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Inside the Market / Market Trends

A new study explores trends in Paris real estate over the past two decades

Finance Study over 2 past decades - Paris Property Group

Despite successive financial crises, Paris real estate remains a profitable investment. Property prices have more than tripled over 30 years. Smaller apartments and studios have seen higher percentage increases than larger apartments. The most active foreign investors in Paris property are the Italians. But foreign buyers have not significantly influenced real estate prices.

These are among the main conclusions of a new study published by Paris and Ile-de-France notaires (officials who handle property transactions). Their extensive research looks at the evolution of property prices over the past 20 years (for some calculations they have gone back 30 years). It also explores buyers’ profiles.

Real estate prices have more than tripled over 30 years

At today’s values, the average price per square meter in Paris in 1984 was 2,180 €. In 2013, it was 8,140 €. It’s worth noting that this is an average and that prices among and within arrondissements (districts) vary significantly.

The notaires have collected data on prices by arrondissement since 1991. The study notes that prices have not increased at the same rate throughout all arrondissements and the gap between arrondissements has closed somewhat. The 2nd arrondissement has seen the biggest hike in prices over 22 years. They are now about 3.5 times higher than in 1991, representing an annual increase of 5.8%. By contrast, prices in the 16th have gone up 2.09 times over the same period: an annual increase of 3.4%. The 6th retains the prize for the most expensive arrondissement in the city with a median price per square meter of 12,320 €.

Smaller apartments have seen the greatest increase in price

Of the 1.3 million apartments in Paris, two-thirds are studios or two-roomed properties (plus kitchen and bathroom). They accounted for 55% of properties sold in Paris in 2013. Since 1996, the prices of smaller apartments have increased more than those with three rooms or more: by a factor of 3.65 for studios and 3.66 for two-roomed apartments compared to 3.39 for three rooms, 3.3 for four rooms and 3.02 for five rooms.

Nonetheless, the median price per square meter of larger apartments remains higher overall: 8,760 € for five rooms compared to 7,960 € for two rooms. This is because of their comparative rarity and quality and their location in the more sought-after neighborhoods. It’s possible to pay 25,000 €/m2 or more for a luxury apartment on the Avenue Montaigne.

Foreign buyers are active but are not the key factor in price increases

In 2013, 8% of buyers of Paris real estate were foreigners. Contrary to received notions, the most active foreign buyers were not the Saudis or the Russians. Italians remained at the top of the list (19.7% of foreign buyers) followed by the Chinese (7.1%), Americans (7.0%), Algerians (5.3%) and British (also 5.3%).

Non-resident foreign buyers bought the most expensive properties, with a median price per square meter of 10,000 €. Even so, the study concludes that foreign buyers have not had a major effect on prices in the capital. Rather, the limited supply of apartments compared to demand has been the prime factor in the price increase.

 

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