Buying a prestige property in France has always held its appeal for many foreign investors. Not only are there the charms of France to enjoy, but top-end international buyers are attracted by the strength of the legal and planning framework in France.
France has one of the most secure land registration systems in Europe, and a substantial level of planning protection is afforded to character properties and neighbourhoods. All of which ensures that properties retain their value.
Entry level prices into the market start at around €750,000, which, up to around a €2m price tag tends to be dominated by French buyers. Over €2m there is a stronger presence of international buyers, and at €4m+ most sales are to an elite group of buyers from abroad.
Major agents in the market include Sotheby's International, Mercure, John Taylor, Daniel Féau group, Barnes International Realty, and Propriétés Le Figaro.
Mecure, one of estate agents, report that since 2019 there has been an increase of 50% in the number of transactions.
Similarly, the Daniel Féau group report that "Sales in 2022 have exploded, exceeding even those of 2019, which was already a record year. French buyers remain active and international buyers are back."
Whilst in Paris prices for properties in the general market are falling, agents are reporting that is not the case for the luxury end.
According to Leonard Cesari, associate director of the Mobilis Group, "In the 6th, 7th, 8th and 16th arrondissements, prices are in the stratosphere, exceeding €30,000 per square metre for turnkey properties not needing works."
Knight Frank French Riviera report a price increase of +10% since 2020. Barnes also consider that prices for €3m+ properties in Paris rose by a similar amount.
Prices are being driven not only by demand, but by a shortage of supply. Daniel Féau state that "Few properties are currently for sale and what characterised the year 2020, that is to say the increase in the number of apartments and private mansions on the market, is today well and truly a thing of the past."
Buyers
Most of the wealthy buyers are European, generally British, Belgian, German, Swiss, or Scandinavian. Due to Covid Chinese buyers remain scarce and after a spending spree in the Riviera at the start of the millennium, the Russians are no longer present.
Although the Americans account for only around 5% of the prestige market, all the agents report that they are buying in increasing numbers.
According to a recent study of luxury real estate trends by the Coldwell Banker network, who interviewed 2,000 US high net worth individuals, 92% of them were considering an international real estate purchase. They cite the strength of the dollar, the tense and uncertain political climate in the United States and the rising cost of living as significant drivers.
Laurent Demeure, CEO of Coldwell Banker says they are primarily targeting France, and especially Paris, with interest rates a big driver. "Americans can borrow in France around 2% at a fixed rate instead of 8% in the United States."
Nicolas Pettex-Muffat from the Daniel Féau group states that "About ten years ago, these buyers came from Boston and New York. Today, we see Californians arriving who buy pied-à-terre in Paris."
Some are still looking for a picture postcard property in Paris, ideally an apartment with a view of the Eiffel Tower or other historic site, but an increasing number are seeking to buy in areas where they can experience more of the authentic village character of Parisian neighborhoods. The Marais district is particularly popular with them.
The overwhelming majority are also only looking for properties that have been renovated and are well-equipped, with a range of services, a quality of interior design that is 5* hotel based, ultra-modern and functional.
As a result, where properties do not meet the exceptional standards demanded there is less interest amongst international buyers. According to Daniel Féau, prices for properties that cannot meet the high standards being sought are either stable or falling slightly.
This is a major difference with French buyers, who have a lower starting budget, and who are more prepared to consider building work. Finding reliable, available tradesman is an increasing problem for all property buyers, and those at the top-end prefer to do without the hassle. The costs of the works have also risen rapidly in recent years. International buyers are therefore afraid to position themselves on properties whose final price they are unable to assess.
Regions
The market has been one that has traditionally been for second-homes in Paris, but that is also changing.
With suitable properties in the capital in short supply, luxury home buyers are investing in major regional cities in greater numbers and in properties where they can spend longer each year.
So properties with a pleasant living environment, with access to services for families, such as schools and sports clubs, are in strong demand.
Large Provençal estates are also popular, especially those with an economic activity such as a vineyard or an olive grove.
For the experts, the return to the city is explained by the lack of social ties due to lockdowns. "The desire for large cities has accelerated because buyers are thirsty for social interactions: they want the terraces of cafes, restaurants, the theatre and concerts," notes Alexander Kraft, CEO of Sotheby’s International Monaco.
Laurent Demeure from Coldwell Banker states that "The demand on the Atlantic Coast is exploding, especially on the Basque Coast and the Arcachon Bay which are becoming the California of France."
However, not all major cities are in the same boat. "The enthusiasm for Bordeaux or Lyon is waning, the prices of prestigious properties in these two cities have reached a plateau. This is also the case in Paris, except for exceptional properties," comments Patrice Besse, president of the Châteaux et Demeures de France.
Outlook
As to the market prospects, none of the agents are forecasting a continuation of the strong trend of the past few years, with prices expected to flat-line. The rise in interest rates is likely to be the most significant factor calming the market.
Daniel Féau consider that "We see no reason for prices to fall, at least as long as the weakness of the euro reinforces the purchasing power of an international clientele once more in the market for luxury and ultra-luxury real estate."
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