The OAT now yields more than the best Paris offices
Oct 13, 2026
At 4.86%, French government debt now yields more than the best offices in Paris. The premium that rewarded property risk has disappeared: either prices adjust, or rates come back down.
Key takeaways
The 10-year OAT at 4.86% exceeds the yield on the best Paris offices (4.25% to 4.50%).
From 2010 to 2021, the office premium over the OAT never fell below 130 basis points.
Restoring a 100-point premium would reduce values by around 25% at constant rents.
For the second time in four years, and this time by a clear margin, an investor earns more by lending to the French state than by buying an office building in the Paris Central Business District (CBD). On 12 October, the 10-year OAT (French government bond) stood at 4.86%. The yield on the best Paris offices was 4.25% to 4.50% at the end of the third quarter. This inversion cannot last: a building carries risks that the OAT does not.
A quarter of exceptional rate rises
The ECB raised its rates twice in 2026, on 17 June and then on 10 September; its deposit rate has stood at 2.50% since 16 September. Euro area inflation reached 3.8% in September according to Eurostat’s flash estimate, driven by energy.
The bond market followed, and France more than its neighbours. The August average for the 10-year OAT, 4.00%, was already the highest since October 2008. On 12 October, the OAT stood at 4.86%, 140 basis points above the German Bund (Banque de France, Bundesbank). Uncertainty over the 2027 budget is weighing on the premium demanded of the French state, and Moody’s is due to rule on its rating on 23 October. Economists polled by Reuters expect the ECB to hold rates on 29 October, followed by a further rise in December.
The risk premium has disappeared
Buying an office building means accepting vacancy, works and resale risks that the OAT does not carry. For twelve years, this risk was rewarded: between 2010 and 2021, the prime yield on CBD offices exceeded the OAT by 130 to 310 basis points.
The rise in rates in 2022 crushed this spread, without eliminating it for good. After briefly falling below zero at the end of 2022 according to BNP Paribas Real Estate, it had recovered to 60 or 70 points by the end of 2025. Today it is negative: between −36 and −61 basis points depending on the point of the range used.
What this does to values
The market has begun to adjust. In the third quarter, JLL noted a 25 basis point rise in prime yields across all asset classes, transactions renegotiated midway and sellers tempted to withdraw their properties. The average price of offices bought in the Île-de-France region fell to €4,980/sq m including transfer costs, down 6% year on year (ImmoStat).
To measure the distance still to go, the table applies a simple rule: at constant rent, the value of a building moves inversely to its yield. Starting point: 4.375%, the midpoint of the current range.
Scenario | Prime yield | Premium over an OAT at 4.86% | Value at constant rent | Value with rents +4% |
|---|---|---|---|---|
Status quo | 4.375% | −49 bp | 0% | +4% |
Moderate decompression | 4.75% | −11 bp | −8% | −4% |
50 bp premium | 5.36% | +50 bp | −18% | −15% |
100 bp premium | 5.86% | +100 bp | −25% | −22% |
This mechanical calculation is not a forecast. It gives the order of magnitude of the adjustment if rates stay where they are. Rising prime rents absorb part of it: €1,250/sq m per year in the CBD, +4% year on year according to Cushman & Wakefield.
Our view
For sellers of let buildings (offices, retail, residential investment buildings): buyers who borrow can no longer keep up with 2025 prices. With debt at around 4.20% all-in (Colliers), a 4.25% yield no longer offers any leverage. Prices are now set by equity buyers: family offices, private investors, family-owned property companies. The two major Paris disposals of the summer illustrate this: Capital 8, around €800m, bought by Pontegadea; 29 Sèvres, around €300m including works, acquired by GCI and a family office.
For equity buyers: the window is opening. 58% of French institutional investors plan to sell more (MSCI), and six SCPIs (French property funds) have cut the price of their units by 10% to 17% since July. These are forced sellers, facing few buyers.
For Paris residential property: its prime yield, around 3.50% according to CBRE, has been below the OAT for a long time. It is valued on use and long-term wealth rather than on yield. The shock will come through lending: 3.31% on average in August (Crédit Logement/CSA), a level that does not yet reflect the rise in the OAT.
What would change our view
A rapid easing of the OAT: Moody’s opinion on 23 October, ECB meetings on 29 October and 17 December, the outcome of the 2027 budget.
Prime rents rising faster than expected and restoring the yield without a fall in prices.
Private capital willing to accept a low premium over the long term for the security of a CBD location.
This document does not constitute investment advice.
Sources and method
Method. 10-year OAT: December average for each year (OECD), then the 12 October value for 2026 (Banque de France). Prime yield on Paris CBD offices: midpoint of the range used each year, cross-checking several advisers. Spread = prime yield minus OAT, in basis points. Value scenarios: initial yield divided by target yield, at constant rent and then with rents up 4%.