Guys, please. Thank you. We will start, we will kick off if Mark is ready. Ready, good. Thank you. Welcome everyone in our Capital Markets Day in Paris, and also on the webcast. So we titled this event, "Opening a New Phase," for three reasons, I would say. The first one is that we achieved on the plan that we gave to you two years ago in our Capital Markets Day in Berlin. The second one is that value at troughing, we'll come to it. And the third one is that we will show you that we have an ambition to continue to transform this portfolio and to extract the value growth from our portfolio later on. So the agenda of the day, this morning, we'll talk about the strategy.
We'll go through also an update on each of our business lines. We will have with us JLL and MKG to speak about the office market and the hotel market. And during the afternoon, we will visit some hotel and some office that we have in Paris. Covivio, you know, well the company, it's a diversified player, diversified in terms of product, in terms of geography. I think this is something which is key, even more today. Key also to have strong platforms. We are also the specialists in hotel, in residential, and in office. And when you look at the right part of the slide, the three pillars that we have in our DNA are even more important: centrality, of course, hospitality, moving up the real estate value chain to the operating side. We'll come to it later on today. And the sustainability.
We are in Paris, so a few words about Paris. It's the second city for us in terms of portfolio. Right after Berlin, it's a EUR 2.5 billion portfolio. It's also probably the number one city for us in terms of gross capacity, either for office with redevelopment with reletting gross potential, but also for hotels, especially with the deal we are doing with Accor Invest and the CapEx program that we'll put in on those hotels. We put here several examples. We'll visit some of those assets today. I won't go through each of those assets. Just to kick off now on strategic update with Christophe. Thank you.
Thank you, Paul, and welcome everybody. I'm also very happy to welcome you in our European headquarters here in L'Atelier, which is really for us the showcase of what we imagine is the office of tomorrow. And we will have the chance to show during the day, just after lunch, for those that not visited it before to have a look at this building. So, well, so what we will share first in terms of strategy. First of all, as Paul said, two years ago, it was in Berlin, and we had the last Capital Markets Day of Covivio. I have to say, the mood was not very nice, and we said that we want to adapt the company to this new environment where we imagine will be the next two years. To do that, the main topic was to maintain a strong balance sheet.
For doing that, we announced the idea to have a disposal plan of EUR 1.5 billion through a different asset class during the next two years. And we will also, despite the situation, to capitalize on, gross acceleration. What are we able to deliver, two years after? We achieved the EUR 1.5 billion disposal plan as of today. We will go more into detail just after. We will be at year end at the LTV below 40%. That is the target that we give also to the market. And we have strong operational results with roughly 14% cumulated like-for-like rental growth during this period. Just first, in terms of disposal, EUR 1.5 billion disposal achieved, 75% growth in the office sector, EUR 1 billion.
We just signed yesterday the disposal of one big asset in Milan, and Alexei will give more detail on that, the development that we are currently doing in the southern part of Symbiosis for roughly EUR 200 million. We also continue to streamline our portfolio in Resi with a EUR 240 million disposal during this time. Block sales, mainly through a partnership with CDC that we put in place this year, but also privatizations that we continue to put in place with a really nice margin, on average 44% margin on this privatization. In the hotel sector, also we sell some non-strategic hotels during this time. Balance sheet, key question on this time. We really are at the target to be below 40% LTV. At the same time, we keep the same maturity of debt close to five years. We reduce net debt to EBITDA.
It was 12.1 x in June, and it will be continued to be reduced in the future quarters. The cost of debt will remain low longer, at below 2.5% until 2028. It went until 2026 two years ago, thanks to an interesting hedging policy that we put in place. And at the same time, we double the liquidity position of Covivio to EUR 2.5 billion compared to EUR 1.2 billion two years ago. And all of that enables us to keep our triple B plus rating as S&P with a stable outlook. In terms of gross potential, during the last two years, we have this 13.6% like-for-like on average on the revenues. It's compared to an inflation that's what, 8%, so really stronger than inflation, like-for-like rental growth, despite the environment that all of us know.
That allows us to have an earnings that grows to guidance of EUR 460 million for this year compared to EUR 430 million in 2022. At this time, we also prepare the future. One of the goals was to continue to recalibrate the portfolio between the asset classes. So we reinforce our exposure in the hotel sector, mainly this year with the transaction we made with one of the shareholders of Covivio Hotels exchanging Covivio Hotels shares in Covivio shares. But also, we work to in our portfolio with Accor Invest, and we will sign by the end of this week, I hope so, Tugdual. It will confirm that the deal that was announced one year ago with Accor Invest that will change also the profitability of our portfolio and our capacity to create value in the future.
Where do we stand in terms of real estate market? That's a big topic, big, big question, I imagine, for all of you and also for us. But what we could say, first of all, it's remaining a lot of political and economic uncertainties around us. We'll not share more detail on that, but all of you are aware of that. And it is, I have to say, continuing. But looking to the data, the figures, inflation is really decelerating strongly in Europe. Today, Eurozone, Europe with inflation at 2%, and it could be below in the coming months. The interest rates are going down. The long-term interest rate, the short-term interest rate, and looking to last day's figures, it continued to go down and is positive. And there is also first positive signal in the European real estate investment market.
Just when looking to what occurred since the beginning of the year, in the hotel sector compared to last year, + 55% in the European market. In the German real estate sector, + 50% when I'm looking to the transaction of the first half compared to last year. In the office sector, remained weak market, but as we announced this morning, this EUR 200 million transaction, we see the beginning of big transaction coming back into the market. There is also this rumor of this large transaction in La Défense that is today in the market. That mean really that we see that the market start also in the office to change. What does that mean, all of that in term of appraisal value?
The figures that I just put there as not the last one, the appraisal campaign is not finished, but that's the first indication of what will be the appraisal value at year-end on a like-for-like basis for the different asset classes we have in Covivio. What we imagine today with the discussions we have, this appraisal is plus 1% in the second half, both in hotels and in German resi, and minus 1% in the office sector. This minus 1% in the office sector is driven by plus a little plus in the city center location, a little minus in the business district location, and a stronger minus in the non-core location. That leads to roughly for us a 0% evolution on the valuation in the second half, and that confirms that the net asset value was in truth at the end of June.
For the future, what is clearly what we are? We say a powerful diversification. Paul said that before. We have a diversified company in term of business profile, in term of geography, in term of products. It is so, and so I will just go through these three topics now. First, in term of expertise, we changed a little bit the profile of portfolio during the last years. You see that it was hotel was 15%, today it's 20%. Offices were 60% portfolio, today it's 50%. So we changed, start to change the mix of the portfolio during the last years. And as you will see after, we want to continue to go in this direction. When I'm looking to the evolution per products, we increase exposure in hotels.
We also develop our own operating expertise during the last years, and now with a dedicated brand, which is Wikit. In the resi, we want to continue to push on Berlin. We really consider that that's the city where we want to be more in the future. Today, it's 55.7% of our portfolio, and also in Berlin, but also perhaps in other cities in the future. We want to continue to do privatization with really nice margin. In the office sector, we want to continue to push on centrality of the portfolio. Today, we have 69% of our portfolio, which is located in the city center. It was 59% four years ago, and we want to continue to go in this direction. We also continue to improve the quality of the portfolio.
We will continue to push our offer on service like we will see in this building, which is really for us key for the development of the office sector in the future. In terms of operating performance, this strategy, what we have done in the past, leads us to keep a really high occupancy rate despite the cycle, despite the evolution of the environment. You see that during the last 10 years, on average, the occupancy rate of the portfolio was close to 97%, and it was 97.3% at the end of September. We have a revenue growth during the last 10 years, which was roughly for 30%. That's above inflation during this period. In terms of positioning, I will not go too much into detail because after you will have a presentation for each asset class.
But in the hotel today, what is key for us in this area, our hotels are located in 19 major touristic destinations. And what is expecting for the next years in Europe is an increasing by 5% per year of the tourist arrival coming from all around the world. In German resi, we continue to benefit from demographic strength in the asset in the location where we are, especially in Berlin. And you see that on year on year, the evolution of the market rent in Berlin was plus 10% another time. In the office sector, we will continue to work on to increase our exposure into the city center location. And you see the same, the evolution of the prime in Paris and in Milan during the last 12 months is + 7%.
Somewhere in the future, we said several times that we want to continue to have a more balanced portfolio between our asset classes. We confirm the long-term target we have in terms of exposure to go to roughly the same exposure in the three asset classes we have between offices, hotels, and resi. How to do that? It will take time. That means that we'll continue to have rotation of the portfolio. We will seek new acquisition opportunities mainly in the office and hotel sectors. We'll work on conversion of offices into hotels. We have some programs that will start.
In resi, we want to reinforce our exposure in Berlin in the future to pursue privatization, but also in the sector to deploy progressively a hospitality approach as we have done in the hotel sector and in the office sector. In the office sector, as I said, more quality, more centrality, and we want to fully exit for the non-core part of our portfolio. In terms of hospitality approach, as Paul said initially, it's really a key pillar of our strategy, and we want to do that in each, in our asset class. In the hotel sector, we have our own hospitality brand today with Wellio that manages directly hotels and will double the size of the hotels managed after the fulfillment of the transaction with AccorInvest.
In the office sector, with value first, but not only value, what we are putting now in all of our large office we have, we put more service to our client and want to deploy this quality of products in France, in Italy, but also in Germany. And in resi, there is really also in this sector a demand for new form of housing and urban services. And we want to start to develop operated resi project. We have already one project ongoing in Alexanderplatz in Berlin, and we have two, office conversion in Paris that will be also in operated for office in the future, in operated resi in the future, sorry. In terms of ESG, that's the third pillar of the strategy of Covivio. We really built during the last years a leadership position over the long term.
I won't go through each data that are there, but in 2018, we established our first 2030 carbon trajectory that was approved by the SBTi. Since then, we increased significantly all the KPIs that are indicated there. This year, we have decided to bring together the carbon and biodiversity strategy in a Nature Plan that will be presented just after by Yves. The last point is also to extract value in your portfolio. How to do that? That's some figures that I know that some of you like figures. That's why we are giving some of them: three aspects. The first one is the full effect of what we have done in 2024 in the hotel sector that will lead to roughly EUR 17 million of more revenues next year. Second one is the pipeline.
We have today the committed pipeline that will deliver roughly EUR 70 million of future rents. And for that, we need to spend EUR 450 million of remaining CapEx. And we have on top of that the managed pipeline that could lead to more than EUR 55 million of future rents. And for that, we need to spend roughly EUR 700 million of CapEx in the future. And lastly, asset management, we have really first one is linked to office reversion. So we imagine that we have EUR 18 million -EUR 28 million of positive reversion in the city center in the office sector that will lead to the future renewal of the current lease. We have strong reversion in German resi. We put that more than EUR 50 million , but it will take time because that will take time things during the future.
In the hotel sector, during the next three years, we imagine to spend EUR 170 million of CapEx that will allow us to generate more than EUR 22 million of future revenues. On top of that, there is also this big privatization margin that we have in German resi that represents a total amount of more than EUR 1 billion that will be, that will take time also to arrive. These figures exclude completely indexation and variable hotel revenue effect. On the last point is opportunities in the, in the world when we could consider that we are at the trough of the market, we are starting to look at new opportunities also in term of investment. Just to remember our strengths, we were, we have a really strong track record in term of asset rotation.
During the last 10 years, we are able to manage EUR 8 billion of disposals. Another strength of Covivio is the fact that we are able to put in place long-term financial partnership as we've done this year with CDC in German resi. We were always keen to have a long-term partnership with us, and that's a way of also for us to pursue our development. We have a financial balance sheet structure, which is healthy today with the LTV below 40%. That means that all these topics will lead us to seize new opportunities in terms of hotels, in terms of Berlin residential also in the future, and to do development in our portfolio that we have today in Paris, Milan, and Berlin.
Just to summarize the key takeaways of this overview, and after that, we'll go into all in more detail. First, we deliver our plan that was announced two years ago. Second, we consider that the real asset market is at the trough today in terms of valuation. And third, we put in place these strategic priorities, rebalance the portfolio, increase centrality, deploy our hospitality offer, and extract growth potential in our portfolio. So, it will be a Q&A session at the end of all the presentations. So don't worry if you have questions, we will answer to them at the end. So now I will give the floor to Yves to speak about ESG. I use this one.
Thank you, Christophe. Good morning, everybody. I'm very pleased to update you this morning with our ESG strategy and performance. The backbone of our ESG strategy relies on four pillars.
The first one obviously is about our real estate operational activity, and we will focus on it this morning. The second one is about our stakeholders and especially our clients. We commit to ensure their well-being. We measure it, and as you can see on this slide, it's our hospitality approach is quite efficient. The third pillar is about our teams. We are convinced at Covivio that at the end of the day, the human capital makes the difference. So we train our teams, we measure the satisfaction, and we ensure that they are diversified. And you see also on this slide that it works. Last but, sorry, last but not least, governance. Our governance relies on right balance of powers between with a non-executive chairman of the board and a CEO.
The board is mostly independent, international, diversified also, and has created a ESG committee a few years ago. And this ESG committee has increased the share of ESG criteria in the remuneration of the management team. It's overall more than 20%. Back to pillar number one, and a small update about our carbon trajectory. As Christophe mentioned, it's SBTi confirmed, and our ambition is to reduce by 40% our carbon emissions between 2010 and 2030. You can see that we are well on track. How do we do that? We have four main levers. The first one is our CapEx plan. We still have roughly EUR 230 million to invest in our portfolio with green CapEx by 2030. We are well on track. Second one is, of course, by delivering state-of-the-art new building.
third one is about our usage of energy and green energy. The fourth one, we don't control it, but we also rely on the improvement of the energy mix in the countries where we operate. Ten years ago, we announced we made public the ambition of reaching 100% of our portfolio with environmental certifications. By that time, as far as I remember, we were around 30%, so it was quite ambitious. We are getting close to the end of 2025, and as you can see, we are way well on track also on this target, so our challenge now is to improve the level of those certifications. As you can see, for example, in offices, we are now more than two-thirds of those certifications are at least at a very good level. All this makes us a leader in terms of taxonomy also.
When we compared with our peers, the real estate, the REIT activity, which is the one we can really compare with our peers. As you can see with those numbers, we outperform our peers both in terms of alignment of revenues, but also with alignment of CapEx. Today we wanted, as Christophe mentioned, we wanted to announce to you also that we worked and we delivered both a strategy and an action plan about biodiversity. The real estate industry has a huge impact on biodiversity, and as we intend to remain a leader in ESG, we obviously wanted to tackle this challenge, and today we are happy to make public our strategy and action plan. It's all about three pillars, 21 targets. I won't go into details with those 21 targets, but I can briefly give you an idea of this action plan.
First pillar is about avoiding the new deterioration of natural habitats. For this, for example, we commit to have a 0% net artificialization impact on our committed pipeline. We will do more and more refurbishment and building elevation instead of constructing a new building, obviously. We will measure on each of our developments. We will measure the impact on artificialization, and we will with our suppliers put in place a process to trace all the materials we use and use less and less materials that have bad impact on biodiversity. Second pillar is about reducing our resources consumption. On top of the ambition, the target we have in terms of energy, we also commit to lower our water intensity, for example. We will shortly use only green electricity on the buildings we directly manage.
We will double our solar energy production, and we will obviously use more and more materials from a circular economy by reusing the material we will destroy, even though we will do less and less on that and we will track the new material we will use in order to ensure that more and more come from circular economy. The third and last pillar is about improving biodiversity in cities, and here also we will commit to measure the impact and to improve the impact on almost all our development projects and to have a net gain in biodiversity on the 20 largest assets we manage currently in our portfolio. We are also today very proud to announce the first Nature Report that we make public today. As Christophe mentioned, we decided to bring along our carbon ambitions and targets with our biodiversity strategy and action plan.
All this makes a Nature Plan, and we are happy to share it with you with the details of all our targets in terms of biodiversity in this Nature Report that is online today on our website. Finally, you see on this slide that all this, the strategy and all those achievements, have allowed us to stay at the top of the rating of agencies. We are in two years since we spoke in Berlin two years ago. Since that moment, we either improved or stayed at a top level for all those agencies, as you can see on this slide.
Thank you very much, and I'm pleased now to leave the floor to Olivier that will give you an introduction on the office strategy. It's not you, Olivier. Okay. I thought it was you. Okay. Welcome. She's there. Welcome.
Thank you. So thank you all. Good morning. I'm Marie-Laure de Souza. I'm the CEO for JLL in France, but also in Belgium and Southern Europe. So today I will try to give you some highlights on the markets, knowing that you can have some Q&A, I think at the end, so I'm sure that you will have some. What's going on in markets today in offices in France and in the countries where you are located? Firstly, let's have a look on the trends and what are the factors that are today shaping the markets globally in Europe. We have five major trends. If you have to leave the room before the end of the presentation, you have to keep in mind that five major trends are important today for the corporates who are really acting today in the French market.
The first one is really making a focus on the talents, on the human resources, which you are seeing here on your strategy. This is the main point today for the corporates, knowing that they are trying and still trying to attract and retain the client, the people. So it means that they want to have the best place in their offices to have a balance between the professional life and the personal life. And the offices is becoming a new way of living. So having a good experience in the building is one of the major trends that they are all expecting. The second one is the technology. This is one of the major trends that we have. You have all heard about artificial intelligence. You've all heard about all the technology that we are going to implement in the, in the buildings.
This is major, and it's a major trend, knowing that it helps us to bring our corporates to their sustainability targets, because to have sustainability trends, you need to know what's going on in your buildings, what's going on with your people. So the technology is coming into the building. The technology is coming into the facility management. The technology is now due to data that we are all collecting to give facts to the people to take decisions more brightly. The third one will be sustainability. Of course, we all know the taxonomy you've heard about, but we all know also that it's one of the major trends for the corporates for the next years.
We are responsible for an ecosystem in real estate, which is major, and the sustainability, knowing that we have the taxes, but also the will of the company to change the way that they are acting, acting in their buildings, acting in their offices. So it's a major trend that we are looking at. And we know now that some corporates, I will tell you about Barclays, for example, which is a global account of JLL. Barclays just told us that the strategy in the next five years will be to change completely the way they are acting in their real estate world. And all their main offices in the next five years will be only sustainable ones. The carbon impact of their buildings will be the first motivation of move, and it will be the first objective of them changing the way that they are acting.
The fourth one will be the portfolio optimization. We've seen that there's a lot of transparency now in the market and that there's a lot also of ambitious real estate challenges where the portfolio optimization will be in the heart of all the strategy of the investors, but also the corporates to get some targets they have in their strategy. And the fifth one will be the return on investment. Of course, data is helping us also to take good decisions and strategies, knowing the fact that we are looking at. So these five major trends are really acting on the real estate world. Then we have major trends also in Europe, and mainly in France. So if you've heard about centrality, this is the main priority of the companies to attract and retain the talents today.
Some companies do prefer to downsize a bit their portfolio and their square meters in offices to choose a better location, to choose a central location, which is one of the major points that will help them to attract and retain their talents. So this is major, and as you can see, it has also an impact because on the last two years, we had a lot of corporates who were in the first rings of the cities or in the second ring of the cities, and they did prefer to take much lower spaces, but better spaces and centricity. Now, in 2024, I can tell you that companies who decided to do it and to leave 20,000 square meters in the first ring to get into the CBD of the cities for 8,000 square meters are now looking for extensions.
And this is one of the trends that we see in the end of the year, knowing that a lot of these companies are now struggling because they don't have enough space in their buildings. I can tell you about Technip in La Défense. They were due to stay three days in the office. Now, the big CEO in Texas said to them in September, "Guys, you have to come back five days a week." So it means that they had to take extension very briefly and very fast to get all that people back. I can tell you also about Amazon.
We are working for them in many cities in Europe, and I can tell them that a few months ago, their requirements were 35% less than what they are expecting in 2025 to get because their CEO also told them to come back in the office five days a week, so I can tell you about a lot of companies. This is the trend that we see even in the investor world, knowing that everyone knows now that home office is a part of the hybrid world, but in the same time, we know that when you're in your home, you can work on a very dedicated task. Now, having some synergies, creating new offers, creating new service, mentoring the new, the youngest people have to be done in the office, so we don't have the same return to the office depending on the culture of the countries in Europe.
More in the south you are, better you like to be in the office because your culture is mainly due to your social environment in the office. The comeback in the office is really a trend that we see in the fourth quarter of the year and that we are going to see an increase in 2025. What does it look like in the real estate overview of France? All the numbers that I'm going to explain to you are numbers on the third quarter of the year. The fourth quarter will be important, of course. You have to know also that the fourth quarter in France is always the biggest one and the major ones for take-up and major trends. The first one on the take-up, the take-up is quite low at the end of September, 1.2 million square meter.
The average is a bit more for the last 10 years because the average take-up a year is around 2 million square meter in France, but it was mainly due and we're going to see that on trends, looking also at the economy and the cycle of the economy. We had the downsizing due to the COVID and new ways of working, but I just told you that it was the past and it's going to be a bit different. We had the flex office who took a lot of position on the last three years, and due to that, now they are installed and based, so they are not one of the major engine of the take-up.
And the third one will be the tech world, which now has to decrease a bit, maybe, their impact due to the fact that they are working differently and the intelligence and the artificial intelligence and changing a bit that. So what you are looking at is that all the trends are quite on all the surfaces, all the spaces, but major due to maybe the uncertainty about the French politics before the summer. The Olympic Games also were a bit distracting on the French market, but we do see now that a lot of big trends and transactions are currently negotiating in France and in Paris. We do hope that the take-up will be much bigger at the end of the year. Major trends on big surfaces and the coming back of the office is really an impact.
So I can tell you that big transactions are currently being acted and are going to be acted in La Défense for major surfaces like 35,000 square meter at EUR 660 per square meter in La Défense is currently in negotiation. Or maybe some people are telling that Arboretum could find a tenant in the next days and weeks. So it will have a big impact on the take-up. If you see a take-up quite in decrease also at the end of the year, 2025 will be much different and we will see that. It has also an impact on the rental values, as I told you, and the centrality and the will for the companies to be in the center of the cities has a direct impact on the rents.
As you can see, we have the major increase of the rent in Paris going up to EUR 1,400 per square meters. This is not the top rent. This is a calculated prime rent because due to the vacancy rate in the center of Paris, we do have this vacancy rate going so low that the prices are going high, but also because the buildings are much better than they were a few years ago, taking into consideration the new services, but also the ESG environment. When you're looking at the global immediate supply in the French region and mainly in the Parisian region, we have today a vacancy rate which is quite high when you're looking only at the numbers because we have a vacancy rate around 1.9% of the global stock.
You have to look at that carefully because on that 9.5% of vacancy rate, you have a major part of this vacancy rate, which is composed by the second ring grade C buildings, which maybe will have some problems in the next years to find a new tenant, but it's not due to the quality of the building. It's mainly due to their location and maybe also to the fact that they are not sustainable at all. So only 25% of this vacancy rate is today new or restructured. So these buildings will be the ones who are going to find their tenants at the end of, we do hope, a quite short period. So when you're looking at the history of these numbers, you do see that the 1.2 is quite, maybe a low number, but as I told you, the fourth quarter is not there anymore.
We are still expecting to be at 1.7 million square meters at the end of the year, which will be rented by the companies. In the same time, you can see that, as I told you, we have the flex office world, which is now established. We have the tech world, which is a bit going down. Also we know that a lot of companies are looking also on the balance with the region. Maybe it will have an impact also on the take-up in the Parisian market in the next years. When you are looking at where the companies are going and where they are going to take their rents, you do see that Paris still attracts one up to two deals in the greater Paris region, which is quite major.
When you are looking at the areas, you are looking, you're seeing that the centrality and the location of the buildings is really important, but it also emphasizes the fact that business places are really important for the companies and La Défense won't have a bad year this year. This is completely sure, at the same time as the CBD is going on and mainly will have, as I told you, with the impact of the five days coming back to the office, an impact of great sustainable buildings in the first rings of the cities. This is what we're expecting because due to the vacancy rate in the center of the cities and due to the fact that they need more premises, they need more services, you can't find buildings for everyone.
Even the budget is going also to change a bit, maybe these trends in the next weeks and months. The large transactions were concentrated in the center of the region, but due also to the fact that they were decreasing the global footprint of it, knowing that everyone now is looking also for a certified building. As I told you, the first ring of the cities are going to provide this type of buildings.
When you are looking at the prime rents, as I told you, the prime rent hasn't been so high in the history of the Parisian region and it's going to stay due mainly also to the next stock that we will find in Paris, due also to the new legislation of permits into Paris, which will emphasize the fact that great buildings in Paris will find tenants and the rents could completely and continuing to increase to be at the rents in the next years, so in the same time, you can see that the major rents and even in La Défense, you will have a peak in the next weeks, as I told you, with the big transaction, which is currently acting and maybe the fact that all the companies in La Défense would decrease their footprint will continue to take some.
So the prices will stay a bit higher than what we are seeing today. We can see for the moment also that the incentives given by the investors are still stable, but it depends, of course, on the location of them. A bit of information on the investment context where you are more maybe expert than what I'm going to tell you today, but really shortly, some key themes that we can see in the investment markets today, in France and mainly in the offices. The overall look is better with the growth that we can expect. The inflation falls back and we do expect immediate return on the investment markets. The key interest rates have entered into a downward phase, due to the slowing inflation, and we do see that and we start to see it in the U.S.
We do expect it to come to Europe, to continental Europe, and to France. Mainly, we do hope in the year 2025. The employment remains quite healthy with less pressure than a few months ago, but still some pressure on that. The employment levels are quite high, and the wages are right. We know that there we have risk. We have risk on the geopolitical context. We have risk with the escalation in the war in Ukraine. We know that the U.S. election could have a different impact that we still expected some weeks ago. For the moment, all the investment market is still sensitive with some new trends, which are balanced by what we try to do in the ESG context and trends due, of course, to the climate events that we do see.
As I told you, the geopolitical context has a high impact on the investment market, but also in the certainty that the corporates are taking for that decision. Let's try to have some good news around that and the interest rate began to reduce. We do hope that it will continue knowing that the forecast will be quite positive in the next months or we try to expect it. What's going on on the investment market? You've seen the letting market, which was quite lower than what we had in the last years, and the investment market is more marked. As you can see on the third quarter, it was quite low in France, mainly in offices.
As you can see on that trend, this is obvious that for the moment, the market is quite low and we have a moment where everything is quite frozen. We have sellers, we have buyers, but for the moment, the good interests are not completely aligned. So we do hope that it will be with some different actions and reaction and strategy in the next months. As you can see, it was mainly impacted in offices, knowing that in retail, in logistics, and in light industrial, the numbers are a bit different. So you have a different balance than what we had before due to the trends on the markets, but due also to the attraction of new asset classes.
Maybe we could imagine in the next year that we will have new asset classes coming into that investment market, for example, on energy, infrastructure, education, or maybe life sciences, which can maybe be the new ways of investing in the next future. We do hope also that 2025 will be, we'll say comparable, but we do hope better in Europe in 2025. When you are looking at the trends, some emerging markets are a bit different, but the major traditional markets are more impacted than the new emerging ones. So, we've talked about France, we've talked about a bit the global market. Let's have a view on Germany and let's have a view also in Italy.
So Germany, Germany is not as easy to understand as France is because France is more centralized than Germany is, knowing that Germany is mainly on seven markets that you can see there. So we don't have seven markets, but quite we have seven lenders and seven markets which are impacting and are different, on the, on the global view and the numbers may be quite a bit different. When you are having a look on all that markets, you can see that the take-up is still quite good, even if it's like in France going down. So 13% less, 13% more, sorry, than the same period last year. Good news. The vacancy increase in some cities, but not everywhere, mainly due also to the lack of good supplies in the center of the location of these cities.
So as you can see, the prime rents also were going quite higher, due to the fact that we have a lot of lack of stock and lack of stock also have to be balanced because when you see a vacancy rate of 10% in Düsseldorf, as you can see, the stock is lower, so it doesn't have the same impact. But we do see exactly the same thing in Germany that we see in France. Companies are looking for central location, companies are looking for new services for ESG buildings. So it's mainly a lack of the stock sometimes that it's frozen, the center of the market and they're due also to the cities. And then the differences between the cities are major. You know that Frankfurt is major, is a major financial city or whereas Berlin is more tech impacted cities.
Every city has its own ecosystem and the differences are quite the same on them. When you're looking at the take-up, you can see that Berlin is impacted by the tech world because it was mainly a city where you had a lot of backup and back offices on the major big tech companies. This is why they are also impacted. As I told you, artificial intelligence also is acting and impacting the number of workforce in that type of companies, knowing that we are expecting new jobs and new companies and new people coming into those companies. But for the moment, they are in a way that they are looking at what's going on and how they are going to imagine their future.
Düsseldorf is going also a bit down, but not due to a special industry, but mainly due to the market itself and to the lack of good buildings into the center of the cities. Frankfurt is really impacted by the financial part, but the return to the office is less obvious than it is in France for the moment, even if the companies are trying to bring their people back. Hamburg is mainly also due to the world trade and to the slowing down on the exportation of Germany. Cologne, I won't comment particularly. Munich is going to be quite stable and lacks the same of 2023. Stuttgart is going also to have exactly the same trend as we had last year.
When you are looking at the supply and where it's possible to have new buildings, the cities were organized due to their industries. When I was talking about Berlin and about the tech companies, Berlin was also providing and is still providing completion of new build buildings due to the impact and will of the tech companies to come back. We do think that these new buildings will find their tenants. The question could be the Grade B, Grade C buildings for the near future. In Düsseldorf, the stock is quite low, but the completion is still going on. You have to know that in a normal year, the vacancy rate, which is the best around 7.58%, that is still a bit more important today in that city will find new completion.
So we do think that these buildings won't be the problem in these cities in the next years. The problem will be mainly in Grade B or Grade C buildings in secondary location where the tenants won't go due to the fact that they were not having achieved their ambitions around sustainability and around new services. As you can see, also the city where you will have the more completion will be Munich. And then we have to make a lot of words and pedagogy and to explain the new markets going on for these companies. When you are looking at this vacancy and that's prime rents, the vacancy, as you can see, is quite high. The average vacancy rate is mainly due, as I told you, to the new completion coming and to the will of the companies to stabilize their own strategy before finding new buildings.
The uncertainty that we had before is impacting also this vacancy rate and the prime rents. Italy, let's go to the south. The situation is a bit different. In Milano, the office market is quite stable or is quite good for the moment due to the fact that we have a very low Grade A vacancy rate around 2.8%. As you can see, it could look like the CBD vacancy rate in France. The investment, sorry, is going higher than what we are expecting. The prime rent also is quite good around 4.5% in the context that we know. And the take-up is quite stable, knowing that we still have, as you've seen, a lack of good and great premises in the center of the cities where we do have this type of buildings. The completion will be quite high, but are still missing.
They are mainly located. We will see that in the map, in some places of the cities and mainly in new brain markets like Porta Nuova, which is still going on. This is quite funny because in JLL, we are currently looking at our own location in Milan, and I can tell you that it's not easy to find the great building in the great location, due to the fact that, well, there's a real lack of these supplies and it's quite high. The rents are quite high also. So the office take-up, as you can see, is quite going down for the moment, but the fourth quarter is going to be better. It looks like the market of 2021, which was good globally. So we do hope that in number of deals, but also in the global take-up, we'll have quite not a bad year.
The take-up is a bit different from what we are expected. What you can see is that there you have a decrease on the rents due mainly to the fact that these buildings are not existing at all. As you can see on this map, we'll find exactly the same map that we could have seen in all the global location and cities that I've just talked about, knowing that the center is still quite high. You have some new refurbishment, which are going to be major in the center of the cities. Milano is still a 20-minute walking city, which looks like also what is going to be expected by the companies in the next years and what is expecting also by the talents of these companies.
So when we've seen Germany, we've seen Italy, and we had a look in France, what are the key trends for offices in France and in Europe for 2025, but also for the next years? So you have seven points to keep in mind. The first one is, as I told you at the beginning of the presentation, a return to the office employee experience. So meaning that now everyone knows that the hybrid work is a way of working, that the flex, way of working in the offices is something that we know that is completely convinced and in the center of the strategy of the corporates. In the same time, we want our people to stay in the office and we find new ways of doing it depending on the culture of the cities.
For example, in France, giving free lunches on Friday could help you to have your people at the office at this time. It's not the way and it's not the same in Northern Europe, but the culture of the cities and the culture of the countries are mainly impacted also the return to the office. But we know that it will be a global and major trend that we see in Europe, but also in the US in the next years. The flight to quality, this is something very important. All the companies know now that they want to attract their people, but also they want to increase their brand and the quality of their reputation due to the best places to work.
The pandemic transformed a bit the way that we are working, but what is sure is that we know that now the office is important, that the office is a way to live differently from before. We know that we need to have a high quality of spaces and experiences to give back to our people due to the way that they want to come back to the office. The flight to quality is something that we have seen, and this is why I'm more stressed about the grade C buildings in the second rings, second rings of these major cities than I am on the first ring on La Défense or in Paris inside. The flight to quality is important.
As we talked about the location, when we're talking about commercial real estate, when I started something like 30 years ago, even if I'm less than 20 today, of course, what we've seen is that the location, location, location was that what I've heard 30 years ago. It comes back. In fact, we come back to the basics. We come back to what is important for the companies and the location is important for the brand, for the way to access to the building and the transport and the common transports are major in that strategy. The fourth one will be, of course, as I told you, the impact of intelligence, of artificial intelligence, of the new IoT tools, of the new buzz, of the new ways of working in the, in the offices.
A future trend will be to have buildings where you can have data, when you can collect them, maintain them, and take decisions around them. So all the artificial intelligence is going to change a bit the way that we are working, but I'm deeply convinced that even if we'll have a shock at the beginning, knowing that some non-added value work will be challenged, new offices and new ways of working will increase and will be much more present in this market in the next months and years.
The fifth one, as you can see, and as we've seen just before in the lack of quality of good stock in the center of the places and the location where we are looking at them, and they are the major trend on the ESG and the sustainability for the development approach and the way that the people are going to choose their new locations. The last one will be, of course, the supply constraints of the good buildings, the good places with the good services and the good new way of working. So I think that I try to give you as quick as possible the big trends that we are seeing, in Europe and in France in that moment. So maybe you have some questions or maybe I will give you back the mic and the scene. Oh, questions, two questions. Thank you. Please.
Good morning. I'm Valérie Jacob. I just have a question on your presentation on the French office market. I don't know if you can go back to the slide when you are showing the take-up. Sorry for that. I'm coming back.
Yeah, this one. You want to see this one?
The one, yeah, that one. Yeah. When you talk about that slide, you said there are lots of deals in the making in the Paris region, in La Défense and everything. And then you said that your forecast for the year end is 1.7, which basically means that the last quarter is going to be the same as last year and not that big compared to historical level.
So I was wondering how you reconcile these two things, the fact that your forecast is only 1.7 million square meter , and that you think there are lots of deals in the making. Is it because we will see a Q1 2025, which is going to be larger or?
So, in fact, what impacted a lot the companies were all the changes in the same time. You can change one parameter. When you are changing so many parameters, it blocks and it's freezing sometimes the decisions. So we know that you see one, we will, we say we are 1.3 million square meter that have already been taken. We do expect to be quite at the same level at all the last quarters of the fourth part of the year because people are still expecting the last moment in France to take the decision. So it took more time.
So this is why we do think that the year was quite calm from now, but we are at this moment where 500,000 square meter or 400,000 square meter, it's quite a lot. We know them, we know that they are currently in, but it will go to what? 1.7 million square meter . So we'll have a good Q1 in 2025. I can't tell you about all the deals one by one, even if for the moment they are quite confidential, but it's quite a normal comeback to what we have expected before, knowing that the last part of the year is that moment where everyone has to take the decision. So we'll have a good balance between a good fourth quarter and quite a good first quarter of 2025.
Thank you. I'm Véronique. I wanted to ask a little bit maybe about value. You mentioned obviously transaction volumes are still low. You mentioned, I think, that sellers and buyers still haven't found each other. Do you feel that we could see still some value write-downs in offices in general, but also in Paris? Or is it more the uncertainty that's prohibiting any transactions?
Firstly, the increase of the prime rent in the center of Paris is mainly due to the new quality of this building, which are better than the one which were provided before and completed. It has, it's in fact the quality of this building, which increased, of course the rents, but also the lack of the supply, which increased the rents. We'll still be stable on that.
I think that the first, the EUR 1,000 per square meter in Paris will be the new trend that we will see, and it will be the new value that we are expecting in some places where the supply is bigger. When you have some competition between the buildings, between very good grade buildings, then we can expect in fact the rents to be quite stable. But we do imagine that for some strategic reason of some investors due to their vacancy in their portfolio, they will have some reaction which won't be the one that we're expecting. And the major trend will be mainly on incentives or on net rents more than on the rents that we can see as the average that we see today.
In terms of property values, do you see this increasing rent more translating into higher yields, or do you expect yields to still remain stable and therefore values going?
I would like to answer you properly to that question. It's not easy to do so today. We do imagine that the quality of the stock and the quality of what we've done in the last months will have a large impact on the values in the next years, but we'll have to change a lot of parameters before coming back to that new normal.
Yes. Hi. Yeah, Jonathan Carnetto. Hi. You mentioned a couple of times, or probably more, La Défense. Yes. Both in the investment market, also in the rental market. In your latest conversations with potential tenants, are you seeing more appetite for the area given Paris is full? Are you also seeing in light of some of the discussions on the invest ment market, for Trinity, for instance, you just seeing more appetite there, or is it just a very burgeoning beginning?
We have three major trends in La Défense. The first one is that it is a business district, which is really attractive for the companies because it has an impact on their brand, it has an impact on their environment. So La Défense has been for the last 20 years a market where we have big take-up, lower take-up, big like. So the cycle is quite different. La Défense will stay La Défense and in a good business district. This is sure. When we are talking about corporates and tenants, two other things are coming.
The first one is that the major buildings of La Défense are divided, which was not the case five or ten years ago, so it has an impact of new coming into La Défense and smaller companies, but very high value companies, so this is a major trend that we see that was not existing before, and the second one is that we are bringing to La Défense companies which were in the first or second ring, which can afford today with a global, economic, net rent that you can have. It will, it has an impact of new arrivals that we didn't know before and new industries, a new segment of industries that were not in La Défense, so I'm still positive in La Défense for brand new buildings.
I'm still positive for buildings which are taking into consideration the services, the sustainability, and what we've seen as major trends. This building will find new tenants where I'm a bit more stressed about will be the Grade C buildings in La Défense, which didn't embrace the new trends that are looking for the corporate. But La Défense will still La Défense. And when we see the prime rents that are coming, we do imagine that it means that it's a big, it has a big impact and the quality also of the supply in La Défense is much better than what we've known before on some buildings. So I'm not completely stressed and it will, of course, have an impact on the global investment rates also that for the moment are quite non-existing. So not easy to have majors.
I mean, of course, net effective rents have dropped quite substantially. Do you see them stabilizing or going up even, or are they still going to stay at, you know, that kind of level of incentives? It's going to be, I don't know, up to 35%, I guess.
In fact, the global market that we see in the Parisian region is mainly different speeds. So as I told you, when you are looking at the center of Paris, you see very low vacancy rate and prime rents. This is one speed. The second speed will be the first ring and it will be completely different. So we do think that in the other places of Paris, maybe it's going to be stable. In La Défense, what we can see is that we'll have these two speeds in the same market.
The good brand new buildings, we could imagine quite a higher prime rents, but quite a lot of incentives just to follow the companies and to help them, for the next years. But in the same time, we will see maybe some still increasing, rents for great build ings. And we could imagine decreasing, rents for buildings which really, really struggle to find new tenants or will be transformed.
Okay. Thank you.
Thank you very much, Marie-Laure. Thank you for coming.
Thank you. Thank you. Thank you all.
Sorry to interrupt the Q&A, but the timing is the timing. A few words about the what we have done on our portfolio in terms of repositioning. First, focus on what we did the last decade regarding portfolio transformation. With this idea of flight to quality mentioned by Marie-Laure, we have first increased the average asset size, which allows us also to implement more significant asset management action on asset by asset basis. We have increased our exposure to city center, reduced the non-core bucket, and streamlined our portfolio in major business sets, but we'll come to that in detail later.
One of the drivers of this transformation is for sure the disposal activity. You can read that we have done EUR 2.1 billion from 2021, close to appraisal value despite the headwinds of 2023. Of course, this disposal activity is a selective activity. You have on hand held mature assets with no further value creation, such as, for example, Riverside Toulouse or Major Yarmopolier or Symbiosis School, ICS Symbiosis School in Milan.
On the other end, you find the non-core pockets, the non-core bucket with telecom assets, both in France and Italy, and also Liberté Charenton, which was an old office building in a market where there is no more to come for the office and which was sold to be transformed in other products. I will leave the floor to Alexei to give you more color about a main achievement of last y ear.
Thank you, Olivier, and good morning everybody. I'm really happy to share this new agreement that we have reached with the Valesco Group for the disposal of 55% stake of the SPV that owns the future headquarters of Moncler. And by the way, as Covivio, we have a put option to dispose of the residual part of the stake by end 2027.
As you see in the picture, this is really a state-of-the-art building that aligns in line with the strategy that we have just described, 38,000 square meter building that, as you see from the map on the left, is really in the southeast part of Symbiosis, our district that we are developing. To us, this is really an important transaction on, let's say, from two angles. First of all, it aligns in line, as I said, with our strategy to have financial discipline and to achieve our targets of disposal. But we have completed with this disposal the exit from the southeast part of the Symbiosis area that we have started, I would say, in 2021 in terms of strategy because you, I'm sure you remember last year we disposed the school, as you see in the map.
Then the Snam headquarters is a build-to-sell with a ready in place and agreement to disposal. And now with this last transaction for a value of EUR 200 million in line with the appraisal, we have completed the refocus of our investment in the northeast part that is more close to the city center, more close to the transportation. And by the way, strictly connected and linked with the Scalo di Porta Romana development that I will describe later, that will be a brand new neighborhood scale development that we believe will be a reference in the city in Milan, but a reference in Europe in our, in our idea. Going ahead, Olivier spoke about sales, but we try to be, as Olivier, as Christophe said, as dynamic as we can. We have done also significant reinvestment in our development portfolio in terms of CapEx.
And you can see here some selected pictures regarding the 20 deliveries that we had from 2020 until now. All buildings mostly in the CBD that can really provide a user experience so flexible with services, comfort, totally in line with the new demand of offices as of today. We are talking about roughly 300,000 square meters that we have delivered at 5.5 yield on cost, almost all fully occupied at delivery. And all this dynamism in terms of management allowed also to have a more diversified tenant base. Back in 2015, our five top clients represented more than 50% of our revenue base. Of course, it was a heritage from our sale-leaseback approach that we have at that time. Now you see the figures are totally different. The first top clients represent less than 30%. The first 10 clients represent 41%.
We have really a very nice diversification across industries. Back to Olivier.
Thank you, Alexei. Just, after having streamlined our portfolio, let's share what we have done at the product level, I would say, to tackle change caused by COVID and work from home trends. Okay. First, in a word, where probably CapEx are stabilizing, the value will come from mainly your capacity to generate revenue and to extract revenue for your assets. Real Asset as a Service, as you have heard from Marielle, is for sure the new motto. We come from a pure lease strategy. We were in a B2B relationship with our corporate clients. Now we have a really commercial strategy, a B2B2C strategy to our client to deliver tailor-made offer to them. Let's go to the three components of our offer.
First, with Wellio, our operated office offer, our approach in design and user experience, and a few words about smart building. Joe, first, regarding Wellio, so you have there three examples of what we have delivered. First, the first one is a full building totally let to one tenant totally operated by Wellio for one client. It's a tailor-made offer, and Expertise France has been working there for more than five years, and they are very happy to be there. Second, a mixed, sorry, a mixed asset offering flexible area. And you have in this building leases, but also 450 workstations proposed to the clients and a lot of amenities. We host there also the regional Microsoft Labs, which make a lot of people come in that building using the amenities such as auditorium, event space, meeting room, and so on.
Via Dante in Milan, another example of Wellio, fully operated by Wellio, 30 clients and almost 100% occupancy rate. What is the common point of the three assets is in those assets, Covivio is taking care directly of the people who are living and working in the building. That's why we have this idea of lab, because of course, doing that, we are able to understand people's expectations. We are able to implement innovation both on technology and usage and to test it and also improve Covivio team's service orientation. At the end, it helps us to build this tailor-made offer, which makes the difference. Let's move to our, yes, design and user experience approach. The idea there is when we think about a project, about a refurbishment, we will visit L'Atelier this afternoon.
We start from a design thinking process with the idea to put around the table all the stakeholders, clients, cities, Covivio team, architects, everybody around the table to think about the concept and what we could do in this building. It's leading to a singular concept, a singular identity for each building depending on the building itself, the history, the location, of course, but also the family of clients we are targeting and we come to that. Of course, the concept is also focused, as you know, now with the JLL intervention that we are focused on services, of course, and also on health and green, especially maximizing outdoor space. The smart building is something which has come recently, I would say, in our world.
It's probably one of the main knowledge we have from the Wellio experience regarding the growing importance of IT and technology. We felt very early the necessity to build up a smart building team to be able to define the right level of building embedded technology and also to deliver to our clients tailor-made solutions. Those solutions, it's of course first to improve energy consumption, but also to maximize the user experience. It's mainly the connectivity, the way you access your building and all the service you can have. You can make a ticket if there is something wrong in the building and that's it. It's also about the data issue. It's to collect data, to secure the building data, but also to use the data to optimize the usage of the space.
To sum up, what is a Covivio building now? Covivio building is the idea to create a unique experience for the people in the building and to support our clients to attract talents, which is a main goal for them, to foster community, to increase productivity, and to optimize the cost through intensity of usage. Here it's the example our Christophe mentioned, the showcase of L'Atelier. You will visit it this afternoon, so I don't be too long on that. But, nevertheless, there is, there is something on L'Atelier. It's of course a question of hospitality, care, well-being. I don't know how you feel there, but, as you enter in the Atelier, you feel this atmosphere of hospitality, inspired by residential or hotel code. It's also a matter of efficiency with a really diversity of workspace and solution for you when you want to work in this building.
It's a matter of intensity. A few words about that. The building is hosting Covivio. It's the main occupier of the building, of course, but also four other clients who are there as Lipton or Cheerz. We welcome 10 external clients per week who are coming there for meetings, seminars. They are using this, this room where we stand, but also meeting rooms. They can use the rooftop for a party or an event or whatever. Is the idea to generate revenue at the building? To this question, the more you use the building, the more you optimize the cost. I would stress the point that for corporate now, the question mark is not anymore only the value per square meter or the rent per square meter, but it's how much you pay for one person you put in the building.
And as long as you are able to create, to generate additional revenue, you are able to pay the services, you are able to pay the better location for an affordable cost. And exactly the trend we feel is the future. And that's why we are well positioned with our portfolio. I leave now the floor to Marielle. No, sorry, I have one more for you. It's Maslow. Maslow, the example there is that we make a big work to define who are the clients we target. And especially there was one point we highlighted that the fact that there are more women working in Levallois than men. So we put the stress on the quality of the building, I would say a spa lounge atmosphere, a very safe place to work, very cool place to work.
It has been a great success because despite the bad timing to go to market, we have been able to reach very quickly 100% occupancy rate. Now, Marie-Laure, I'm sorry.
Okay, thank you, Olivier. I will just step back and give you just, you know, the overall figures. Yes, on the office portfolio. We're just stepping back a little bit and looking at the key, key figures on the European office portfolio. The global valuation, it's EUR 7.7 billion. The occupancy rate is 95.6%. In terms of sustainability performance, the certification, you know, ratio and the performance is 94.2%. I think what is very important is the segmentation of this portfolio. 69% of our office portfolio on a European basis is what we call core asset in city center. Really central, you know, portfolio.
words on this one, both assets are attractive high-quality assets located in major European capitals. Also most importantly, in fact, on that, I will revert back to that, the potential revenue embedded, the growth potential from rental income is extremely high. In fact, we have the 25% core assets in major capitals. What does that mean? High-yield assets, high-quality assets with prime tenants. Then the last bucket is in the non-core. Non-core has been significantly decreased. And we're only speaking now of 6% of our portfolio. And the strategy on that front is very clear: to exit that bucket. Obviously, no big surprise. The goal is to go up on the core assets in city centers and to streamline the core assets in major business hubs and exit the non-core.
Just in fact, if we're deep diving a little bit on each of the segments, starting with the core asset in the city center, key figures to keep in mind, we have a portfolio of 92 assets, occupancy extremely high, 90-98%, a yield 5%, but with strong reversion rental reversion potential, certification performance 95%. We put some example on the screen just in fact to illustrate. I would just pick up a few of them. Percier has been just resecured on the with Chloé. It's, we're speaking here on the 8,000 square meter. And we are resecuring in fact Chloé on that front until 2031 and capturing 14% rental reversion doing that. L'Atelier, you know it, it's where we are. And then if I go to Milan, Torre Garibaldi, the main tenants are occupying more than 50%.
We know that at least end in 2028, we have a strong reversion on the rent front. Goujon, Paris, 12 years lease with LVMH at EUR 1,100 per square meter average rent on the building. And then back in Italy, Corte Italia, that building will be delivered next year. It's already pretty on a full let, prelet, on a tech financial company and a top rent for the market. If I move to the major business hub, key indicators on that segment, the yield. So we are speaking here about seven yield, 7% yield here. Occupancy as well, pretty, pretty high, 94% with a high quality, in fact, in terms of tenancy. But also very interesting to look at is the quality of the asset as we are on the sustainability front, 97% certification rate.
But on top of that, 81% with certification, which is at least at very good level. Few examples on the screen again, Dassault Campus, but you may know it's the south of Paris. We have a lease until 2033 with them. If I go back in fact in Berlin, Beagle, 25 years, with a lease with Deutsche Bank, Thales, also in south of Paris, 2038 lease. In fact, on the Thales on this one, going up Frankfurt, that asset, you may know it, it's right in the terminal, right, really connected to the terminal. So you have no better location, right to the airport here. And then in fact, a few other examples, So Ouest , we have a pleasure to host the headquarters of Samsung in that building.
If I go in the non-core, non-core, we are only speaking here a bucket which is below EUR 500 million in terms of value. So it's less than 3% of the portfolio for very clear strategy on that front. Either there is an opportunity to make a transformation into residential. We estimate that in fact we can, you know, do that, apply that strategy for EUR 160 million of that bucket. We have already been doing that very successfully because we already deliver close to 900 units with a pre-sold ratio of 96% and an average margin of 8%. When we can't do that, then the strategy is very clear, is to make a straight disposal on those assets. So we have a bucket of close to 300.
The good news on this bucket is in fact we increase the occupancy rate over the past few months, going up from 83% to 88%, which will obviously help us in terms of the exit strategy. In terms of key numbers, I won't go through everything, but what to keep in mind, centrality, we went from 46% to 69%. As said, the goal is to, to continue to improve that significantly. On the sustainability performance, everything is in the green and with strong improvement of the performance over the last nine years. Then if you translate that into operational performance, what this is very interesting, we put here a long term in terms of occupancy rate. If you look at the 15-year performance on the occupancy rate, we are 95.4%.
And then the last, the end of last quarter, we are close in fact to 95.6%. So very strong performance on the long-term basis in terms of occupancy. I was speaking about the strong reversion. Just looking back at 2023 and 2024, we capture 8% on the core bucket and 14% on the city center. So it's very something which is strong. And obviously when we translate that into the like-for-like performance, since the beginning of the year, we are speaking about something over 8% and more than 5% since in 2023. So, thank you, Marie-Laure.
How to continue, I would say this impressive performance in the future and what are the future growth driver in our portfolio? Clearly, when we look at the growth driver, it's a question of location, reversion, of course occupancy and development to capture, I would say, rental growth and secure future cash flow. When we look at the city center exposure, our target is by 2028 to be at 80% of exposure exposed to the city center. How will we do that?
First, we concentrate our investment in our committed and managed pipeline in the city center, and we'll come back more in detail to that. We will continue to do straight sale as market said, as Marielle said, but straight sale and also by joint venture to streamline our major business hubs and exit from non-core area. And in this case, you have two situations. The one where we go to a conversion into residential, it could be also hotel.
It's not only residential or straight sale again after having done the asset management work and especially increased occupancy rates, what is the case? On the reversion, what we have achieved, you gave some figure, Marielle, but we have done on average the last two years + 14%. Two examples there. The first one is + 22%. We have signed a new lease with a top financial company in Delcassé, close to here in the eighth district. And it's a 12-year lease with, I would say, pretty decent level of incentive. And we have renewed the lease of top luxury company, in fact is Chloé, Avenue Percier.
Here also we achieve a significant reversion, with now a new headline rent with EUR 920. I would say without CapEx, for the asset in the condition where it was before the relating to the renewal, sorry. We also have a potential maybe in the. It's a kind of forecast. Here it's a mix of development opportunities and it's the first part on the site. We have identified some assets in the inner city. You have some example there, Louvre, Mayo, for example. Now as you, for the Parisian, after a mess during several years, now it's a stabilized business district with very good connection to the public transport. We have there an opportunity to refurbish this building in the future and to reach probably rent above EUR 950 per square meter.
Here we are dealing with 13% of additional revenue and plus 70% reversion after CapEx, of course. The other part is a question of reversion and reversion here. We are dealing with, for example, EUR 14 million additional revenue potential, 15% of reversion. One of the examples is Torre Garibaldi, where we have already achieved, on the last letting we have made more than 20% reversion under the control of Alexei. The occupancy rate here is of course our day-to-day business, is the job of the asset management team, commercialization. All the people are taking care of the clients in the building and to keep your clients is the first thing you have to do regarding occupancy. Probably here, the main challenge we have is to cope with the departure of Suez in CB21.
So Marie-Laure has stolen a large part of my argumentation on La Défense. But what I have to say, it's first that it's sure that, and it was not I am saying that, but it's a stabilized business district and it's still the first business district in Europe. When you look at the CB21 itself, it's the most Parisian tower. It's really in front of La Défense, very visible. Each 14th of July, when there is on the TV show with the French army, you have the plane arriving above La Défense and you see on the TV the CB21 tower. So it's a really, really attractive location just on the metro line. But we are today encouraging discussion with potential tenant already. So it illustrates also what Marie-Laure was saying about a beginning of the recovery in this market.
But the point I want to stress the more is the fact that today the combo in terms of price and quality and location is unbeatable. The gap between CBD, as you have seen, is more than EUR 500 per square meter. So, we are addressing, of course, the domestic market because it's important to stress that Suez, they didn't leave La Défense, they are staying in La Défense. So we are addressing this market in La Défense, but also other markets. And for a corporate or a company who is looking for affordable centrality with no bargain on quality, La Défense is probably the best option. So here, moving to the rental growth for redevelopment, you can see that we have a mix of city center, but a large focus on city center, 85% of our portfolio.
I will not go through the different example. You mentioned Corte Italia, which is close to be delivered. We have Monceau also, and we have also Alexanderplatz, just to stress on that point that it's not only offices, it's a mixed-use project, half office and half high street retail and residential. On the major business hub, it's mainly the extension now of the Thales campus in Vélizy. And this site will become the largest worldwide site for Thales with more than 5,500 employees there, a 12-year lease at delivery. What can I say of the lease? High yield, high quality building, high quality tenant, and long-term lease. So I think it's not so bad. Also in Paris, we have identified already some opportunities and potentially EUR 30 million potential rent and more than EUR 147 million rent and EUR 130 million rent in addition.
You have an example. There is Louvre. It's the first in the pipeline, in fact, and because Orange will vacate the building by the end of 2025, beginning of 2026. Here we have a really landmark building, very attractive. It's close to the La Poste du Louvre in the center of Paris. And what we can say is that we have already attraction on the building and we have already contact with especially luxury brand because we could do there a very nice concept building. Now, I leave the floor to Alexei to give you more color, sorry, on what could happen in Milan regarding development.
Yeah, in this context of capturing rental growth, I think it's worth it to spend a few words additional on Symbiosis, the district in the south of the city center that we are developing and on which we spent really a lot of effort. And now it's really visible the evolution of a dynamic and well-established business district. Everything started in terms of these new dynamics back in 2017 when the Prada Foundation was opened there. And of course, this is a big catalyst of attraction for the overall area. Then we contributed to the evolution right after in 2018 with delivering the new headquarters at Fastweb that, as you can see in the map, is right there after a nice square that we have delivered.
Then, of course, we did the building D, we did the school, and we come to today's sharing, let's say, a new strategy for us that is focusing more on the north part, going out from the southeast part. That just to be clear, it is roughly 1.4 kilometers from the metro. That is, of course, a point. We want really to continue even further with the Scalo Porta Romana, this good success story. By the way, on Symbiosis, we have also another potential building to be developed. It's the C plus E right next to Fondazione Prada, really, really in the, in the heart and the most attractive part of the development. I just want to call your attention on the evolution also on the rent. The figures that we have there is really what we have in place.
I remember at the time of the first negotiation with Fastweb, it was not easy to achieve a rent slightly above 300 EUR per square meter, 320. Now, as also we have said, we have seen from the presentation of JLL, we are way above 400 EUR per square meter. We have several transactions that testify these numbers, and there is really an upward trend on rents. I'm sure that also with the development of Scalo di Porta Romana, this will further increase. Talking about Scalo di Porta Romana, this is the map. This is an area that we acquired together with two partners being Coima and Prada back in 2020. As you may see, it will be a neighborhood scale development.
We are talking of roughly 200,000 square meters of land that, as you see, is divided in two because what that line that you see in the middle is a train. There is one track for the train that will be covered with the park. In the center of the development, you see there is a huge park that will be a public park and all around, there is the development of a mixed-use neighborhood that is residential, hotel, retail services, and offices. We have highlighted in red our portion in the agreement with our partners. It is, of course, already defined the portion of each one of us. We will split the land at the completion of the approval of the master plan that is expected next year.
It was quite a discussion when we acquired the area, but I think we really have one of the nicest spots of the overall development because, as you see, it's right in the metro station and it is right on the main street that goes to the city center. Just to give you an idea, from that corner that is Piazzale Lodi, walking to Piazzale Duomo is roughly 20 minutes. We are talking about two kilometers. That's the distance. Our portion, as you can see, it is divided in two because of this, let's say, line that we have in the middle. Of course, as of now, we are very much focused in the north part, the one closer to the metro. This is the timeline.
This year, we have really worked strongly in order to organize an international architectural contest in order to have a project for the area to be available. We are still in the selection phase that will be completed by year end or very beginning 2025. In 2025, we target the final approval of the master plan. By the way, the city is quite involved and we expect really to stick on this timing because the area hosts also the Olympic Village that, by the way, it's already there. I go back on one slide. What you see in the bottom left corner is the Olympic Village that will be delivered to the, let's say, Olympic Foundation by July 2025 next year. It's already fully built. We are totally in time and after the Olympics, it will be converted into student housing.
So also this will contribute to make the area more vibrant and it will host up to 1,700 students. You can see also from the slide some sketches idea to give you the quality of the development that we are doing on the, on the north part. The figures that you see in this slide are referred to the overall Covivio portion. Of course, we are now, as I said, focused in the north part that represents roughly 60% of these figures. But all in all, for us, the development is roughly EUR 500 million and we target we are really an interesting yield in the area of 7%. After all these have been said, just a quick summary before a break. We have really transformed our office portfolio being more, more, more central, better quality, more certified.
We have, of course, and I always in increasing operating performance. We have shared the good track record in terms of occupancy rate and like-for-like growth. And we have also set up new targets by, let's say, 2028. We want to increase our exposure to city center in the office part to 80%. And, we strive to capture the reversionary potential inside the portfolio existing that is in the area of 15%, with potential revenues that we can achieve from our development pipeline that is EUR 125 million. So this is all for the office part. Now we have 10 minutes break and then we come back here. Thank you. [Foreign language ] .
This very nice F&B experience that you had in the cafeteria. Let's go into detail on the hospitality part of the Covivio portfolio, and let me introduce for this reason Vangelis Panayotis, who is leading MKG, which is a consulting firm specialized in hospitality that will introduce the market and the trends for Europe before going more into detail into the portfolio and the strategy.
Thank you, thank you, Tug. I have a few slides, a few figures. As it is still the morning, I think we can go through some figures, so we're going to talk about the hospitality industry in Europe. I think 20 years ago, the hotel asset class was more seen as exotic, and I think that was the time where the early adopters or pioneers entered the market like Covivio.
Then it has turned to be quite intriguing. What is this asset? During the COVID, it was almost toxic. Everyone was saying, "What's that asset? What are we going to do with it?" And now it's probably the most desirable asset in the room. What can we do with the hospitality industry, and what are the prospects? The idea is to go first through the demand, then the supply, because I think they are both well correlated if we want to look forward and see what are the prospects, and we will finish with the prospects. So this is a graph starting from June 2021.
Of course, you saw all the bad figures, which are related to the COVID period. But during that time, if we compare the top-line performance of the hospitality industry in what we have called the first bucket, being the UK and France, we have a two-digit recovery, and now we are well above the performances of 2019 when Europe was around a 20% increase. If we compare point to point from 2019, because we thought it was the last high point on the performance on the market, we had a quite strong recovery and rebound for those two markets. Then the second bucket, which is the south of Europe. I'm sure most of you went from time to time during summertime in one of those countries, or at least I hope for you.
But when we look at the figures, it has been very strong, very powerful in terms of rebound because of different segment dynamics. Of course, until 2019, the corporate segment was very strong, and now the leisure has really led the rebound on this type of activity. And then the third bucket, which is more Northern Europe and Eastern Europe, including Germany, that has started its rebound with some latency compared to the other two buckets I've shown you, and they were just in the phases of the rebound. So they are still positive if we compare the performance 2024 with 2019. So we're still back to positive figures. Now it's classic, back to basics or back to normal. If we look now at the figures year to date, so from January this year until October this year, we are back to normal.
It's a normalization effect after the COVID, the rebound, and now all across Europe, we are still in what we used to call a normal figure, except for a few markets like Spain, which was booming quite a lot. But I think there will be some balance in the coming months and years. So looking to supply, and we start with a focus on France. Don't worry, I will explain the graph, but I think it was very interesting to put two dynamics, one aside to the other. On the top, you have the demand, which is reflected by the occupancy rate and the ADR, which is the price of the hotel. And below, you have the supply. And I think the data set is from 1983, so we have quite a long path in the cycle.
You see that since almost 1995, the supply has been very flat, which has pushed clearly the performance of the demand because supply is under constraints for a very long period of time, and we can clearly see that there is no effect of oversupply on the market, clearly not, even though during that time, it's not that the big guys out there, those who are the structured guys like the chain operators, like the investors and the asset owners, they have been restructuring the market, so the small independent hotels, those who are not anymore aligned with the expectation of the market, have been restructured by the players who are more structured. What are the prospects in terms of supply? We took an analysis on the building permits in France to see if there is a lot of hotels coming, a lot of supply coming on the market.
Unfortunately, if you see, there is still room to grow. In 2024, there was a clear decline in the number of building permits. Both we are in an undersupply situation on the market, and there is no real prospect for that much supply that is coming anytime soon. This is, structurally speaking, something that is more defensive on the value of the asset. Then again, still in France, because it's a good example, one of the most mature markets across Europe. Here we have put the other type of commercial accommodations, i.e., the camping site, the extended stay, classified rental, the village, and clubs around there. Since 2005, it's flat. There are 2 million units from 2005 to 2023. Then again, we see that clearly supply has been under constraints.
Still, there are new guys who have entered the market, which is a private rental, most known as Airbnb guys around and the others that have brought almost 1 million units on the market from 2014 to 2023. But in the meantime, the performance, the top-line performance of the hotel asset has been almost a 40% increase of RevPAR. So definitely, there was a lot of supply coming on the market, but still, the performance was more than resilient. They were still increasing. What is interesting in that graph, it first shows that it's clearly flat, clearly undersupply, and that all the new regulation, I think a few days, a few weeks ago, there was a new regulation that has been voted in France to limit the impact of the Airbnbs or private rentals alike. So probably, this will reduce the competitive effect on this commercial accommodations market.
And probably, this will extend across Europe. I'm almost sure that those regulations will be more and more trendy on the political side. If we look at the situation, we have seen very detailed trends. So if we look at the situations across Europe, almost the same things. So we took two points: one, 2012, 2013, the change in supply, and the other one, 2022, 2023. So clearly, we see that all the markets from kind of booming supply in 2013, 2012, now it's very limited in terms of growth, almost a 2% increase. While in the same time, because the cycle was not exactly the same, Australia and Germany, that was their time for booming in terms of supply for many reasons that you all know in real estate. There were quite good trends for growing assets in Germany.
But the rest of Europe was clearly in the same situations. If we look in detail about how this supply is structured, market by market, what you see, it's all the blues. It's the independent supply, meaning independently owned, not branded. And all the red part is what we can call the structured players, so the branded players, usually backed with asset owners. So there is still a lot of room to come to the same level as we can see in the US market, which is almost 75% of penetration rate in the market with those structured players and chain players. And it's the same in Asia. I won't mention anything about the Middle East because it's very small, but if you look at Dubai, there is not much independent hotel in those kinds of markets.
There is still space and path for restructuring the market from independently owned to more structured players and small units getting out of the market, being replaced by mid-size or big-size units on those markets. The prospective now, what we can expect, which is the best exercise, and I love that it's recorded every year so we can look at the video and see if we were accurate or not. It happened frequently. Sometimes not, but it happened. Now it's the cycle on demand. If we take 2007, because that was Le hman's and a big cycle, so we see that during the previous cycle, the increase of the top line for the hotel, what we call the RevPAR, the Revenue Per Available Room, has been almost 26% with an average year growth of 2.1. Now, COVID included, so from 2019 to 2024, we are at 20%.
Good news. Probably, there is still place to growth because there is a bit of inflation, but still, we didn't went to what we went in the previous cycle, and we are in a more dynamic growth rate on average per year, which is almost 4%. Of course, there will be probably a normalization effect on the market, but still, it shows that there is a pace to grow. Looking again in details for this year for France, the beginning of the year, I mean, the question we were asking ourselves is that, is there any slowdown which is behind us? Because the beginning of the year was minus 2.3% until mid-July or until the opening ceremony of the Olympic Games for many reasons, economic reasons, political environment reasons.
You remember in France, we had no government, we had new elections, and everyone was staying to vote with political instability until the 3rd of July. Then the Olympic Games came, so it gave a boost to the performance. And then we were landing the year with 1.1% in terms of increase, or at least until October. But we have to keep in mind that last year, at the same period, it was the Rugby World Cup. So then we have a base effect to compare that is rather positive, and still, we can achieve growth above that. If we look at the order book, so what are already booked for the coming months and the coming weeks, we see clearly that the province, which was a big delay on the performance, is showing very strong.
On the same side, Paris has a very exciting end of the year because there is the reopening of Notre-Dame. There is the halo effect of the Olympic Games. Many people want to be there for the celebration, the end-of-the-year celebrations, and still, there is last-minute Booking, which is more and more a trend, and I'm sure that Paris will still achieve good performance for 2025. Now, if we look at what happened in the last downturn on the cycle, what we saw for the Lehman Brothers, in case anything happened, but we never know, but the recovery time has been from 18 months, which was quite quick. This industry has shown to be very, very resilient.
We believe that probably, if there is any, probably one day it will happen that the recovery time will be even slower, because if I go back until the first Gulf War, we showed that it was much longer. Now, due to the yield management, to the new IT systems, and to have more dynamic and structured players, they have the ability to deploy very quickly and to correct very quickly the market. So probably, if it happens, it's going to be more like nine months with a limited impact. The forecast is based on key economic indicators, GDP, inflation, and unemployment rate across Europe, because it gives a good idea about the domestic demand, but also the international demand, and most of the travelers across Europe are European guys, so it's interesting to see what are the prospects.
We have seen an improvement on all those metrics in the last month. Let's say that the dynamic remained rather positive on that. Now, if we look at the prospects, then again, we are back to our three buckets. Let's say northern Europe, where in Germany, there has been a big rebound for two reasons. First, the European Football Championship, and also, they were late in the recovery. I know it's normal that base effect, we compared something which is less dynamic. France is back to normalization and hopefully will be supported by the halo effect of the Olympic Games. Then we have again the southern Europe that are still booming, but probably they will be at some time in the next 18 months back to this normalization effect. In conclusion, the fundamentals tell us. It's good so far.
It's good on the supply side. There is no oversupply that will probably create some fragility on the market. That shows so far how resilient this industry has been. There is middle class from India, maybe one day back from China, and so on. So there is still space in the demand side in terms of tourists and visitors. Strong resilience, as I have mentioned, clearly in the last three decades, this is what this industry has showcased so far. There is no reason that it's going to change. But it's a specific industry because you have an operator generating cash flow on assets and backing the yield for the owners. So it requires different skills and knowledge and expertise and experience to really manage and get the right yield. So we have seen so far on the market good players.
Covivio is clearly one of them, being one of the first who have tackled this externalization of walls back in 2005, no, 2007, 2005. So one of the first players to do that. And nowadays, in a market that is continuing to get restructured, to get the right yield, you have to go with the right partners on that because there are still small players that are going to be restructured. And you have to know which are the good guys out there in terms of operators, in terms of models to really get the most of these good fundamentals and good demands and good situations in terms of supply on the market. That's all about. I think it's your turn, guys. Questions, maybe? I don't have good advice for your next holiday. I can talk.
Okay. Thank you. Thank you very much.
Thank you.
Okay, then diving a bit more in the portfolio and how we want to address this market in the future, considering these good fundamentals that have been described by Vangelis. So a lot has been said. I will be quick on the reason why we started to invest in hospitality 20 years ago. Clearly, years after years, cycles after cycles, the intuition that we have at the beginning on this asset class is confirming, and it's even overpacing. Few comments on that. The three main reasons why we like and we want to reinforce in this asset class is clearly the difference between offer and demand. I will comment a bit more just after on top of what Vangelis has said. High-yielding asset, which has passed a number of tests demonstrating that the industry is resilient and the macro trends are very strong.
Third, a very flexible ownership model, and it is very unique in this asset class and very important to deliver growth and value creation. We will have a lot of examples on that. Those three reasons, we are more and more to share this reason why we want to invest in this asset class. So more and more, there are new players coming in this market, and the investment market, as it has been described before, is more and more dynamic. Growing in demand, very supportive. Two kinds of customers. The domestic customer, 4% average growth in the next five years due to what? Due to the fact that more and more people are investing more money in experience and leisure, and also aging population that has more, I would say, power or money to spend in traveling.
The even more important, I would say, driver for growth is coming from international customers. Historically, it was mostly from the U.S. The important part of customer base in Paris is coming from the U.S. But now, more and more with the development of Latin America, from China, India, there is a huge amount of middle class starting to come to travel. And obviously, when you want to travel and discover the world, Europe is on top of the agenda, which explains the reason why the figures that have been presented there are quite predictive. It has been this kind of rhythm in the last few years and will continue to do so. It has been largely commented on the supply side. First, less appetite for investors to develop greenfield projects.
So more and more investors and also brand operators are focusing on transforming all hotels, transforming independent hotels rather than building. So an impact on the supply. And second, the graph was self-explaining on the impact of Airbnb. It has been a huge driver to cap a bit the performance because there has been a lot of new supply, alternative supply. But now, this is the peak, and we know that from the regulation side, this peak will start decreasing because there's lower acceptance from politics and will limit the additional competition on that. Another thing that is interesting, sometimes a lot of people believe that hospitality is linked to GDP growth and inflation. It's not at all the case. Just because the main driver is the evolution of demand globally. The international demand is the most important driver, obviously, in competition with GDP and inflation.
But when you see during the last 10 years to 15 years the impact of development of new customers coming to Europe and mostly in the gateway cities, as it explains the reason why when you see the RevPAR evolution, it has nothing to do with both GDP growth and CPI in Europe. On top of that, what is interesting is also the yield that we have been able to achieve investing in hospitality, which is first quite high. Today, we are at 6%. And second, has been quite resilient because this difference in terms of 50 basis points between today and before is obviously explained by the evolution of the real estate market. But it's also explained by the reason why, the reason which is the evolution of revenue that has absorbed the most important part of the yield expansion that we have seen in all the different asset classes.
That's why it's quite resilient. When we see this kind of yield, we strongly believe that the risk premium historically paid for hospitality, given the long track record that we have seen, is no longer deserved as it is. We expect the yield premium to start decreasing starting this year. Another interesting thing that is quite unique is the ownership model. When you invest in hospitality, you can decide both ways. Either the, I would say, traditional way, and this is the way we enter in this market, was through lease. You have predictability, you have redundancy, low CapEx exposure, obviously no operational exposure. You can live with that for 20 years , 30 years. It has been one of the huge successes of Covivio. You can also decide to keep the full profitability of the real estate by owning the Opco and the Propco.
Doing that, you obviously have the capacity to increase the yield. You gain the full control on the hotel, and you can act more intensively on the performance and then on the value creation. This is the story that we will explain just after in terms of next step for us. Finally, the figures here demonstrate the appetite for hospitality. When you have more and more players coming in this market, obviously, there would be long-term pressure on the price. That's why I was speaking about impact on yield. The yield that we have seen in the last 10 years won't be the yield that we will see in hospitality for the next 10 years. Moving to our portfolio, some words about the description. Today, we own more than 300 hotels all over Europe. We're seeing EUR 6.4 billion. We are very diversified.
That was a play historically. Diversified in terms of counterparts, in terms of geography, in terms of segments, which give us a quite comprehensive knowledge on the market, the different trends of the countries, and also of the hotel operators. Today, when we look at the different players in this market, we are ranking number one in terms of number of rooms when we compare with the pure player in terms of real estate hospitality. Historically, this market has been divided in two parts. Institutional investors, so guys like us, like Pandox, like the German guys. And also, it has been also predominantly dominated by private equity that was mostly chasing for operating properties rather than the institutional investor focusing on real estate. Today, there is an evolution. There is more mix. This is the trend that we are following.
And this, I would say, panorama will for sure evolve in the next few years. In terms of geography, we have a European exposure. We are exposed to different markets, obviously France, Germany as historical market, then developing in the UK, in southern Europe. What is important for us by choosing this diversification is that each market has its specificities in terms of customer base, in terms of trends. For instance, the German market is much more domestic. It helped a lot during bad times like COVID. Spanish market is much more leisure, which explains the reason why the dynamic is very positive. France and the UK are quite diversified. So we deliberately, we have chosen to be exposed to these different trends in order to build a model that is fairly resilient during a long-term period.
When it comes to investing in hospitality, obviously, we need to know and to work with the big players. We have this capacity to develop strong partnerships with the main hotel operator. What does that give to us today? I would say three things. The first, credibility and bargaining power. Obviously, when you discuss with Accor and B&B and you own 50 hotels , 100 hotels , 150 hotels, you don't have access to the same kind of terms and conditions that a usual investor. It's very efficient. Second, it gives us a perfect knowledge of the strengths and the weaknesses of the different players. We know which kind of brands are efficient in terms of distribution. We know which kind of brands are efficient in terms of operational performance, capacity to, I would say, be straight on the cost.
Choosing the right operator when it comes to deciding to invest in a hotel is really a strong advantage in this situation. Finally, those hotel players, they want to develop, and having a partner that they know well, that is credible, is very helpful also when it comes to developing the portfolio. Today, our portfolio is divided into two kinds of investment theses. The first one is lease property, a historical part of our business, long-term performance, positive and steady. We work today with the main players that you see here, 62% of our portfolio. The part that is really transforming, and when we see the most of opportunities, is today the operating properties. It's close to 40% of our portfolio. Before, it was 20%.
So we really believe that on screening the right asset in the right location can deliver a much higher, I would say, return and yield. So that's why also, when it comes to investing in this part of the portfolio, we have also recently decided to create our internal management platform. Historically, we were giving the management of the hotel on a day-to-day basis to a third-party operator. You see on the left part of the slide. Now, we have equipped ourselves to be able to directly do so and to be much more agile and proactive in the way that we manage the portfolio. Going more into detail on the first part of the portfolio, the lease is the historical part, as I said, a very nice asset. I won't go that much into detail. The picture is self-explanatory.
Working with a big hotel operator, Accor, IHG, B&B, Spanish guys. Low occupancy rate, 57%, long lease duration, and excellent location. Booking location is 8.8. So I would say only opportunities on this portfolio, a bit of variable revenue coming from that. And the way that we are extracting value generally on this portfolio is when it comes to repositioning the hotel, you have two ways of increasing the revenue and the return at the end of the lease. So this is the example number two. At the end of the lease, we discuss with the tenant. Normally, he wants to stay if we correctly choose the hotel.
And then if the effort rate is quite low, which is the case on average on the portfolio, we have the capacity to immediately increase the rent without any CapEx, just for them to stay and to keep the business in the hotel. Or the second example, if when the hotel operator wants to renew, reposition the hotel, normally he wants us to invest a bit because the cash for hotel operators is quite the risk scarcity, I would say. And we have the capacity to invest together with him with quite high yield on CapEx, on average between 8%-10%. It was on this example, 10%, which enabled us to have a quite nice value creation. Then on operating properties, I leave the floor to Sébastien.
So on the other side of the portfolio, the operating property that accounts for 38%, as mentioned by Tugdual. As you were saying, it's very well located. The average grading on booking is 9.2, and we also have top-performing hotels at an average of about 30%. We have, with this operating portfolio, full exposure, as explained by either Vangelis or Tugdual, to the market growth, giving us the flexibility to choose the best operators and work with him on different assets.
We will see in the coming slide a few repositioning opportunities that we have led through the year and the one to come, where we have a strong yield on CapEx above 20%. The picture is also self-explanatory and very nice asset. If I take one of the good examples of the successful repositioning of the operating asset, Le Méridien in Nice, for those of you that know Nice, the best location is 1 Promenade des Anglais, so a unique location.
One of the best grades we have in our asset, 9.6 on 10 on booking. We had a hotel of 318 rooms that we have fully renovated in 2019 and 2020. We have also expanded this renovation. We bought an office in the same building, and we created six family suites in the building. A total of 324 rooms and a total investment of EUR 13 million, including the F&B. We still have potential to develop something on the rooftop that will come in the coming years. You will see the numbers here. Once we did that, we were under the Méridien brand, so a Marriott brand. We had a management contract. Discussing with Marriott, we switched the management contract to a franchise contract, giving us a lot more opportunities in terms of sales and revenue management, so allowing us to deliver more revenue.
We have also switched this management to franchise, given the operational management to resume our operating platform, allowing a lot more flexibility in the operation, and giving us, at the end, if you see the figure on the right side of the screen, an increase in RevPAR by 95%, mainly driven by the ADR. and we have multiplied the EBITDA by more than five, arriving at EUR 11.6 million at the end of the year. so a very successful repositioning for this asset. We are not only able to do asset management within our portfolio. We can also look at the different ownership modes and when we have different issues, looking at specific action. A good example is when we have an underperforming hotel with a low EBITDA margin. This can happen, and it will happen. We have several opportunities of action to take.
We can either change brand and operator. We can finance the CapEx to get a better return, as explained by Tugdual. What we did in 2022, it was the portfolio managed by Accor. We switched the portfolio to B&B, why? Because we have this expertise, as explained, to select the best operator and the most performing one. B&B today is having an operating model which is top-performing versus Accor in certain typologies of assets, and that was the case. Economic assets in secondary cities with a small-sized asset, a little bit medium-sized, but they are top-performing. So we had the ability to invest at a 9% yield on CapEx and create more than 15% value just by switching from the Accor managed to a lease contract. On the other side, if we have an enterprise hotel with a good revenue potential and a RevPAR potential, same thing, several opportunities.
We can select the best owners because the best operators, sorry, because we have this expertise and we know exactly all the brands that are currently operating in the market to finance some of the CapEx, to reposition the asset. And we can either stay with the same operator but with a different brand or the flag. This will be explained by Tugdual in the coming slide on the current operation we have with AccorInvest, where we're going to switch from a lease contract to a managed contract, giving us a franchise, giving us more opportunity, as we say, to extract the value from the hotel. We will finance the repositioning. We will select the best brand within Accor or some of them will be out of the Accor world. And we are expecting over 20% yield on CapEx and more than 30% value creation.
We're not only doing asset management, but we're also looking at the type of ownership mode that we want to have to deliver the best growth.
Then moving to the next phase, as it has been explained, we started investing 20 years ago, and we progressively understood and discovered this very nice asset class. We have now, I feel, all the knowledge to be able to, I would say, accelerate both growth and also value creation. When you see those three phases, there's been the first one, which is discovering the industry, discovering the hotel operator. That is when we invested together with Accor when we started discussing and investing with B&B. The second phase came with the European expansion and with also the will to discover other hotel operators and other ways of investing in hospitality.
Within this phase, also the first, I would say, move in the operating properties with the belief that we can gain access to a higher yield, a higher potential if we control the full value chain. So now that we have done all those things and we have been successful in building a EUR 6.4 billion portfolio with multiple opportunities, that comes a new phase for us, a new phase of growth and expansion with the priorities that I will describe just after of increasing the size of the portfolio, increasing the exposure of Covivio to hospitality, and increasing also our capacity to extract the value from the portfolio. Historically, it's what we have done. So as I said, European expansion, growth with multiple hotel operators is the main driver of the growth of the portfolio from EUR 1.4 billion to EUR 6.4 billion.
Historically, also Covivio progressively took more and more exposure to the hotel subsidiary, Covivio Hotels. We started with 23% share in Covivio Hotels, and we are now at 52.5%. And that could continue to increase. And finally, historically, that, for Covivio, was a small baby, 12% of the portfolio. Now it's 20% of the portfolio with the clear objective, as has been described at the beginning, of having around one-third of the portfolio that would be a hotel. If I start with extracting the value from the portfolio, from the existing portfolio, obviously, one of the key trigger events would be the closing of the deal that we have negotiated for two years with AccorInvest that will occur tomorrow. And as a reminder, that's a really transforming operation as we will transform from lease to management and franchise contract.
We came to the conclusion after a few years of discussion on this portfolio that those hotels were probably will have a lot more value if we own the Opco and the Propco than with this current situation with Accor, AccorInvest, and Covivio. We decided to merge that. This will give us a lot of opportunities that would be just explained after by Sébastien.
If we look at the roadmap post tomorrow after the closing, we have a clear roadmap to come. Number one is set up the new management of the different hotels. We are taking over good numbers of hotels. We will be working, as Tugdual said, with either third-party operators or with our own operating platform, allowing us once again to really capture the value creation.
Some of them will stay also under the Accor management, the key asset in Paris. Number two is to continue delivering the disposal plan that we had worked with on AccorInvest on non-core hotels, where we already have disposed of secure EUR 100 million at a present value. Number three, last but not least, will be executing the repositioning CapEx that will allow us to deliver the value creation that we are expecting for those assets, merging the Propco and the Opco. We have identified a plan of around EUR 100 million CapEx. As I said earlier, we are expecting over 20% in yield on CapEx and 30% value creation. One good example of this roadmap to come, for those of you that will join the asset tour today, you will visit the hotel, is the Mercure Tour Eiffel, central location in Paris by the Eiffel Tower.
It's a 405-room property, very well located, as you see by the grade. But you can see also the overall satisfaction from the customer, 7.5, because it is an outdated hotel that was not renovated for years, but that has a very high potential. Our objective is clearly to reposition the asset, to do a full renovation of the product rooms, F&B, optimize all the space that we have. We have a wonderful garden today that is not utilized, and develop the offer. We are planning a EUR 20 million investment, and we are currently discussing with Accor, this hotel we stay under the management of Accor, the specific brand that we will have in this property in order to be able to get the most out of the renovation.
We are expecting clearly a growth in EBITDA driven through the growth, sorry, the growth in EBITDA driven through the ADR by 40%. You will see this afternoon that you have a hotel next door, which is the Pullman Paris Tour Eiffel, four-star, 400-room property. The RevPAR of this hotel is EUR 370. The current RevPAR of the property is below EUR 200. So you see the potential of the renovation in this particular area. That's what we're expecting on the right side, increasing the EBITDA by more than 60%, a 30% yield on CapEx, and of course, value creation that will be above 35%. This renovation will also include all of the technical features and our carbon trajectory in order to make sure that we follow the strategy of Covivio in this specific area.
So asset management and also acquisition. Clearly, in the acquisition agenda, our focus is to increase our Southern Europe exposure. Today, Southern Europe is around 15% of our portfolio, France is 33%. So this is where we believe we need to increase our exposure. And this is also where we have seen the best performance in our portfolio. And the strong belief also is that this performance will continue to deliver higher return. In terms of offer and demand, always the same things when we look at opportunities. Southern Europe still has a lot of room to grow. Spain is a more mature market, but Italy has a lot to do for new investment, for new hotel chains to come and to develop the market. It's only the starting point that we have seen during the last two years.
So we want to increase our exposure to Southern Europe, and that would be a key area of focus. I hope that by the end of the year, we will have the opportunity to announce first acquisition there. But this is clearly the priority for the next few years. The second thing when it comes to, let's say, develop is also development. As I said at the beginning, obviously, development is much more constraints, but we have a historical good track record with a lot of hotel chain operators. We still have a nice pipeline. Next year, we will deliver two B&B hotels, one in Porto and one in Brussels. And we have a lot of other discussions with B&B to continue to develop their hotel chain all over in Europe.
We have also the opportunity, and we are working more and more on a regular basis with the office team to convert office into hotel. We have today three products that we are working together, and we are working also with some brands, two in Paris and one in Bologna, Italy. Finally, also in Italy on the nice development project of Porta Romana that has been described by Alexei. There is a potential for probably 10,000 square meter development that could be a mix of three or four towers with different kinds of opportunities. Obviously, hotel chains are really starving for growth in Italy. I'm sure that in this area, there would be very nice projects coming in the future.
To conclude on this part, clearly, I hope that we have been able to share with you the attractiveness of this asset class in terms of yield, in terms of positioning, and also in terms of potential. So obviously, it's a key priority for us. We benefit from a nice portfolio, very strong knowledge of the market, 20 years experience working with all the hotel operators in all the geography. So all these ingredients are key for us to start this new phase of development, increase our exposure to hospitality, and at the end, deliver growth, obviously, with the idea to achieve this target, long-term target of one-third of the portfolio invested in hospitality in Europe. Then I leave the floor to Katja and Daniel.
Thank you, Tugdual. So I think now we need a time machine to match the timeline. Short flight with German residential, one of our key asset class, to 30% weight in the group. Prime portfolio, of course, needs prime fundamentals, which we can show here. So you see on the left-hand side, the trend to urbanization, like more or less in all countries, coming up to 84% urbanization. This is the trend in Germany. And also in our regions, you see population growth, which was not the case in the forecast 10 years ago, where everybody was thinking that Germany is shrinking out. But now we have a strong increase in expectation in Berlin with 10% on the top. Nobody knows where the people would like to live. Second topic is the offer, which is important to us. We are mainly in the big cities.
You see the evolution since 2014, - 28% in the big cities. In Berlin, - 50% decrease in offer of rental apartments and no supply inside. We are still, even in the good times with low interest yields, 100,000 new apartments lacking every year. Trend is going down and no improvement. It will even get worse. You see on the left-hand side on the bottom, the decrease of building permits, - 30% compared to the peak, cutting by half compared to 2016, which then explains the increase of close to 10% in asking rents in Berlin, for example, 3% overall Germany, and for new flats, also 7% strong increase in asking rents, which is a clear proof of the shortage of offer. What about private investment market? Mainly own users investing in their apartments.
So now, good news. Interest rates are going down, stabilizing, which immediately takes to a pickup in individual mortgage lendings. You see a strong pickup since a few months. And on the other hand, you have the stabilization in the prices of all classes of apartments, even taking up now increasing prices. And new-build construction was even not seeing a decrease in value. What message is this sending to private investors? So don't wait to buy because prices will not decrease anymore. And it's a proof, even in a big crisis when we had a war in Europe, prices were not losing so much value. So it's a stable and good investment in your own future. Residential is a B2C business, of course. And those fundamentals drive then also the interest in the investment class residential.
We had a depressing 2023, but on a year-to-year basis, now 50% increase the last two quarters. It should stay on this level. We have seen some transactions announced to the market. Handing over to Katja.
Thank you.
Shared economy.
So after the macroeconomic perspective, let's have a close-up onto our portfolio in Germany. The residential portfolio in Germany has a value of EUR 7.5 billion, which is EUR 4.5 billion in group share and consists of around 40,000 apartments. The rental yield is 4.2%. And we have made a huge shift from 2015 until now to the city of Berlin, which is now 57% of our portfolio value. So what makes Covivio different to other residential companies? First of all, 100% of our portfolio is located in metropolitan areas with more than one million inhabitants and 90% in cities with more than 500,000 inhabitants. We do have a unique positioning in Berlin, which is EUR 2.6 billion of our portfolio value, 57%, like I said, and 70% of that in prime and in good locations. We do have a high reversionary potential, 45% in Berlin and 25% in average.
Our portfolio is already prepared for prioritization, which means EUR 2.3 billion are already divided into condominiums, 1.9 million of that in the great market of Berlin, with a potential step up of 40%. Let's have a closer look onto Berlin. Berlin has a share of EUR 4.1 billion, EUR 2.6 billion in group share. We see a like-for-like rental growth of 4.5% and a yield of 3.7%. The average rent is EUR 9.10 per square meter and per month, 45% reversionary potential. We also see a great potential in the replacement value. As of today, the value is around EUR 3,000 per square meter. The replacement value means when you buy the same asset in the same location, the replacement is EUR 5,600 per square meter.
You can see 16,600 units around that, almost 1,200 commercial units already, only small ones in the buildings, and an occupancy rate that is almost 100%, so 98.4%. Second big location in Germany is North Rhine-Westphalia. We have made a shift also in North Rhine-Westphalia to only the best performing locations in North Rhine-Westphalia, so meaning we do have huge parts in Duisburg, Mülheim, and also in Essen and Düsseldorf. We are almost fully let, so the vacancy rate is almost nothing with 0.5% and the like-for-like rental growth of 3.5%, and also here, a strong reversionary potential with 20% upside, and the replacement value is 100% more than what we see as of today in our book values. Aside from the hard facts, actually, let's come also to the soft side and the tenant side. We do have high client centricity and top-level services.
We have been awarded six times in a row with the Fairest Landlord Award, 23 service centers taking care of our tenants on site, and also 24/7 emergency management, which makes us very close to the tenants, and we do have strong partnerships with nonprofit organizations in Germany. That was it from our side, but where do we stand compared to our peers? Actually, with EUR 8.4 average rent per square meter, we're 20% above the top and well-known listed peers. We do have the highest like-for-like rental growth with 4.2% compared to 3.3% in average. Net rent margin is really high with 90%, and also the occupancy rate, if you say it in vacancy, is 1%, so it's half of what the others have. What do we have? We do have a high-quality residential portfolio. We do have experienced local teams on site taking care of the tenants.
We do see significant revenue and growth and privatization potential. Actually, this has been also signed this year by a great contract with a joint venture partner, a French investor sharing a EUR 274 million portfolio with us in Berlin with 861 units. We have sold it in line with our appraisal values. That was the status as of today. What lies ahead of us? For me, it's two strategic or four strategic priorities: reinforce Berlin exposure through asset rotation, extract value through privatization, but also deliver a sustained +4% Like-for-Like rental growth and extend the operated real estate to residential. When it comes to the reinforcement of Berlin exposure, actually, Berlin is a quite great market. We do see a young population. We do see a higher economic growth than everywhere else in Germany and a higher population growth.
Our goal is to reinforce exposure to the most attractive city in Berlin. We benefit from underpriced assets in an improving environment, and we have the manage-to-green know-how. We manage to capitalize partnerships in Germany and get some economies of scale. How do we do that? We do that through asset rotation. The idea is to do some block sales, mostly in North Rhine-Westphalia, but also to capitalize on privatization due to our highly divided portfolio. We do have EUR 2.3 billion of our portfolio is already divided. EUR 1.4 billion of that is free from any regulation, 68% of that in Berlin. If we see the past history, it was almost EUR 300 million of privatization volume with an average margin of impressively 48% compared to the book value and an average square meter price of EUR 4,900.
Keep in mind the average price I show you on the first slide was like 2,600. And we do see a significant growth reserve in each city. Berlin has a significant growth reserve, as well as Hamburg and also Dresden and Leipzig. So in total, we feel that we can extract EUR 1 billion out of the existing portfolio by privatization. So for the last two priorities, back to Daniel.
Number three priority, sustainable growth of 4% over the coming years. Three drivers, indexation. This is German regulation, evolution of Mietspiegel. We see from the past that high inflation periods are then turning out in higher indexation too, but with a certain delay and spread over time. We have the reletting and the modernization with special slides just behind. Looking at our reletting potential, reversionary and achieved. This is a comparison between old rent and new rent per apartment. You see the trend strongly increasing since 2022 in Berlin, now having new record level at 35%, which we are achieving on average for each reletting.
If you turn this compared to the average portfolio rent, because in the long run, we are all dead, we know, so everybody has to move out one day, then you see we have in Berlin the potential of 47% of rent increase overall, and double-digit potential in the other regions, 32% on average for Germany. So this gives a EUR 50 million rent potential to be realized over the coming years. Number three is our strong sustainability investment focus in CapEx. So a big part of these 50 million group share CapEx is green CapEx. The good thing in German residential is you have an immediate yield of 5% due to regulation, midterm because of the better shape of the buildings, of 10%. And combining this economic performance increase with environmental performance increase, we have a strong decrease in our CO2 emissions when we do these investments.
Only a quick look on two examples. You see double-digit midterm yield on these two investments and 66% or 46% reduction of CO2 emissions achieved. Leaving sustainability, we are talking all about centrality. What is maybe lacking is hospitality in residential. So here we are on the bridge between hotels and residential, operate residential apartments, service apartments. We see a clear trend, a shift in demand. People not staying for 10 years, but only for two years, moving to some city. It has to be a central location. Then they need services. They don't want to take care of all these nasty things which are having to do with managing its own apartment. You need a good quality building. A benchmark building will be Alexanderplatz, downtown Berlin, 308 units to be managed by us starting in 2027.
As Christophe said in the beginning, we have other operating activities to come, transformation of maybe hotels, but mainly business office buildings into operated residential. Before we are leaving for the Q&A session, don't miss these three takeaways: prime residential portfolio, strong operational performance, and our three priorities reinforce Berlin, deliver sustainable 4% growth, and value extracting by privatization and hospitality approach for residential serviced apartments. Thank you, Christophe.
So conclusion. So well, I think a lot of things were shared during this morning. So you have what I said at the end of my presentation. So just to remind, this is main priorities we share this morning. To continue the rebalancing of the portfolio, this one-third, one-third, one-third is really a long-term trend. The question is not to be there tomorrow.
It's just the idea that we want to increase our exposure in the long term in the hotel sector and to reduce a little bit our exposure in the office sector. That doesn't mean that the office sector is a bad sector. It's just the idea to rebalance in the long term our exposure in these three asset classes that each asset class we like in total as Covivio. More centrality, that's key in each of our asset classes, and that's something we want to continue. Hospitality offer, that's also what we want to do in each asset class. And growth potential, I have to say, in each asset class we also share. So now with Paul and with all the team, we are available for a Q&A session. So I don't know how long we last, but we are there. Okay, first one.
Good morning, everyone. Sorry for that gap. Aakash Shah from Citi. I have three questions for you. I guess we can go one by one.
Thank you.
The first one is the disposal in offices, the non-core disposals that you are aiming at. Who would be the typical buyers for those non-core assets? And is there a level of discount that you have in your mind that is acceptable to you while you're looking to dispose those properties?
Okay, just to come back perhaps to valuation and questioning to that. Because that's a question also that you raised with JLL and so on, where do we stand in terms of valuation? What is our feeling today is that really in the city center, we are starting to see a small increase in valuation, and we expect that we continue. In the business district, we see continued decreasing value, but small decrease in value. We hope that next year it will be stable value. On the peripheral asset, on what is non-core for us, nobody knows exactly where the value. So that means that to answer your question, in this part of the portfolio, we could accept another decreasing value because really each asset is a specific case. And so you cannot give a rough amount of discount that you could accept.
In each asset, we need to decide at the time if we have an offer, if we want to accept it or not. But like we've done in, I have to say, in Charenton, for example, we accept at the end 50% decrease on the values compared to what was the value just two years ago. But I think it was the time to do that because we consider that this value was in term of office, we were not able to do that. And in term of internal way to do that in Terreïs, we were not able to have such a value. So in each case, we are looking at what we can do. But the idea is really to exit for the non-core asset, I imagine in the next two years, and the price will be the price that will arrive.
I will not have a clear answer on this topic.
What kind of buyers do you think are interested in these assets?
Most of our buyers are developers, I have to say. Developers that have better ideas than us and better hope, and they consider they could do something different than us. We don't see long-term investor for that because they are really assets that need, most of them, to be transformed in something else and office.
Thank you. The second question is just on the overall office stock in Paris. What percentage of the current office stock is grade B or C? And probably you could split it in CBD and La Défense.
Somebody wants to answer? Olivier, I let Olivier stand up. There is no clear figure. What we can say, the overall stock is 55 million square meter depending on the source, 55 million square meter -60 million square meter. We know that the occupancy rate is reaching now 10%, probably half. Yeah, at the end. Probably the half of it is totally obsolete today or regarding the building quality, but moreover the location, that's what we can say. We don't have a specific, we don't have yet a classification A, B, C detailed by the broker or the surveyor who are looking at the market.
Thank you. And the last one. The hotels obviously seem like quite an attractive case as you've presented. What is the risk to the hotels' case apart from the obvious COVID, war, etc.?
I think you see it's a volatile asset class, more volatile asset class than the other asset class thanks to the fact that you don't have a long lease with a fixed rent everywhere. But we have a lot of long lease, in fact, also in your portfolio that was too well explained before. So you have two-thirds of the portfolio, which is really in fact secure when you have just upside mostly on the variable part of the rent. So that's something which is really important. And on the operating asset, you need to manage the asset. You have all the operating risks that you can have in operating activity.
But as is today, and what is for me really interesting when you are looking to the long-term trends, the long-term trends during the last 30 years, I have to say, you have a growth which is above inflation in terms of RevPAR on average. So after that, yes, we have some volatility, you could have more volatility. But now it's 20 years that you are working this hotel hospitality sector. We face several crises. COVID one was really the deepest one. But at the end, when we are looking to the rent we have on this part, on the fixed part, it was really there. So the tenants were able to pay the rent. And that's for me the most important topic. So that's why we want also to keep an important part of fixed rent in the hotel sector in the future.
We are able to manage hotel. That's what Sébastien and Tugdual were explaining before. But we want to keep an important part of stability in terms of results. That's part of the story of Covivio, but with the capacity to extract value in the future and to increase the rent at renewal. So that's what I can just share in terms of main risk, what I see in this asset class. Next one.
Yes, thank you. So we have gone through a lot this morning. And I'm just curious how you've actually funded all of this. And I appreciate, obviously, you're going to sell a lot of the non-core office assets. And you'll sell a lot of the units as well. But I'm just curious in terms of numbers, if you could add a few on the sources and then also where is all that going, please. Thank you very much.
You know, we give the target, long-term target. It's not a short term. It's not 25 years , 26 years , just to be clear. During the last 10 years, as it was explained, we disposed of EUR 8 billion of assets in our portfolio in total. So we will continue to do disposals. We'll continue to do rotation of the portfolio. We will also continue to try to find equity when it's possible, like this year with Generali that contributed stake of Covivio Hotels into Covivio. So there are several ways to do that, mainly through disposals. That's sure that that will be the main way to do that. But we will see, you know, when you are looking to the equity raise of Covivio during the last 20 years, it was also an opportunity to raise equity. So we will see how to do that.
But really, it's not that we will do that only just in terms of equity raise if it's accretive in terms of cash flow, just to be clear also. So that's why the point is not growth for growth, really. That's not. But we will continue to dispose of office assets, not only the non-core. We will also want to reduce the part of the business hub. That means that we will invest a lot in the city center, but we will also continue to dispose some part of assets that are in the business hub. So that's the way we imagine to do that. But today, there is not a clear plan which is written how to do that. It's more in the direction we will want to share today, a long-term direction. That's just to be clear.
That means that this split, and at the end, it is 40 years , 30 years , is good also for us. It's just the idea to have in the long term more hotels and less office.
Okay. Yeah. And I guess just coming back on that, in terms of equity, I might be mistaken, but I believe your GAV discount is probably high teens, maybe mid-teens at the moment. I suspect around 16% maybe. I'm just curious, sure, if it's good on the cash flow side, but I'm just curious if you could tell me for what kind of assets you would do that for. Maybe on the hotel side as well. You're obviously now up to 52.5%, and you said that you wouldn't push out everyone else. And of course, that kind of makes sense because a lot of the people in that vehicle are also in Covivio as well. So it would kind of make sense that you don't push too much.
But I'm just curious, first of all, on the COV level, when you would do that and maybe for what type of assets? And then also, yeah, on the hotel side, what are the next steps there, please?
Today, as I said before, nothing is written. The direction is to increase the exposure. We will see the opportunities, so today, you see this year we have this discussion with one shareholder that want to exchange his share in Covivio. We have done that. Today, we don't have any open discussion with any shareholders, just to be clear on that, so it's nothing on the table today, but we see that, and we know that in the timing, things can change. We are open to that, to work with other Covivio hotel shareholders, and on Covivio today, really, with such discount on the GAV or on the NAV, we will not raise equity, just to be clear.
Sure. Yeah. Next question is on the flex office. I'm just curious if you see the growth there on a desk by desk basis or on a floor by floor basis with extra services.
Just to be clear, on the flex office for us, it's a way to increase the value of the building. What we call all-in-one offer for us is more important than the value offer. The idea is to put in the office building more services that add value on the rent and that helps us to find tenants. So what we see today, just to give you an example, the Goujon story that Olivier was mentioning before, that's one value. We just renew the contract with the tenant with plus 20%-27% compared to the previous one. That's one example, on one contract, but imagine also the case if you have rent in Paris during this period. That's one example. Just in L'Atelier, we just also change our first client to another and it's + 20%. So just some example of what we see today.
As of today, really for us, it's more, as I said, a way to increase and improve our offer. We don't want to have value everywhere. It's not the target of Covivio. The target is to have the capacity in each of our buildings to give service to the client and to be able to charge that on top of the rent in a dedicated contract.
Okay. Sure. And then in the balance of the portfolio, do you see the GAV growing as you change it to what's on the screen now? Because I guess in some cases, if you're going to sell offices, that's obviously going to help you there. But so I'm just curious if you see the GAV as a total that will grow as well, do you feel? Because you just said that you're going to buy more hotels and more German resi, or is it just that if you sell the assets you don't want, then the ratio will kind of sort itself out?
What is key for us is to keep our target LTV below 40%. After that, that will depend or we'll go where Google values, where we will be able to dispose. So as of today, we are not planning to increase the GAV just to increase the GAV. We are really driven now. We managed during these two years of crisis. We don't say that, but we have done two dividend shares. That was something important for us to manage this period. So it was, I think today we are really happy to have done that because that helped us a lot to stabilize the company, to stabilize the balance sheet and so on. But now the question is really for us to keep this LTV below 40%, to try to reduce the net debt to EBITDA ratio and to increase the results per share.
After that, the GAV, it will be the result of what we can do. We don't have a target to increase the GAV to EUR 20 billion. That's really the target we have. It is the case that means it will be through equity somewhere, but not directly, I imagine, with what we are today.
Okay. Sure. The final question is on Southern Europe. You intend to buy more hotels there. And I'm just curious in terms of how competitive it is down there, if you could comment on the ability to get assets at a good price, because it seems like a lot of capital is chasing assets down there. So I'm just curious in terms of timing, pricing, and also I guess in terms of the IRR that you're going to target. And also just to get a sense of if you know when the price has gone a bit too high that you will stop or yeah, thank you.
So obviously, we are not a force buyer. So we will always have a clear look at the return. I would say we've always been sensitive to achieve something above 10% IRR when it comes to investing in those kinds of destinations. It's not a secret. Spain and Italy are really hot in terms of investment appetite from a lot of investors. So what makes the difference is obviously the local knowledge and the people that are on the ground. So we are lucky to have two people based in Madrid that know perfectly the market for more than 20 years. Historically, the leader is a former girl from a big hotel operator in Spain and also in Italy. We also rely on the network and the knowledge that we have on offices, all the network that we have with local investors.
And also what is quite important is that we have more and more incoming calls from brands that are quite active in the Italian market, with which we have a lot of discussion, and they call us to help them site opportunities that they also source. So this is the kind of situation that we are facing. So local people being quite obviously prudent on the situation today. But probably coming back to what has been shown in terms of performance, you can obviously say, "Look, are you coming a bit too late after this incredible recovery in Spain?" My personal feeling is that there's been in Spain, it was a cheap market, in fact, for hospitality historically. And probably when you look more into detail in Madrid, for instance, Madrid was really ranking much below Paris in terms of attractiveness. Today, Madrid and Paris are quite the same.
It's normal that the RevPAR also increases at the same kind of level in terms of attractiveness. There's been a catch-up effect. It's for sure a more mature market, the Spanish market, and probably where we could have a lot more to do because Italy today in hospitality is only 5% of our portfolio. It's probably there. I hope that we will have some good success in the next few months and years.
Thank you, Tugdual. Last one, because I think other people ask questions. Okay. Thank you.
Thank you. Marc Mozzi, Bank of America, I'm going to stick to three questions despite having 15 of them. Number one, can you discuss a bit about your geographical split? Any target in mind? Because it looks like Germany will still be above 50%. Is that something you feel comfortable with?
Germany today is 40%, not 50%. So in group share.
When you do the math on the one-third, one-third, one-third, then you will end up at easily 50%.
No, that really depends where you invest. Today, we are at 40%. The target is not to increase Germany. The target is really to increase South Europe, where we like to invest today. Also, I have to say, when I'm looking to Italy in terms of office, we have this pipeline, which is really important to develop in Porta Romana and in the Symbiosis that we arrive. If we have opportunities there, we will push that. In Spain, it's really something where we want to go. So in total, we want really not to increase Germany today. 40%, I imagine is the max we will have. Perhaps it could be reduced a little bit in the future. We have France, which is today 35%; we imagine to stay like that, and the rest of Europe could be also at one-third. So this evolution could be also for the future.
But it's something that really will also depend on opportunities, as you imagine, but in the resi, we want to invest in Berlin, but we want to find assets to also dispose, so no change in terms of allocation in German resi in total, and in the hotels, as I explained, we want to invest more in Southern Europe, so that's the evolution of the mix in the coming years.
Okay. Clear. And I should have started by, you've got plenty of good objectives here, long-term view and so on. Why not providing any financial guidance? What's prevented you to do that?
We never do that in the past. We consider that really today we have a lot of drivers. After that, it will also depend on the evolution of the environment, of a lot of topics. We really will comment on the results in February, the guidance for 2025. But as you imagine, taking into account all the good news we have in the pocket, today we are really confident on the results of 2024, but also the future results for 2025.
Okay. And the final one is just you want to deploy your hospitality offer to residential. Can we have a bit of background on how many people are currently involved in that business? And how's that compared to five years ago in 2020? And what is the cost of that hospitality business? And what will be the adding cost if you move to residential? Thank you. That's it for me.
Thank you. First of all, it's a small story for us now. It's something that just we want to start. As Daniel said, it's a strong trend that we see in the resi sector to have also this co-living stuff and something like that, which is there. We have this operation in Alexanderplatz, and we have the choice to operate it directly or to find an operator. As of today, we consider that we need to study that. We have also in France some operations that are today office that will be converted into resi, but into more operated resi, and that's the idea to have, for example, what we call an internal startup to try to work on that. It's really very few people today, only two, just to be clear, that are working on this side.
We will see by the end of next year, by the end of 2026, if it's something that we want to develop or not. That will really depend on the first result we will have for this part. The idea for us is to say that the hospitality is also important in resi. It seems to be, and there is really, as also Daniel said, it's really in the corner between resi and hotels. The question is how to manage that. We will see in the future. As of today, it's really something very, very, very small.
Good morning. Céline Soo-Huynh from Barclays. I just have a question on the hotels. So for me, one quick way to increase your exposure to hotels would be to increase your stake into Covivio Hotels. But you always said in the past that you would only do it in shares as opposed to cash. But now that things are stabilizing and rather than buying assets you don't know, could we consider a cash offer on Covivio Hotels? Thank you.
The question today is what wants to do the Covivio Hotels. It's a partnership at the end. It's a listed company, but it's a partnership between long-term investors. And what I can share with you today is that all the long-term investors that are with Covivio Hotels today are really happy as shareholders of Covivio Hotels. And I don't see them moving either in cash or in shares in the coming months. After that, it could change, but it could change. But today, that's the feeling I have because as you imagine, we have discussions with them. And as of today, it's something that I don't think they will change quickly. Perhaps it could change, but if it's the case, we could imagine, but really, it's not something that we imagine in the short term.
Good morning. Pierre-Emmanuel Clouard from Jefferies. Two questions on my side. Sorry to stick with figures, but.
Paul is there. Paul wants to answer something, so good news for Paul.
Can you remind us the total level of finance on CB21? And what could be the impact on your guidance on the FFO next year? And maybe do you think that it could be relet anytime soon or the vacancy in La Défense is so high that it's complicated today to have a bet on that?
Hi, Paul.
Six. Nice question. Total rent level in France for CB21 group share for us, at least from Suez, because Suez is leaving, it's EUR 20 million . Then they are leaving mid next year. We also have termination fees. So we consider that's why, as we said in previous calls, we consider the impact for 2025 should be limited on the departure of Suez, which gives us one year, I would say, to find tenants. And yeah.
Great. The second one on German resi. What is the expected envelope of CapEx that you need to spend every year in order to achieve the plus 30% reversionary potential today?
We put the graph in the presentation. Basically, EUR 50 million of modernization CapEx. Then it's two-thirds of the CapEx of the German residential. But specifically to get this rent catch-up, it's EUR 50 million per year at 5%-10% yield.
Okay, and last one, maybe I understand that the split one-third, one-third, one-third is in terms of values. Can you give us a broad guidance on the rental breakdown? Because I imagine that German resi is lower yielding than offices today.
No, we don't. It's really not what's the idea of today. The idea of today is really just to give a long-term view of the split of the portfolio. So after that, you know that the yields are not the same. So you can do your calculation by yourself. But really, it's the idea is not to say in 2026 we'll be there. No. It's a long-term view, as I explained, and after that, yes, we will have less rent in the resi part than in the office and the hotel, yes.
All right. Thank you.
The sole point is you will not eat, but after that, we'll have a short lunch. Okay. Good.
Thank you. I will break the question on the figures. I will come back on ESG. I appreciate that you started this morning's presentation with your ESG ambition. I just wanted to know, given your ambition to increase your exposure to hotels in Southern Europe, we have seen, unfortunately, recently how climate change is affecting this region of Europe. How can you manage these conflicting targets to be more exposed to hotels in Southern Europe and also to limit your impact on the environment?
Thank you for this question. Our objective is clearly to, let's say, to be in line with the carbon trajectory per country. So basically, it's very simple. The way we look at new investment, for instance, in Spain, because I have in mind a very precise example, we look at the current carbon emission of the building. And we try to figure out or estimate the CapEx that is needed to align this building emission with the carbon trajectory of Spain. So this is the way we contribute to this objective. Depending on the countries, obviously, the emissions are not the same. But this is really probably when we start looking at investment, we ask the expected price. We ask for the lease, and then we ask for the consumption and the split of the consumption. These are the three things that we ask.
Obviously, this is on top of the priorities.
The climate impact is also part of the criteria when you...
Yeah, yeah, sure. Yes. Today, in the investment committee, we have a specific part on the climate impact.
Thank you.
Hi. Vanessa from JPMorgan. Maybe a follow-up to the financing question that you got asked earlier. I know you've given a five-year strategic plan, but if we think about probably the next year, the next two years, how should we think about your capacity versus your capital constraints and the evolution? I know you want to be below 40%, but if you could give some color on that, that would be great. Thank you.
Yes, well, just to have in mind, we have to finance a pipeline, which is today mostly an office pipeline, which is there. We imagine we have between EUR 250 million - EUR 400 million of CapEx to spend per year in terms of pipeline in 2025 and 2026. In total, not only office, but also resi and hotels. That's the first part of what we have. That means that we have to imagine to have almost at minimum the same amount of disposals. That's really what we imagine to do. That means that we will continue this rotation policy that we implemented in the past. And after that, if we are able to have some more disposals, we could do more investment. But really, it's just like that, like we are monitoring the balance sheet today. So we have this pipeline.
We want to deliver it as of today. Some assets of the pipeline are exiting the pipeline. The Moncler story was in the pipeline before. Now it will be not anymore in the pipeline. It's also a way to finance it, I have to say. So that's something that we will continue to monitor. But with really the target to be below 40% LTV, we will be at year-end. That's really for us a great achievement thanks to all what we have been able to deliver. So that's the way. That's why this evolution of the split of the portfolio will take time because we cannot do that quickly without equity or without debt. So that's something which is clear.
Hi. I have two questions, please. The first one is on the disposal of your Symbiosis building in Italy. If I understood it correctly, I believe that your latest guidance for the total cost of that project was very in line with the value you got for it. Is this due to the recent weakness of the office market there? And do you expect to get better margins on your rest of the projects in the pipeline from now on?
Alexei Dal Pastro.
Sure. First of all, I start from an introduction. I was not long in this description. This asset is currently a development, as Christophe said. Works are expected to be completed by mid-2025, and Moncler then will enter the building, start the lease, and so on. As we said, the transaction has been secured at value in line with our appraisal, in line with just what you said. Let's say the main driver for the decision of the disposal is really to focus as much as possible our investment in the area that is quite sizable in the north part, as I said, closer to the city center, to the CBD. By the way, as we said, we still have one significant building to develop there that is C+E, is 22,000 square meter. That is already authorized.
But of course, we will launch as soon as we have a significant pre-letting and then we have all the Scalo di Porta Romana story. So this disposal, in my view, shouldn't be read as a lack of confidence. We really like the area. We continue to invest to develop. The disposal in terms of value is totally aligned to our valuation, supports all the costs that we have done. We will continue this story at the end.
Thank you. And the second one is on hotels. We've had a relatively quick trading update from one of the U.K. operators. I mean, I know U.K. is like a very specific region and RevPAR numbers in Q4 are not great. But also that weak trading update came on the back of higher costs. So given that now you are going to turn more operational in the hotel business, how are you seeing those costs evolving in your other regions? Do you think that the expected RevPAR growth in 2025 will be offset by cost rises? Or do you think that you can improve your EBITDA next year?
Trading is softening all over Europe. It has been demonstrated just after. I have to say, after those three incredible years, it's quite normal to take a break, breathe, and stabilize to start again after with regular growth due to the fundamental that we described. Discussing a bit about the cost, obviously, it has been a big challenge during this huge inflation time, the increase of cost, and also the increase specifically of labor cost. Obviously, hospitality is relying a lot on, let's say, low wages. And this is where the state and the regulation has been the more requiring in terms of wage increase for low salary. So it has been specifically the case first in France, then in the U.K., and also in Germany. And for 2025, we have in our forecast some important increase in terms of wages in Germany, in the U.K. also.
But as we said, the level of ADR has been able to absorb this increasing cost. So as you suggest, it's a point of attention for us when it comes to, let's say, to move a bit more in operational side. But we consider we are paid for that. So that means the yield is higher, the flexibility to be, let's say, more on the ground to optimize the way the hotel is working should enable us to be able to address those kinds of things.
Thank you. Thierry Cherel, that's it. Just one question on my side, maybe more for you, Paul. It's about the long-term view on the LTV. Have you discussed with S&P and other credit rating agencies about your desire to increase hotel, which they don't really like because of volatility, in the same way as you are increasing the, I would say, active management with you? Could you give us some more color on that? Thanks.
Yeah, sure. We had discussions with them when we announced this acquisition of Generali and also the deal with AccorInvest. Actually, the way they looked at it and they wrote a report on it saying that they expect no impact on the rating of Covivio based on the fact that actually the Accor deal is transforming variable leases into management contracts. And as Christophe said, we have two-thirds of fixed leases in the hotel part. So for them, they also acknowledge the strong, let's say, growth profile of this activity. So no impact, I would say, already included in their last report.
And just to add, S&P decided to improve the standalone rating of Covivio Hotels during this year. So that was, for me, a good signal that the perception of the rating agency of the risk of this asset class is improving. So it was BBB minus before. Now it's BBB. With the support of Covivio it's BBB plus, but it would not change. But I think for me, the fact that S&P improves the standalone rating of Covivio Hotels is a really good news, the fact that they now consider this asset class less risky than other asset classes in the long term. Okay, there is a volatility in terms of results. That's sure.
But thanks to the long trend, positive long trend, they imagine in this asset class, I imagine that was the reason of the fact that they improved the rating despite the fact that we have more hotels under management than before with the operation with AccorInvest. So I think we are done in terms of timing of questions. We will continue the Q&A, but directly during the lunch. Thanks a lot for attending this part of the Capital Markets Day, and we'll meet after. Thanks a lot.