View of the Notre-Dame de Paris cathedral at sunset.
Paris is gaining popularity among property investors due to several factors including low-interest rates and more attractive prices.
By Michelle Yee
Paris, one of the most visited destinations in the world, is hugely popular among tourists, especially couples, who flock to this charming city to admire its cultural and historical monuments, museums, centuries-old churches and art. These days though, the French capital is also becoming a hit with investors who are snapping up properties here due to historically low interest rates and relatively low prices as compared to other major global cities.
“Activity has been buoyed by record-low interest rates and competitive asking prices. Transactions across the whole market are up 23 percent in the year to May 2017. The prospect of interest rate rises has encouraged buyers to close deals and stock levels have fallen.
“Additionally, despite a strong international standing, Paris hasn’t attracted the same volume of international money into its prime residential markets as London, Hong Kong and New York. Reliant primarily on domestic wealth, prime prices on a per sqm basis stand 32 percent below those of London, and 69 percent below those of Hong Kong. We believe this represents value on a global stage,” revealed a Savills research report.
French capital set for more growth
Following several years of muted performance since 2011, Paris’s property market has picked up speed in the last two years, and analysts expect the positive trend to continue this year.
“With a new political regime, historically low interest rates and building consumer confidence, the residential market has now turned. Having bottomed out in 2014, prices increased by 5.8 percent in the year to May 2017.
“Prices in the 1st, 4th and 5th arrondissements have already exceeded their 2012 peak. This recovery is being driven by domestic demand. Foreign buyers accounted for just 9.0 percent of the prime market in 2016 (sales above €1 million), but we expect them to grow in importance. They already account for around half of buyers in the ultra-prime segment. The new government will bring clarity on legislation and a period of relative stability. This could encourage foreign buyers who have been waiting on the sidelines to act,” shared Paul Tostevin, associate director at Savills.
Looking ahead, Paris is expected to lead the global prime residential market in 2018, outperforming top cities like London, New York and Miami, according to a Knight Frank report.
“Benefiting from the improved economic and political outlook in the Eurozone, luxury home prices in the French capital are likely to grow 9.0 percent this year,” Knight Frank said.
Why invest in Paris?
For couples and investors looking to invest in Paris, the French capital offers more than just good rental yields. According to Fleur, gross rental yields in Paris are around 4.2 percent for small apartments and 3.9 percent for big apartments. That said, there are many more reasons that make this charming city an attractive investment.
Improvement in infrastructure
“Further investment in its Metro will be taking place; $25 billion expansion titled the ‘Grand Paris Express’, taking place between 2020 and 2030, will open four new lines and 68 stations. The main aim is to reduce traffic and pollution from it and increase ridership by up to 40 percent,” said Fleur.
In addition, by winning the bid to host the 2024 Olympic Games, Paris can expect to receive billions of dollars which will be used to upgrade existing infrastructure and develop new ones.
According to a study commissioned by the city, the games could potentially generate up to 10.7 billion euros for the region and create approximately 247,000 jobs.
A business hub
A global city with a diverse economic base, the Paris region generates 31 percent of France’s GDP. The French capital, which boasts a young, highly educated workforce, is also host to more international headquarters than London, and is the number one European region for R&D spend.
Tourist hotspot
Despite fears over terrorism, tourists are still flocking to the French capital, which is home to top attractions such as the Eiffel Tower, The Louvre, the Notre-Dame de Paris, the Arc de Triomphe, and more. Paris’s cultural and historical sites have always been a huge draw for travellers, as reflected in reports.
According to figures from the Regional Tourism Authority, the first half of 2017 suggests Paris and the surrounding Île-de-France region are on course to hit a 10-year tourism high.
Meanwhile, hoteliers in the Paris region registered 16 million guests for the first half of 2017 – the highest number for the same period in the past decade.
Political stability
“Emmanuel Macron, the French president, and his commanding majority government, should mean a period of stability for the Parisian residential market. Reduced political risk in Europe coupled with pro-business reforms could result in renewed economic growth and stimulate the residential markets,” the team from Savills said.
A safe haven
Savvy investors looking for steady long-term growth and a safe haven from international financial volatility will do well by parking their money in a Paris property, experts said.
“Even at the height of a crisis, like the subprime mortgage debacle in 2008, the real estate market in Paris simply doesn’t collapse. Conservative lending practices and high acquisition costs have deterred speculative practices, leaving Paris real estate for buyers who are looking to enjoy it themselves while securing a safe long-term investment. Our market is fairly recession-proof because property in the historic centre is extremely limited—and Paris is and will always be a top destination,” Kathryn Brown, chief of operations at Paris Property Group explained.
What to look out for
As with purchasing property in any other foreign country, industry experts warn that it is important to do your due diligence beforehand to ensure you’re able to make a well-informed decision to secure the best deal.
“Unless prepared to offer without seeing the property, it is essential that buyers make the time to come over to Paris and allow time for visiting and be prepared to put in an offer on the same day. The market is moving very quickly, and the most desirable and attractively-priced properties can come and go in the space of a day.
“We are also finding that if negotiation is to take place, it is for inventory rather than price (there is little to none for lowering the price). Inventory, including furniture and appliances is especially attractive to overseas buyers who are looking for somewhere where they can visit and enjoy with minimal hassle,” shared Fleur Buckley, property services manager at FrenchEntrée.
FAST FACTS
Population: 2.2 million
Total area: 105.4 sq km
Currency: Euro
GDP per capita (France): US$41,000
GDP growth (France): 2.0 percent
Future transport: Paris metro expansion
Distance from Singapore: Approx. 10,720 km
INTERNATIONAL HIGHLIGHT
Exaltis is a brand new luxury residential property in the upscale 16th Arrondissement in Paris.
NEW PROJECT
Exaltis
16th Arrondissement – Porte d’Auteuil
Located in the 16th Arrondissement, this 92-unit luxury residential development is part of the complete redevelopment of the ‘Gare d’Auteuil’. Developed by a reputable developer, this residence forms an integral part of a multi-million euro regeneration project in this area.
Comprising a mix of studio- to four-bedroom apartments, each unit is bright, airy and spacious, and offers breathtaking views across Paris, towards the Eiffel Tower, or towards the Bois de Boulogne.
For recreational pursuits, the endless green landscapes of the Bois de Boulonge provide a wide array of activities from boating to cycling. Residents can also easily walk to the large Sainte-Perine park, or the garden of Poets.
Type: New-build apartments
Marketing Agent: internationalpropertyforsale.com
Facilities: Fireplace, full security system
Nearby Key Amenities: Shopping malls, historical sites, restaurants, parks, gardens
Nearest Transport: Portes d’Auteuil Metro station
Starting Price: €700,000 (S$1.13 million)
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