Paris is consistently included in the list of the most expensive cities in the world for home buying. And only very wealthy people can afford to acquire luxury real estate here. But despite this, in recent years, due to a number of economic factors, the local market has visibly sank relative to its global competitors. International demand has fallen, while price growth has declined. True, there have been positive changes lately …
Paris is one of the world economic centers, the real estate market of which attracts wealthy investors. According to the New World Wealth report, the French capital is among the top ten cities where multimillionaires prefer to buy housing .
However, in recent years, due to not the best economic indicators in the country, the total investment in the elite segment of the market has become noticeably lower than in competing cities.
But the election of a new president, historically low interest rates on loans against the backdrop of competitive real estate prices and an increase in consumer confidence markedly spurred the French capital market.
In 2016, the situation began to change for the better. For example, at the end of last year, the cost of premium residential real estate in Paris increased by 4.3%. And in the current 2017, the growth rate of prices increased and since the beginning of the year amounted to 7%.
According to the latest report by Christie’s International Real Estate, Paris is one of the five hottest real estate markets in the world. And Knight Frank in its Wealth Report 2017 puts Paris in eighth place in the top ten cities with the most expensive luxury real estate.
- € 12,000 – 18,000 per sq.m – the average cost of premium residential real estate in Paris
- € 20,000 – 30,000 per square meter – the average cost of ultra-premium residential real estate (exclusive objects)
The main catalyst for the recovery of the elite market was the demand from the French themselves. The abolition of the wealth tax has played an important role in this.
Savills deputy director of international research, Paul Tostevin, noted that the prospect of higher interest rates pushed many buyers to close deals this year. Due to which the number of vacant offers on the market has decreased. So, the rise in prices for elite real estate will not only continue, but will accelerate.
In 2016, foreign investors accounted for only 9% of the total demand for premium housing. The indicators are far from the highest. For example, in 2008 their share was 14%. Savills experts believe that in the near future, thanks to the abolition of the wealth tax, and the new government, which is preparing a number of legislative initiatives designed to improve the country’s investment attractiveness, the number of foreign investors will increase.
According to the data for 2016, the largest group is made up of buyers from European countries, among which the United Kingdom, Switzerland and Belgium take the lead – 39%. The share of US citizens is 16%, which is 5% less than a year earlier.
The number of buyers from the CIS countries is up to 20%. But there are still few immigrants from the Middle East and Asia who have taken a fancy to London on the Paris market.
France’s reputation as a high-tax country has had an impact on premium real estate markets. However, an analysis of the cost of buying, owning and selling real estate showed that this is unreasonable. Taxes and fees here can be assessed as average by world standards.
In particular, the cost of purchasing in France is lower than in many competing cities. In Hong Kong, Vancouver and Singapore, foreign buyers pay an additional state duty of 15% (in addition to the existing taxes) when making a transaction. In addition, in France, the “famous” income tax of 75% is not paid by those whose source of income is in another country.
In the elite residential market in Paris, most of the proposals are made up of ancient objects from the time of Georges Eugene Osman (1809-1891), and the number of new buildings is limited. There are few modern projects with a high level of service and services provided in the French capital. Most likely, this is one of the reasons why foreign investors occupy a small market share.
But on this in the secondary market, you can pick up housing for every taste.
Apartment in Osman’s house
Apartments with classic finishes with four bedrooms, an area of 92 square meters. in the house of Osman in the 8th arrondissement of Paris near the Champs Elysées can be purchased for € 1.05 million.
Apartments in the building of the early 20th century
Spacious three-bedroom apartment with an area of 143 sq.m in the 16th arrondissement of Paris – € 1.33 million
Historic 19th century villa
Two-bedroom villa with its own library, cellar and garden, with a total area of 125 sq.m in the 14th arrondissement of Paris – € 1.85 million
Castle in the suburbs
The historic castle of the XVII century in the national park of the reserve Fonteblo in the vicinity of Paris. Area – 800 sq.m, price – € 2.9 million
Luxury spacious apartments and mansions are equally in demand, both among the French and among foreigners with large estates (HNWI). But the apartments for family living are mostly bought by the French themselves.