While the capital is still highly coveted, available properties are becoming scarce and prices are soaring. Analysis and perspectives with leading real estate experts.
In Paris, the number of transactions in 2018 was very high with levels close to the historic record of 2017. “The market remains constrained due to the lack of available properties, which is pushing prices through the roof,” explains Stéphane Adler, a member of the Chambre des Notaires du Grand Paris (association of Greater Paris notaries).
One district in two priced at over €10,000/m²
Prices are continuing to soar. According to calculations based on deeds of sale in the capital, the average price per square metre reached €9,550 i.e. an annual increase of + 5.9%. “Half of all Paris apartments sold for over €10,000/m² in the third quarter compared to 28% in the same period last year, and 19% two years ago. Depending on the area, prices are increasing by 5% to 7% a year. One of the most expensive neighbourhoods is Saint-Germain-des-Prés in the 6th district with an average price of €16,200/m2. Next comes Saint-Thomas d’Aquin (7th) at €15,600/m2 and then Notre-Dame (4th) at €15,000/m2. To become the owner of an apartment in Odéon or Monnaie (6th), buyers will have to shell out €14 000/m2.
At the opposite end, Porte de la Villette (19th) and La Chapelle (18th) are more “affordable” at around €7 000/m2. In the luxury segment, prices are much higher and sometimes soar depending on the type of property and neighbourhood, as the four luxury sector executives interviewed in our feature explain. Each describes their best sales, the records they broke in 2018, and gives their predictions for this highly dynamic market.
Luxury property : a turnover of 2 billion
With regard to sales of luxury real estate, the survey conducted by the notaries of Greater Paris for Le Figaro Properties is revealing. It shows the number of properties valued at over €2 million in 2018. This niche market represents an annual volume of around 700 sales with a proportionally high turnover: 2 billion Euros. Luxury Paris properties are seven times more expensive that all other types of property. The 16th district accounts for nearly one-third of all luxury property sales (30%) while the 7th and 16th districts accounted for one in two luxury sales (53%). And when it comes to the nationalities buying these properties (2017 to 2018), the Americans are ahead of the Chinese and the Lebanese.
The impact of the "yellow vests" on the market
Although 2018 was an incredibly dynamic year in terms of sales, there are several unknown factors looming on the horizon. Will there be sufficient confidence in the market in 2019? Will the capital attract buyers or will an element of ‘wait and see’ set in? Will the climate of social instability caused by the ‘yellow vest’ movement and the subsequent unrest seen around the world have an impact? While it is still difficult to assess, Alexander Kraft, CEO of Sotheby’s International Realty France, is not underestimating the effects. He hopes that the situation will calm down and that “it won’t have a negative impact on France’s image around the world.” Richard Tzipine of Barnes is categorical: “Since December 2018, there has been a change in attitude among international clients. Some have decided to postpone their decision to buy until they know what is happening with the ‘yellow vests’.” So to sum up, while the main luxury players are optimistic, they also remain vigilant.
Brexit : yes, no, maybe ?
And then there is Brexit, a milestone event in 2018 and one which has already had a significant impact on Paris’ real estate market. Will it continue to affect the luxury market this year? Nathalie Garcin says she has already seen an initial first wave of Brexiters but thinks there will be “a second and bigger wave if Britain’s exit from the EU speeds up.” For Charles Marie-Jottras, CEO of Daniel Féau: Purchases made by French expats living in London due to the relocation of their offices to Paris account for a growing number of sales. Most have bought properties priced at between 1.5 and 3 million Euros and are generally looking for family homes close to schools in Paris or Neuilly. In 2019, everything points to more and more clients arriving from London,” forecasts Charles Marie-Jottras.