Demand for paris luxury real estate sees foreign boost

Luxury Property Paris FranceThe tide keeps changing in Paris’ luxury real estate market. After a couple of years of fast growth, in which the French capital looked set to rival London as Europe’s global hub. Sales ground to a sudden halt in 2012, when the uncertainty linked to the general elections, together with President Hollande’s announcement that he would reform the income tax for top earners and introduce new property and wealth taxes, scared off both domestic and foreign demand.

Paris has seen the return of foreign buyers.

“After May 2012, the market tanked,” says Alexander Kraft, Chairman and CEO of Sotheby’s International Realty France. “French buyers, especially well-to-do French buying second homes, disappeared.” A year later, greater clarity on France’s new fiscal regime, coupled with turmoil in the Middle East, have lured back overseas buyers, although homegrown ones remain scarce. “Overseas buyers realised that the tax reforms did not touch them, that maintenance costs were much lower in France than elsewhere and that value was good,” notes Marie-Hélène Lundgreen, Director at Belles Demeures de France, the international arm of Parisian luxury realtor Daniel Feau, an associate of Christie’s International Real Estate. Plus, adds Kraft, “foreign buyers perceive Parisian property as a stable long-term investment. If you take the long-term perspective, the French market will always be a safe investment. Right now it is close to the bottom, but in the longer perspective prices will pick up again.” Buyers are a mix of nationalities, many from emerging countries: “Argentinians and Brazilians are increasingly active as are the Chinese, who now account for 5% to 7% of the market,” says Mr Kraft. “There is a good number of Russians (10% to 15% of the demand) and we have seen the return of European and American buyers.” Americans, says Lundgreen, have really made a comeback. “They are ready to spend 2 to 3 million for a pied-à-terre but some are looking for big investments to the tune of 30 to 50 million.” The Syrian crisis has also had an impact, with growing numbers of Middle Eastern buyers looking for a base in the City of Lights, particularly for their family. “A mansion priced at more than 40 million sold in six weeks to a Middle Eastern buyer,” notes Lundgreen. As a result, the local luxury property market has split into two tiers–the foreign-fuelled top rung, which is thriving, and the lower, more traditionally French rung, which continues to languish. This presents an opportunity for the savvy buyer because vendors, particularly at the lower end of the luxury market, are now more open to negotiating prices than in the past. “In France, it is uncommon for people to adjust prices, but negotiating has become more flexible, especially when you have a foreign buyer coming in with cash in hand and an unconditional offer,” Kraft advises. “There is a difference of 10-15%, sometimes even 20% between asking and sale price.” However, the picture is different at the very top end of the market, which Kraft calls stable and Lundgreen booming. Properties  at a clutch of super-prime addresses on either side of the Seine rarely become available, and prices remain sky high. “The best located properties in Paris have not experienced a price fall in 2013,” confirms Hervé Levy, Regional Manager for Paris and surroundings at international realtor Home Hunts.

Luxury Property Paris France

So what are Paris’ most expensive streets? Lined with monumental mansions, massive chestnut trees and the finest names in global couture, Avenue Montaigne is the sophisticated grand-dame of Parisian property. “Avenue Montaigne is always sure value,” says Lundgreen. “When you have an apartment there it always goes quickly.” Prices are the highest in Paris at 20,000-30,000€ per square metre, according to Kraft. Higher-floor apartments overlooking the Avenue commend even more, especially if decorated by well-known interior designers. “They can go up to €50,000 per square metre,” says Lundgreen. Extract taken from an article that appeared in Forbes, to read the full article click here

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