Residential Research - Paris Insight 2019
FROM UP-AND-COMING AREAS TO NEW INVESTMENT PLANS, RODDY ARIS PROVIDES HIS THOUGHTS AND INSIGHTS ON PARIS’S PRIME RESIDENTIAL MARKET
Roddy Aris - Associate, International Residential Sales
HOW DO YOU EXPLAIN THE UPTICK IN DEMAND FOR PROPERTY IN PARIS?
From mid-2017 onwards a number of factors combined that helped build momentum. President Macron’s election and his probusiness stance, along with a resurgent commercial property market helped put Paris back in the spotlight. The initial surge came from domestic buyers who were subsequently joined by French expats, particularly those that had relocated in the wake of Hollande’s Wealth Tax in 2012, and later overseas buyers.
Cheap finance as well as Paris’s relative value compared with other global cities persuaded many to increase their footprint within the French capital.
HOW WOULD YOU DEFINE THE MARKET IN 2019?
Unlike many prime city markets around the world at the current time, Paris can lay claim to being a seller’s market.
Inventory levels – the number of homes being actively marketed – are at historic lows with well-priced prime apartments frequently finding a buyer within a week of launching.
HOW ARE PRIME PRICES PERFORMING?
Knight Frank’s unique Prime Paris Residential Index registered 5.3% growth in 2018 following 12% growth in 2017. We forecast prime price growth of 6% in 2019 putting Paris ahead of London, New York and Hong Kong.
Rising demand against a backdrop of tight supply is supporting prices.
Paris, due to its history, lacks the large industrial regeneration opportunities that are seen in London. In addition, strict planning rules limit development and aside from La Défense, most areas are restricted to a height limit of just six storeys.
WHAT MOTIVATES BUYERS TO PURCHASE IN PARIS?
The lifestyle on offer will always be the underlying motivation for most second home buyers in Paris. The City of Light is a cultural heavyweight offering 104 museums, 361 theatres, 5 opera houses and over 106 Michelin-starred restaurants.
A lead indicator of buyer trends is tourist demand and data from the Paris Visitor Bureau shows a 19% increase in hotel arrivals by US nationals in 2017. European markets are making a comeback, with German, Dutch and Spanish demand rising, whilst Chinese visitors (up 20%) climbed to fourth place.
WHAT ADVICE DO YOU GIVE BUYERS NEW TO THE PARIS MARKET?
The first challenge is to become familiar with the very different neighbourhoods and lifestyle Paris has to offer. The 4th, 6th, 7th and 8th arrondissements are the city’s prime districts with prices starting at €16,000 per sq m and reaching up to €30,000 per sq m.
The 16th offers green space and good schools and is often targeted by families. The 9th, 10th and southern parts of the 17th and 18th, referred to as “BoBo” (Bourgeois Bohemains) are rising in value as areas such as Canal Saint-Martin, South Pigalle and Batignolles appeal to a new generation of Francophiles. In the up-and-coming bracket, I’d reference Saint-Sauveur in the 2nd, Portes de Saint Denis in the 10th and Oberkampf in the 11th where values are now reaching up to €12,000 per sq m.
We also see different preferences amongst overseas buyers. Middle Eastern buyers target the Champs-Élysées neighbourhood, and the golden triangle which straddles the 8th and 16th where large apartments of 250 square metres offering lateral living are available. By comparison, US and UK buyers look to the Left Bank, the 6th and 7th arrondissements which offers the old-world glamour, a mix of upmarket eateries, galleries and art dealers.
“UNLIKE MANY PRIME CITY MARKETS AROUND THE WORLD AT THE CURRENT TIME, PARIS CAN LAY CLAIM TO BEING A SELLER’S MARKET.”
THE PARIS PROPERTY MARKET IN NUMBERS
- WEALTH HUB - 22% FORECAST INCREASE IN UHNWIS* IN PARIS OVER NEXT FIVE YEARS
- LOW COST OF FINANCE- 1.45% AVERAGE MORTGAGE RATE IN FRANCE**
- SALES STRENGTHEN - 14.9% RISE IN RESIDENTIAL SALES Y-O-Y IN 2017
- PRIME PRICES UP - 5.3% RISE IN PRIME RESIDENTIAL PRICES IN THE YEAR TO THE END OF DEC 2018
Source: L’Observatoire Credit Logement, Paris Chamber of Notaires, GlobalData WealthInsight
*Individuals with net assets above US$30m excluding their primary residence
** Average mortgage rate for a French resident with a repayment loan from a French retail bank.
Courtesy: Knight Frank
MARKET INTELLIGENCE
Knight Frank’s Research team take the pulse of Paris’s residential market by handpicking the latest data, indicators and trends to help buyers and vendors gauge current market conditions.
Contacts
Roddy Aris - International Residential Sales
+44 20 7861 5034
Kate Everett-Allen - International Residential Research
+44 20 7167 2497
Astrid Recaldin - International PR Manager
+44 20 7861 1182
Important Notice. © Knight Frank LLP 2019 – This report is published for general information only and not to be relied upon in any way. Although high standards have been used in the preparation of the information, analysis, views and projections presented in this report, no responsibility or liability whatsoever can be accepted by Knight Frank LLP for any loss or damage resultant from any use of, reliance on or reference to the contents of this document. As a general report, this material does not necessarily represent the view of Knight Frank LLP in relation to particular properties or projects. Reproduction of this report in whole or in part is not allowed without prior written approval of Knight Frank LLP to the form and content within which it appears. Knight Frank LLP is a limited liability partnership registered in England with registered number OC305934. Our registered office is 55 Baker Street, London, W1U 8AN, where you may look at a list of members’ names.
