(s) broken
     The capital’s supply shortage            Paris: under pressure          Prime rents: heading towards €900
     situation has been observed for          Number of transactions         Change in prime and average Greater Paris Region rents
     several months and explains the          ≥ €800 /sq m/year              In €/sq m/year
     surge in Market Rents. As such,          In Inner Paris,
                                              for areas ≥ 500 sq m
     prime rents are breaking records,                                       € 1,000 /sqm
     reaching €865 /sq m/year in the CBD
                                                                                                                                                    865
     (+3% year-on-year). This trend is                                        € 900 /sqm                                                      840
     accompanied by a sharp increase in                                                                                         790 810
     transactions of more than 500 sq m
     signed at values in excess of €800/sq                              21    € 800 /sqm

     m/year in Paris, with 21 in 2019                                         € 700 /sqm
     compared to 14 in 2018, and only
     three in 2017. Some Parisian areas in                   1                € 600 /sqm

     the East and on the Left Bank are also         2
                                                                              € 500 /sqm
     recording strong increases, partly                                                                                         405 408 410 411
     linked to the boom in demand
                                                        1                     € 400 /sqm
     from coworking operators and
     new technology companies, as is
     the case in the CBD.                                    3         14     € 300 /sqm

                                                                              € 200 /sqm

                                                                              € 100 /sqm

     Source: Knight Frank                                                        € 0 /sqm
                                                                                            2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

                                                                                                       Average rent              Prime rent

             1     2   3
                                                                                                                                                          33
K N I G H T F R AN K                                                                                                                               2019 REVIEW AND 2020 OUTLOOK                           OFFICE
                                                                                                                                                                                                         LETTINGS

      Rebalance in sight?
      More than 130 projects over          Growth in deliveries                                                                                         Increased opportunities in La Défense
      5,000 sq m are currently under       Deliveries of new or redeveloped areas > 5,000 sq m in the Greater Paris Region                                     and the Inner Suburbs
      construction in the Greater Paris
                                                                                                                                                           Share of pre-lettings by geographical sector
      Region, representing a total of                                                                                                                     Office supply to be delivered by the end of 2022
      nearly 2.6 million sq m, 58%         2,000,000 sq m                                                                                                   (Building permit submitted/ Building permit
                                                                   Available deliveries
      of which is still available. Two                                                                                                                              granted/ Under construction)
                                                                   Pre-let deliveries
      sectors are particularly well        1,800,000 sq m
                                                                   Delivered areas
      supplied: La Défense, where
                                                                   Average new/redeveloped office take-up > 5,000 sq m (2014/2019)
      more than 400,000 sq m of            1,600,000 sq m
      office space is under construction                                                                                                                               58%                52%
      or redevelopment, and the Inner      1,400,000 sq m
      Suburbs especially, where this
      volume amounts to almost             1,200,000 sq m
      800,000 sq m, of which only                                                                                                                                      42%                48%
      28% has been pre-let. Short          1,000,000 sq m
      and medium-term availability                                                                                                                       Inner Paris          Western
      is much lower in Inner Paris,         800,000 sq m                                                                                                                      Crescent

      with a pre-letting rate of 57% in
      the CBD and 60% in the other
                                            600,000 sq m                                                                                                                       83%                   77%
      areas of the capital.
                                            400,000 sq m
                                                                                                                         48%
                                                                                                                                     29%
                                            200,000 sq m                                                                                                                       17%                   23%
                                                                                                                                            10%
                                                  0 sq m
                                                                                                                                                                   Inner Suburbs            La Défense
     Source: Knight Frank                                   2014    2015        2016      2017      2018       2019      2020        2021   2022

                                                                                                                                                                 Pre-let                 Available

             1     2    3
                                                                                                                                                                                                                    34
K N I G H T F R AN K                                                                                                                         2019 REVIEW AND 2020 OUTLOOK                          OFFICE
                                                                                                                                                                                                  LETTINGS

      And in the future?
      Three major development trends can be          Finally, the future Grand Paris hubs                                                                           The main development sectors
      identified with regard to the future           are attracting growing interest from                     Mapping of future office projects > 5,000 sq m in the Greater Paris Region between 2020 and 2022
      production of offices in the Greater Paris     investors and occupiers, resulting in an                    New/redeveloped building, under construction or not yet begun (with or without building permit)
      Region. The first is the renewal of the        acceleration of future projects in towns
      most established office hubs, which            in the East (Fontenay-sous-Bois, etc.),
      explains the high number of projects           the South (Montrouge, Bagneux, Villejuif,
      identified in the CBD and in the main          etc.) and particularly in the North (Saint-
      sectors in the West. The second shows          Ouen, Saint-Denis) of the Greater Paris
      the potential of areas located at the          Region.
      capital’s inner ring road junctions.

       MAIN TRENDS

                        Established hubs
                        Renewal of the Paris and Western Crescent office stock
                        (CBD, La Défense, etc.)

                        Paris / Inner Suburbs
                        Dynamism of the ring road junctions (accessibility, quality of
                        supply, available land, etc.)

                        Rest of the Inner Suburbs
                        Development of the Grand Paris hubs (Saint-Denis,
                        Fontenay-sous-Bois, Villejuif, etc.)

             1     2    3
                                                                                                   Source: Knight Frank                                                                                            35
K N I G H T F R AN K                                                                                                                  2019 REVIEW AND 2020 OUTLOOK                         OFFICE
                                                                                                                                                                                          LETTINGS

      What impact on the mobility of large companies?
      An analysis of the movements of major       Occupier mobility
      occupiers over the 2017-2019 period         % of number of transactions ≥ 5,000 sq m in the Greater Paris Region, between 2017 and 2019
      makes it possible to identify the most
      captive office markets, and those subject      Company coming from…                      Left the sector to go to…                      Stayed in the sector
      to greater company mobility.

                                                          Paris CBD                                                                   Paris CBD 68%
      The Outer Suburbs remain mainly driven
      by endogenous movements, while the La
      Défense sector has seen a majority of
      companies favour neighbouring sectors        Paris outside CBD                                                          Paris outside CBD        44%         Negative balance    Paris CBD

      (Western Crescent). With its future large                                                                                                                                        Paris outside CBD
      deliveries, the business district could
                                                                                                                                                       48%
                                                                                                                                                                                       La Défense
      recover its appeal. Nevertheless,                  La Défense                                                               La Défense                        Negative balance

      several other sectors in the suburbs will                                                                                                                                        Western Crescent
      also be more attractive, multiplying the
      alternatives available to companies.          Western Crescent                                                               Western Crescent 73 %                               Inner Suburbs

                                                                                                                                                                                       Outer Suburbs
      In Paris, sectors outside the CBD are
      showing a negative balance. Unlike La            Inner Suburbs                                                                     Inner Suburbs 78 %
      Défense, however, future supply will
      remain limited, which should
      encourage further occupier
                                                       Outer Suburbs                                                                       Outer Suburbs 88 %
      relocations, particularly to
      neighbouring Inner Suburb hubs
      with good transport links.                                   -100       -80        -60       -40        -20         0         20            40          60       80        100
      Source: Knight Frank

             1     2   3
                                                                                                                                                                                                           36
K N I G H T F R AN K                                                                                                         2019 REVIEW AND 2020 OUTLOOK                          OFFICE
                                                                                                                                                                                  LETTINGS

      10 years of large company movements
      The beginning of a new decade is an                Orange in the lead                                             Coworking: in the big league
      opportunity to take stock of the past              Top 10 companies that use the most sq m of office space        Share of each business sector in total take-up ˃ 5,000 sq m
      decade. During this period, the large areas        In the Greater Paris Region, between 2010 and 2019,            In the Greater Paris Region, out of total volume in sq m
                                                         transactions > 5,000 sq m
      market was driven by the recurrent
      movements of several large French
                                                          Company                                Total volume in sq m
      companies. Orange is the leading                                                                                                                         6%
      company in the Greater Paris Region in              ORANGE                                        277,000                    Others                      2%                     16%
      terms of the consumption of office                                                                                                                       8%
      space over 5,000 square metres                      BNP PARIBAS                                   227,000
                                                                                                                                   Coworking /                                        11%
      between 2010 and 2019. France's largest
                                                                                                                                   Flex                       17%
      banking groups also continued to streamline
                                                          GROUPE ALTICE / SFR                           210,000                                                                       2%
      their operations, fuelling demand. In 2019,                                                                                                                                     8%
                                                          GROUPE BPCE                                   208,000                    Consulting
      several of them further stood out through the
                                                                                                                                                               17%
      signing of large new leases (Crédit Agricole        EDF / ERDF                                    207,000                                                                       15%
                                                                                                                                   Administration
      in Montrouge, Société Générale in Fontenay-
      sous-Bois, etc.). But one of the most               CRÉDIT AGRICOLE / LCL                         204,000
      striking trends in recent years has
                                                                                                                                   New Tech /                 20%
      undoubtedly been WeWork's                           SOCIÉTÉ GÉNÉRALE                              172,000                    Media                                              24%
      breakthrough: the American operator has
      taken 8th place in the ranking of the decade's      WEWORK                                        151,000                    Banking /
      biggest occupiers, even though the company                                                                                   Insurance
      didn’t open its first site there until 2017 (rue    THALÈS                                        149,000                                               30%
      Lafayette, in the 9th district).                                                                                                                                                24%
                                                          SNCF                                          133,000                    Manufacturing-
                                                                                                                                   Distribution
      Source: Knight Frank
                                                                                                                                                            2010-2018                 2019

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                                                                                                                                                                                             37
K N I G H T F R AN K                                                                                                                                                2019 REVIEW AND 2020 OUTLOOK                     OFFICE
                                                                                                                                                                                                                    LETTINGS

      10 years of large company movements
      In Paris, the analysis of take-up volumes over       Breakdown in Paris
      5,000 sq m during the 2010-2019 period               Share of each district in total take-up ˃ 5,000 sq m
      shows a fairly clear geographical                    In Inner Paris, between 2010 and 2019
      concentration of the activity of large
      occupiers. Two sectors account for the
                                                                                                                                                                            Paris 15, 13, 17, 19
                                                              15-20%
      largest share. The heart of the capital
      remains a must, driven by the market in the             10-15%
                                                                                                                                                                            Very dynamic outer districts
      8th district and an increasingly marked                 5-10%
                                                                                                                        XVIII
      extension of the CBD towards the east                                                                                                                                        Available land / Development projects
                                                              2-5%                                                                                       XIX                       (Clichy-Batignolles, Balard, etc.)
      (Paris 9th and 2nd). This area is a prime target                                   XVII
                                                                                                                                                                                   Consolidation of large business sectors
      for large "captive" companies (finance,                 Less than 2 %
                                                                                                                                                                                   (banking, administration, etc.)
      consulting, etc.), and also benefits from the                                                               IX             X
      growing demand from more recent
      activity sectors such as coworking and                                                    VIII                   II
      digital technology.                                                                                                        III
                                                                                                                                                               XX
                                                                                                              I                                     XI
                                                                      XVI
      The outer districts (13th, 15th, 17th, etc.) have
                                                                                                                                                                            Paris 8, 9, 2
                                                                                                VII                             IV
      also captured a significant share of demand
      from large occupiers, in sectors such as
                                                                                                         VI
                                                                                                                            V                 XII                           The driving force in the Parisian market
      banking/insurance and administration.
                                                                                   XV                                                                                              Renewal of stock
      Advantages of these areas include:
                                                                                                                                                                                   Captive occupiers (luxury, consulting, finance)
      excellent access, a Parisian address,                                                                                                                                        Rise of coworking and Tech
                                                                                                       XIV                             XIII
      the good value for money of their real                                                                                                                                       “Location, location, location”
      estate supply and opportunities for
      large areas that have been boosted by the
      completion of urban projects (Semapa,               Source: Knight Frank

      Balard, Batignolles, etc.).
             1     2      3
                                                                                                                                                                                                                                     38
K N I G H T F R AN K                                                                                                              2019 REVIEW AND 2020 OUTLOOK                      OFFICE
                                                                                                                                                                                   LETTINGS

      10 years of large company movements
      Outside Paris, the results of the past      Top 10 towns in the Greater Paris Region                                                    The winning trio
      decade show a fairly classic                On total take-up > 5,000 sq m                                                               On total take-up > 5,000 sq m
      polarisation of the activity of large       Outside Paris between 2010 and 2019                                                         Outside Paris between 2010 and 2019
      occupiers in the main office hubs
      of the West, such as La Défense,
      Levallois-Perret, Boulogne-Billancourt
      and Issy-les-Moulineaux. The latter                                                                           Saint Denis                                Courbevoie
      town is very popular, confirmed in 2019
      by several major moves such as                                                                                                              1            664,800 sq m let
                                                                                                                                                               between 2010 and 2019*
                                                                                                                                                               ▼ 15% compared to 2000-2009
      CANAL + who took a lease on "Sways"                                                              Saint-Ouen
      and CNP's acquisition of the "Issy
                                                                        Courbevoie                                                                             50 large transactions
      Cœur de Ville" offices. Outside of the           Nanterre                             Levallois-Perret
      more established sectors, three towns
                                                                                                                                                               Issy-les-Moulineaux
                                                                                                                                                  2
      accounted for a significant share of                           Puteaux
                                                                                                                                                               524,400 sq m let
      demand for areas over 5,000 sq m,                                                                                                                        between 2010 and 2019*
      starting with Montrouge, which is         Rueil-Malmaison                                                                                                ▲ 57% compared to 2000-2009
      sought-after by large French                                                                                                                             27 large transactions
      companies such as EDF and Crédit
      Agricole. In the North, Saint-Ouen
      and Saint-Denis have in just a few
                                                                  Boulogne - Billancourt                                                                       Saint-Denis
      years become major office hubs.
                                                                      Issy-les-Moulineaux
                                                                                                                                                  3            452,800 sq m let between
                                                                                                                                                               2010 and 2019*
                                                                                                                                                               ▲ 22% compared to 2000-2009
                                                                                           Montrouge                                                           23 large transactions

       Source: Knight Frank
                                                                                                                                               *Take-up of areas over 5,000 sq m

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                                                                                                                                                                                              39
K N I G H T F R AN K                                                                                                                        2019 REVIEW AND 2020 OUTLOOK                      OFFICE
                                                                                                                                                                                             LETTINGS

      What changed in 10 years: an overview
      While the last ten years have not really changed the hierarchy of   emergence of new ways of communicating and working.                flexibility, and the huge increase in the number of
      the various office hubs in the Greater Paris Region, a few major    New types of operators such as digital companies, have also        coworking spaces is undoubtedly one of the most obvious
      structural changes have profoundly transformed the                  emerged, leasing ever larger office areas and focusing on the      examples.
      demand and expectations of companies in terms of                    most central areas of the conurbation in order to be able to
      office space design. Among these factors, the digital               attract the best people. Finally, the transformation of working
      revolution has played a major role in encouraging the               methods has also met the demand for an increased need for

                                    DIGITALISATION                             NEW WAYS                                     UNCERTAIN                               FORMALISATION OF
                                      TECH BOOM                               OF WORKING                                   ENVIRONMENT                                GRAND PARIS

     KEY
     TRENDS

                                                                              MORE
                                                                                                                             ATTRACTING                            SURROUNDINGS /
     IMPACT ON                                                             FLEXIBILITY /
     BUSINESS DEMAND                                                                                                           TALENT                                 ACCESS
                                                                          PRODUCTIVITY

     IMPACT ON THE                                                         « FLEX OFFICE »                                   WELL-BEING                            PRIORITY GIVEN TO
     OFFICE PROPERTY
     MARKET                                                                     BOOM                                          AT WORK                             CENTRAL DISTRICTS

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                                                                                                                                                                                                        40
K N I G H T F R AN K                                                                                                              2019 REVIEW AND 2020 OUTLOOK                         OFFICE
                                                                                                                                                                                      LETTINGS

      Coworking: more moderate development
      Taking all areas together, coworking        But take-up at its highest level …                                     … and WeWork is still in the lead
      operator leases totalled almost             Change in take-up by coworking operators                               Breakdown of coworking take-up volumes, by operator
      200,000 sq m in 2019, a 38%                 In the Greater Paris region, between 2015 and 2019                     In the Greater Paris region, between 2015 and 2019, all areas included
      increase over 2018. Activity was
      particularly strong in the > 5,000 sq m
      area category, with 11% of the Greater      250,000 sq m                                                      80
      Paris Region take-up volume in 2019
      falling in this market category (compared                                                                     70
      with 9% in 2018 and 5% in 2017). In                                                                                                                                      69,000 sq m
                                                  200,000 sq m
      Inner Paris, their share even reached                                                                         60
      35%! WEWORK are still the leader in
      terms of the number of square metres let,                                                                     50
                                                  150,000 sq m
      despite a marked deceleration in the
      second half of the year. Other operators                                                                      40
      were behind large transactions, such as
      KWERK in the 8th district and WOJO in       100,000 sq m
                                                                                                                    30                   177,000 sq m                                65,000 sq m
      the 13th and 14th districts. On smaller
      areas, DESKEO continued its rapid                                                                             20
      expansion with more than thirty              50,000 sq m
      sites leased, most of them located in                                                                         10
      the capital and in a few towns in the
      Hauts-de-Seine department.                        0 sq m                                                      0                                                       53,000 sq m
                                                                 2015       2016      2017     2018      2019

                                                             Take-up (sq m)                  Take-up > 5,000 sq m
      Source: Knight Frank                                   Number of transactions                                                                     34,000 sq m
                                                                                                                                    22,000 sq m

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                                                                                                                                                                                                   41
K N I G H T F R AN K                                                                                                                2019 REVIEW AND 2020 OUTLOOK                       OFFICE
                                                                                                                                                                                      LETTINGS

      Coworking:                                                                 Paris accounts for nearly three-quarters of all volumes
                                                                                 leased by coworking operators since 2015, including a
                                                                                                                                             14th districts), while WeWork set foot outside Paris
                                                                                                                                             by signing their first space in La Défense ("Les

      Paris, still way ahead                                                     very substantial share in the CBD. However, 2019
                                                                                 confirmed the trend towards the geographic
                                                                                                                                             Collines de l'Arche"). Outside Paris and La Défense,
                                                                                                                                             coworking operators have targeted the largest office
                                                                                 expansion of coworking, with several large areas            hubs in the West, such as Neuilly or Boulogne.
    …but more projects in the Western sectors                                    leased in Paris outside the CBD (Wojo in the 13th and
    Geographic breakdown of take-up by coworking operators
    In the Greater Paris region, between 2015 and 2019
                                                                                                                              Mapping of lettings to coworking operators between 2015 and 2019

                                            Outer Suburbs

                         Inner Suburbs        1%
          Western Crescent              3%
                                     10%

      La Défense              12%                      40%        Paris CBD

      Paris North East        9%

                                      17%       8%
                       Paris South
                                                        Paris Centre West
                                                        (Outside CBD)

             1     2     3
                                                                              Source : Knight Frank                                                                                                 42
K N I G H T F R AN K                                                                                                     2019 REVIEW AND 2020 OUTLOOK              OFFICE
                                                                                                                                                                  LETTINGS

      The year of Next40 companies
      Like coworking, another relatively recent      Examples of lettings in 2018-2019
      sector is becoming increasingly important:     In the Greater Paris Region
      digital companies, many of whom are
      opting for coworking spaces to support          Year       Tenant                              Address               Area (sq m)

                                                                                                                                                     40%
      their growth and increase their flexibility.    2019       DOCTOLIB               LE SEMAPHORE, LEVALLOIS-PERRET      11,230
      They are also leasing their own offices, and
      this for increasingly larger areas, as shown    2019       BELIEVE DIGITAL              KONECT, SAINT-OUEN             9,880

      by the lettings in 2018 and 2019 to several                                                                                              of Next40 companies have
                                                      2019       PAYFIT                          QUAI 8, PARIS 8             8,000
      companies of the Next40, the index                                                                                                        leased office space in two
      unveiled last year by the government and        2019       IVALUA                   100 AVENUE DE PARIS, MASSY         5,180              years in the Greater Paris
      intended to encourage the development of                                                                                                            region
                                                      2019       DEEZER                     29 RUE DE CALAIS, PARIS 9        5,100
      world-class technological leaders. Next40
      companies accounted for 5% of take-up           2018       YOUNITED CREDIT         21 RUE DE CHATEAUDUN, PARIS 9       4,530

      > 5,000 sq m in 2019 in the Greater             2019       BLABLACAR                 6-8 RUE SEDAINE, PARIS 11         4,300
      Paris Region, even though the majority of
      these companies were created less than          2018       MEERO                       LE CENTORIAL, PARIS 2           3,600

      ten years ago. This is the case for             2018       LEDGER                         #CLOUD, PARIS 2              2,400
      DOCTOLIB and PAYFIT, the latter of which
      leased just under 8,000 sq m on rue de
      Saint-Pétersbourg in the 8th district and
                                                      2018       WYND                       TOUR MIRABEAU, PARIS 15          2,200
                                                                                                                                                65 000 M²
                                                      2018       ALAN                     117 QUAI DE VALMY, PARIS 10        2,200              in total over the period, of
      multiplied the size of its offices by more
                                                                                                                                                 which 67 % was in 2019
      than 120 since 2014!                            2018       DEVIALET                   35 RUE LA BOETIE, PARIS 8        1,980

                                                      2018       SHIFT TECHNOLOGY           BERCY CRYSTAL, PARIS 12          1,660

     Source: Knight Frank                             2018       VESTIAIRE COLLECTIVE         LE BARJAC, PARIS 15            1,300

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                                                                                                                                                                               43
K N I G H T F R AN K                                                                                                                       2019 REVIEW AND 2020 OUTLOOK                        OFFICE
                                                                                                                                                                                              LETTINGS

      The year                                         The growth of digital companies is hardly
                                                       surprising: whether or not they belong to
                                                                                                       and the need to have premises large enough
                                                                                                       to house these new employees. Real estate
                                                                                                                                                         facilities and their services are essential
                                                                                                                                                         factors in the war that these digital

      of Next40
                                                       the Next40, their commercial successes          therefore plays an eminently strategic role in    companies are waging to attract or retain
                                                       and the successive fundraising they             enabling them to continue their growth. The       the best talent.
                                                       receive imply major recruitment needs
      companies
                                                                                                       offices, the quality of their address, their

                   A recent existance                                           An example of rapid growth                                              Paris first and foremost!

                              95 %                                                                                  Areas
                                                                                                                                                                   70 %
                                                                                                                                                             of Next40 companies have
                          of Next40 companies

                                                                                                           x 123
                        did not exist before 2000                                                                                                             their head offices in Paris

                                                                                                              in 5 years                                         10%
           A share that remains
          modest but is already…                                                                                                                           20%                   45%

                           5%                                                                                                                               10%
          of the volume of movements > 5,000 sq m
                                                                                                                                                                    15%
              in 2019 in the Greater Paris Region
                                                                        8,000 sq m                                           2019
                                                                         1,470 sq m                                          2017
                                                                           240 sq m                                          2016                               Paris CBD/Centre West
                                                                            65 sq m                                          2014                               Paris South
                                                                                                                                                                Paris North East
                                                                                                                                                                Others Greater Paris Region
                                                                                                                                                                Regions
                 Source: La French Tech/Knight Frank                                         Source: Knight Frank                                                                    Source: Knight Frank

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                                                                                                                                                                                                            44
K N I G H T F R AN K                                                                                                      2019 REVIEW AND 2020 OUTLOOK                       OFFICE
                                                                                                                                                                            LETTINGS

      Brexit: conclusion in 2020 ?
      In 2020, the possible               Down on last year                                                      Paris, solid third
                                                                                                                 Geographical breakdown of Brexit related movements in Europe
      conclusion of Brexit could          Chronological change in Brexit-related movements in Europe
                                                                                                                 Announced, actual or potential movements, by city
      trigger a revival of company        Announced, actual or potential movements
      relocations, which were
      relatively few in number in 2019.
      Paris remains well placed to
      benefit from this: with 68          250
                                                                              472                                                        107
                                                                              mouvements                                Dublin
      definite or potential
      projects out of the 472
      identified in Europe since          200                                                                                            73
      the 2016 referendum, it is still                                                                               Luxembourg

                                                                                                                                         68
      far behind Dublin (107) but has
      closed the gap with                 150
      Luxembourg (73). Furthermore,

                                                                                                                                                                                57
                                                                                                              Paris/Greater Paris Region
      it is now well ahead of
      Amsterdam (57) and Frankfurt
                                          100
      (50).                                                                                                                                              Amsterdam

                                           50
                                                                                                                                                                            50
                                                                                                                                                           Frankfurt

                                                                                                                                                                            19
      Source: Knight Frank

                                            0                                                                                                              Brussels

                                                                                                                                                                            16
                                                      2016             2017             2018           2019

                                                                                                                                                            Madrid

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                                                                                                                                                                                       45
K N I G H T F R AN K                                                                                                                    2019 REVIEW AND 2020 OUTLOOK                      OFFICE
                                                                                                                                                                                         LETTINGS

      Brexit: conclusion in 2020 ?
      The activity sectors of companies that
                                                                                                                                     The CBD first and foremost
                                                          Paris: less diversity                                                      Geographical breakdown of movements recorded in the Greater
      have so far chosen Paris are less diverse           Breakdown of movements by activity sector                                  Paris Region (movements completed or actively sought)
      than those of other major European                                                                                             By number of movements
      cities. For example, Amsterdam has
      succeeded in attracting companies with fairly           72%                          53%
      diverse profiles (pharmaceutical companies,
      large audio-visual companies, Japanese                                                                                                               8%
      industrial flagships such as Sony and                                                               Finance                                   5%
      Panasonic, etc.). In Paris, three-quarters of
      Brexit-related relocation projects that are
      certain or potential concern companies in the
      financial sector. This share even exceeds 80%
      if Fintech's movements are included, illustrating          10%                       12%            Fintech
      the strengthening of Paris as a leading financial
      centre. Driven by international finance,

                                                                                                                                                                87%
      traditionally captive to an address in the CBD,
      the demand for Brexit-related offices
                                                                                                          Insurance
      therefore almost exclusively targets this
      market. This is where the most significant                 7%                        12%
      movements have been identified, whether in
      terms of projects that have already been                                                            Others
      completed (Bank of America, Wells Fargo,                                                            Media, lawyers,
                                                                                                          pharmaceutical sector,
      MUFG, etc.) or real estate searches that are                                                        recruitment consultancy,
      ongoing.                                                    11%                                     etc.
                                                                                          23%
      Source: Knight Frank                                                                                                              Paris CBD        Paris outside CBD       La Défense
                                                                     Paris                 European average

             1     2    3
                                                                                                                                                                                                    46
K N I G H T F R AN K                                                                                        2019 REVIEW AND 2020 OUTLOOK                    OFFICE
                                                                                                                                                           LETTINGS

                                                                            Context:
               Key trends                                                   still uncertain
               in 2020                                                      • Slowdown in global growth
                                                                            • Resilience of the French economy?
                                                                            • Risks are still numerous (Brexit, elections in the USA, social tensions in France,
                                                                              etc.)

           The main drivers                                                           Main areas
           of demand                                                                  of development
           •   New ways of working
                                                                                      • Renewal of the office stock of established office hubs (Paris, Western Crescent)
           •   Increased search for flexibility and services
                                                                                      • Dynamism of the capital's inner ring road junctions (Parisian address, accessibility,
           •   Attracting and retaining talent (access, well-being, etc.)
                                                                                        quality of supply)
           •   Continued expansion of digital companies
                                                                                      • Development of the Grand Paris hubs (Saint-Denis, Saint-Ouen, Fontenay-sous-Bois,
           •   Continued streamlining of more "traditional" occupiers
                                                                                        Villejuif, etc.).

               1   2    3
                                                                                                                                                                         47
Retail
            2019 REVIEW
            AND 2020 OUTLOOK

             FRANCE

1   2   3
                               48
Retail
            2019 HIGHLIGHTS
            MACRO-ECONOMIC CONTEXT
            TOURISM CONTINUES TO PLAY A KEY ROLE
            FASHION: SOME DIFFICULTIES, BUT...
            NEW FOREIGN BRANDS: A VERY APPEALING MARKET
            MULTIPLICATION OF FORMATS
            DNVBS: A PHENOMENON THAT NEEDS TO BE PUT INTO PERSPECTIVE
            LUXURY: A DYNAMIC MARKET
            LUXURY MARKET DRIVEN BY: …
            LUXURY: WHAT ARE THE GEOGRAPHICAL CHANGES?
            CONTRASTING TRENDS
            PARIS: THE TRANSFORMATION CONTINUES
            RUE DE RIVOLI: THE REVIVAL?
            SHOPPING CENTRES: PRIORITY GIVEN TO THE RENOVATION OF EXISTING CENTRES
            SHOPPING CENTRES: EXAMPLES OF 2019-2020 OPENINGS
            RETAIL PARKS: SUSTAINED GROWTH
            RETAIL PARKS: EXAMPLES OF 2019-2020 OPENINGS
            KEY TRENDS IN 2020

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KNIGHT FRANK                                                                            2019 REVIEW AND 2020 OUTLOOK   R E T AI L

   2019 highlights

            • A dynamic market, in spite of the yellow vests movement and social protests

                       • Significant increase in the arrival of new foreign brands

                            • DNVBs: openings that underline the importance of physical retail

                                • Luxury: continued expansion of major brands through the opening of new flagships

                                  • Shopping centres: priority given to the renovation and extension of existing properties

        1      2   3
                                                                                                                                    50
K N I G H T F R AN K                                                                                 2019 REVIEW AND 2020 OUTLOOK                     R E T AI L

      Macro-economic context
      After a difficult start to the year,      Confidence: year-end stall                 Recovery in consumption
      signs of a more favourable                Household opinion                          Household consumption and gross disposable income
      economic climate for businesses           Synthetic indicator - CVS-CJO data
      grew in 2019, from the increase in                                                                                                                           3%
      purchasing power to dynamic job          130
      creation. While forecasters
      agree that consumption will
      pick up, social movements                120
                                                                                                                                                                   2%

      nevertheless ended 2019 on a
      negative note and undermined
      household confidence, after                                                                                                                                  2%
                                               110                                   102
      retailers had already suffered from
      the effects of the yellow vests
      movement in 2018.
                                               100                                                                                                                 1%

                                                90                                                                                                                 1%

                                                                                     87

                                                80                                           1.60%      1.60%         0.90%    1.20%       1.50%      1.40%
                                                      déc-00

                                                      déc-03

                                                      déc-06

                                                      déc-09

                                                      déc-12

                                                      déc-15

                                                      déc-18
                                                      juin-02

                                                      juin-05

                                                      juin-08

                                                      juin-11

                                                      juin-14

                                                      juin-17
                                                     sept-01

                                                     sept-04

                                                     sept-07

                                                     sept-10

                                                     sept-13

                                                     sept-16

                                                     sept-19
                                                     mars-00

                                                     mars-03

                                                     mars-06

                                                     mars-09

                                                     mars-12

                                                     mars-15

                                                     mars-18
                                                                                                                                                                   0%
                                                                                              2016       2017         2018      2019        2020       2021

                                                                                                                 Consumption       Purchasing power

                                             Source: INSEE                                 Source: Banque de France

             1     2    3
                                                                                                                                                                        51
K N I G H T F R AN K                                                                                                          2019 REVIEW AND 2020 OUTLOOK                           R E T AI L

      Tourism continues to play a key role
      After a record year in 2018, tourist numbers remained at             International tourism                                                  ...but has significantly increased
      high levels in Paris, despite a slight decrease in foreign
                                                                          slowed down in 2019...                                                                in the last ten years
      tourist arrivals. Nevertheless, the number of foreign tourists
                                                                                 Number of hotel arrivals
      has increased by more than 20% over the last ten                                                                                       Change in the number of hotel arrivals in Paris
                                                                        In millions in Paris, 2018/2019 change
      years, boosted in particular by an increase in the number of               from January to October
                                                                                                                                  Between 2010 and 2019, January-October period each year
      American (+54%) and Chinese (+219%) tourists.

                                                                                   8.4                                                                   French and International
                                            8.6
                                                                                                                                                         + 13.3 %
                            5.5                                        5.9
                                                                                                                                                         International

                                            2018
                                                                                                                                                         + 21.7 %
                                                                                       2019

                                                                                                                                                         French
                                                                                                                 Foreigners
                                                                                                                                                         + 3.1 %
                                                                                                                 French

                                                                                                                 Total
      Source: Office de Tourisme et des Congrès de Paris                                                                        Source: Office de Tourisme et des Congrès de Paris

             1     2    3
                                                                                                                                                                                                  52
                                                                                                                                                                                                       52
K N I G H T F R AN K                                                                                                        2019 REVIEW AND 2020 OUTLOOK                        R E T AI L

      Fashion: some difficulties, but...…
      The clothing sector continues to be      A more moderate slowdown                                    An ongoing important role in the French retail market
      penalised by consumer decisions,         Textile-clothing sales in France, annual change
      as illustrated by the difficulties of
      several historic brands. However,                                                                                             New foreign
                                                                                                                                    retailers in France
      the decrease in sales is expected                               +0.7%                                                         in 2019
      to be more moderate in 2020.
      Fashion remains an essential                                                                                      36%
      component of the French retail

                                                                                           2019e

                                                                                                   2020p
                                                   2007-2015

                                                               2016

                                                                       2017

                                                                                 2018
      landscape, accounting for example
      for a significant proportion of
      new foreign retailers or DNVB                            -1%
                                                                                           -1% -0.8%
      projects in France.
                                                                              -2.9%                                                                       44%
                                                                                                                                                                         DNVB* stores
                                                                                                                                                                         in France in
                                                                                                                                                                         2019

                                                                                                                              42%
                                                                                                                                          Opening of luxury
                                                  -15%                                                                                    boutiques in Paris
                                                                                                                                          2019 openings and future
                                                                                                                                          projects
                                              Source: IFM

             1     2    3
                                                                                                                                                 *DNVB = Digitally Native Vertical Brands    53
K N I G H T F R AN K                                                                                                          2019 REVIEW AND 2020 OUTLOOK                       R E T AI L

      New foreign brands: a very appealing market
      In 2019, 57 foreign brands        An excellent vintage                                                          Paris and high streets: always a priority
      opened their first store in       Annual change in the number of new foreign brands in France                     Preferred locations and types of locations in 2019
      France, while "only" 43 such                                                                                     First point of sale for new brands arriving in France
      openings were recorded in
      2018. This increase is
      remarkable and reflects the                                                      57
      strong appeal of the French
      market, which has seen its

                                                                                                                        65%
      supply regenerated by these
      new store openings and brands.
                                                                                                      Paris
      Because of its international
                                                                                                                                                           High streets
      influence, Paris remains by far
      the first choice of foreign          41                             43
      brands for their first opening
      (65% of the 2019 arrivals in                         38
      France, compared to 61% on
      average over the previous five
      years).
                                                                                                      Regions
                                                                                                                                  26%                                      16%
                                                                                                                                                           Shopping centres

                                                                                                                                                                           12%
                                                                                                                                   9%
                                                                                                                                                           Others
                                                                                                      Greater Paris
                                                                                                      Region

                                           Annual             2017           2018         2019
                                           average
                                            2014-2018

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                                                                                                                                                                                              54
K N I G H T F R AN K                                                                                             2019 REVIEW AND 2020 OUTLOOK   R E T AI L

      New foreign brands: a very appealing market
      Arriving in France in 2012                                                    The most significant arrivals of the decade
      and with more than 500

                                                      260
                                                                                    In total number of stores in France at the end of 2019
      stores, Action is the foreign
      brand with the fastest
      expansion in the last ten
      years. Basic-Fit comes second              new foreign brand arrivals          ˃ 300
      with the opening of more than                in France since 2014              Action
      330 fitness clubs in France                                                    Basic fit
      since 2014. No clothing retailer

                                                         10
      has experienced such a
      development. Nevertheless,                                                     ˃ 100
      fashion continues to account for                                               Calzedonia
                                                                                     Kiko
      the largest share of foreign
      retailers' arrivals, accounting for            brands account for              Pandora
                                                                                     Superdry
      36% of all new entrants in 2019

                                                        58%
      (Icicle, Falconeri, Suitsupply,
      etc.), compared with an average
      of 43% in the previous five                                                    ˃ 50
      years.                                of all openings by these new entrants    Desigual
                                                   since their arrival in France.    Flying Tiger
                                                                                     Hema
                                                                                     JD Sports
                                                                                     Parfois
                                                                                     Rituals

      Source: Knight Frank

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