Paris luxury real estate once again a safe bet for French and foreign buyers alike
Conditions have aligned to make high-end property in the French capital an advantageous investment for both residents and non-residents. Reasonable prices, low interest rates and the fall of the euro make Parisian luxury real estate attractive once again.
Luxury real estate professionals in France ended 2015 in high spirits. Despite a slight decline in sales following the November attacks, transactions resumed significant levels by the end of the year.
According to professionals, the reasons for the recent influx of French and foreign buyers are both cyclical — due to the euro-dollar equivalence, low interest rates and relatively low property prices — and structural, relating to the cultural, historical and sentimental appeal of France and its capital.
Increased globalization may also have a lot to do with it, allowing a globalized elite to sell and purchase high-end properties on various continents as beneficial trends and opportunities arise.
Additionally, wealthy investors have been rendered cautious since the 2008 crisis, which diverted confidence away from financial markets into more tangible assets, such as art and property. And while France was long discounted by foreign buyers due to tax measures considered too heavy and restrictive, French luxury real estate now seems a much safer bet than other investment alternatives and real estate taxes now rank among the cheapest in the world for international investors.
According to a recent study by Lux-Residence.com, 9 out of 10 potential buyers are confident about their luxury property purchase occurring in the next 12 months and 73% of them believe this is the right time to buy luxury real estate in France.
Time is ripe for French buyers:
With property prices having declined steadily for the past three years, French buyers are no longer forsaking their homeland for more exotic buying opportunities. Domestic buyers — as well as French expats abroad — have begun to take advantage of reasonable prices to invest in luxury property in France once again.
Low interest rates on loans have also contributed to growing transactions across all sectors of the real estate market. According to Laurent Demeure, CEO of Coldwell Banker France, historically low rates are also encouraging foreign buyers to take out loans to finance their property purchase in France.
Return of confidence for foreign buyers as well:
“In terms of real estate, France is a safe haven for foreign buyers,” explains Thibault de Saint Vincent, the CEO of Barnes International. Middle-easterners are attracted by political stability while Americans can benefit from the near parity of the euro and the dollar.
Suddenly, French real estate prices appear cheap to Americans returning in droves, according to Challenges. They replace Russians who were the top property owners along the French Riviera just three years ago, but have since been forced to sell due to international sanctions imposed on Russia. The cost of luxury goods has also declined in France and Paris while rising in the rest of the world, in London and New York in particular.
Moreover, taxation on capital gains is becoming somewhat more attractive, falling from almost 50% to 19%. This occurred after France was condemned by the European Court of Justice (ECJ) for making non-residents contribute to state services they could not benefit from.
France and Paris also retain an enduring appeal with resident and international buyers alike. Structurally stable and benefitting from a health system, transport and infrastructure in good condition, France is “seen as a kind of savings bank. The acquisition process is certainly long, but it is secure, and allows potential problems to be resolved prior to the final purchase”, according to Laurent Demeure.
No doubt the country and its capital hold a cultural and sentimental appeal as well. International investors are returning en masse to Paris’ historical center, especially favoring areas such as Saint-Germain-des-Près — with its fascinating intellectual and artistic past — the Latin Quarter — near the world-renowned Sorbonne university — the Marais and Montmartre among other appealing neighborhoods.
With luxury real estate in particular, buyers often search for a blend of comfort and charm. Hughes de la Morandière of the Varenne agency tells the Nouvel Economiste that these criteria are met by most high-value goods in Paris. Luxury real estate combines “historical value and architectural quality — high ceilings, original decorative elements such as fireplaces, wood paneling and flooring — with a high quality of renovation, ensuring comfort and energy efficiency”.
Photo by Anissa Putois