Is liquidity (finally) back in real estate?
This week, Blackstone signed an exclusive agreement with Union Investment to acquire the Paris Trocadéro business center, as revealed by Business Immo. An acquisition worth over €700m that could not only be the deal of the year, but also a strong signal for the market. There are several reasons for this.
Firstly, it proves that liquidity is still there. And that it's ready to invest in an imposing unit asset. No fewer than a dozen suitors have positioned themselves on this project. Not since the sharp rise in interest rates has there been so much enthusiasm for real estate. Over the last three years, only the luxury sector had been active in the capital's real estate investment market, concentrating on a few arteries in the Parisian Golden Triangle. Acquisitions with values that are sometimes a little crazy, motivated solely by the desire to support their core business.
Secondly, whether this liquidity comes from major international asset managers, particularly Anglo-Saxon, or sovereign wealth funds. You only have to scan the list of contenders to see that domestic investors are nowhere to be found. No French institutions in the second round. No large SCPIs either, which are more than ever bogged down by their liquidity problems.
Because if liquidity does exist, it remains selective and is still only found in exceptional properties. Such is the case of the Paris Trocadéro business center which, in addition to its location, functions almost as a piece of the city within the city. With a very high office component, but in the CBD, where demand remains strong, accompanied by shops and around fifty residential units.
What's all the more interesting about this operation is the potential for value creation that remains to be realized. The Paris Trocadéro business center was last renovated ten years ago, and it's fair to assume that there's a bit of upside to be had, even if the price comes in at around €17,000/m².
This confirms once again the impressive fragmentation of the real estate market, between trophy assets on which all capital converges, and peripheral assets on which all evils are concentrated.
Rarity no longer just has a value. It also has a price.