Mid-level and senior executives have been taking advantage of the decline in average prices, to upgrade to larger flats, pushing the average transaction amount 1 percent higher to a new record of 396,278 euros ($541,989).
Meanwhile, with 11.1 billion euros ($15.09 billion) invested in Ile-de-France in 2013, the region concentrated 74 percent of total commercial real estate investments in France, according to consultants Cushman & Wakefield.
But while retail and industrial transactions kept on growing, office rentals continued on their downward trend.
Indeed, the consultancy reports that investments in office rentals in inner Paris dropped by 39 percent. In the greater Paris area the trend is similar but not as steep, with office rentals dropping by 17 percent, following on from a 9.6 percent fall in 2012. In contrast, the total level of investments in the office space only dipped by 3 percent for the whole of France.
"What we've seen in France" explained AXA Real Estate's Justin Curlow, "is a deterioration in underlying economics, impacted by sentiment and holding back leasing activity."
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He added that due to the weak economic environment, the market was seeing a "lot of sideways movement." Tenants, he said, were shifting from one place to another in an attempt to rationalize costs.
On the occupancy side, Curlow expects vacancy to begin peaking over the next 18 months, while the La Defense central business district should see its vacancy rise again over the next six months as new tower block offices come online.
"We're expecting improvements to come through from 2015", Curlow said, as rental values should continue to decline over the next 12 months making the market more attractive. By 2015, "the adjustment will have occurred" and the market will see "rental values recover."
So where should investors look at?
For residential investments, AXA Real Estate "continue(s) to think that Paris residential is probably the best place to be in France."
But when it comes to commercial property the group's "preferred sector is logistics" as "the supply and demand balance is pretty well established."
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