What is the commerciality of real estate?

In the world of real estate, various terms can seem abstract when you don't know what it is. This is the case, for example, of the “commerciality of a good”. What exactly is it about? This is what we invite you to discover in this article.

Commerciality: Paris and its fight against the lack of housing

Paris is a big city that is very popular with future buyers. But it is, therefore, a victim of its own success. Indeed, in terms of housing, the supply is much lower than the demand. The capital has therefore thought of various solutions. Among them, there is the need to request prior authorization from the town hall (articles L 631-7 and following of the Construction and Housing Code) for a change of use/destination of a property. For people wishing to transform all or part of their home into professional premises, for example, there are three types of permits:
Authorization 1: “mixed use authorization, issued to a person exercising a professional or commercial activity in their main residence”.
Authorization 2: “authorization to change personal use, issued to a person for the duration of their activity on the premises”.
Authorization 3: “authorization for a real change of use, which makes it possible to permanently transform a residential premises into professional or commercial premises”.
At the same time, the City of Lights has decided to review the rules related to the rental of furnished accommodation. So, for some years now, “any accommodation rented furnished no longer falls within the definition of housing, but into that of hotel accommodation”. But what about the commerciality of real estate?

Commerciality and compensation: what are they?

Private owners, real estate markets, institutional investors... All have the possibility of transforming the administrative use of their real estate property (s). But in the Paris region, in particular, if an owner wants to transform offices into housing, he must sell the commerciality of his offices. He will then be able to recover compensation. What should he do? Simply contact the town hall, which will then ask for compensation. Because, in the French capital, the change of destination of a property from office to residential (transfer of business) is only possible if compensation is obtained.
“Compensation is not a tax, it is not material; it is the transfer of the commerciality of a premises [...] allowing the latter to obtain a real, i.e. definitive, change of use.” Commerciality, on the other hand, must be purchased from a person or others who sell theirs (or vice versa).
In summary, to change the destination of a property in Paris, you must manage to find a quid pro quo. If you are converting offices into homes, this transformation must be offset by converting homes into offices.

Compensation in Paris: three distinct sectors

In Paris, there are three sectors, including that of “reinforced compensation”, which is the most regulated, but also the most restrictive. It concerns eight districts (1)^Iron, 2^E, 4^E, 5^E, 6^E, 7^E, 8^E and 9^E) where the expected compensation is two square meters for one square meter of housing removed (excluding transformation into social housing). If you wish to initiate a commercial transfer procedure, be aware that the duration of processing your file may vary between six months and a year or even longer. But as with many rules, there are exceptions: for regulated liberal professions, ground floors or even for the exercise of a mission in the general interest, there is no need for compensation to change use.

Buying a compensation ticket: the steps to follow

The purchase of a compensation document, also called a “commercial transfer certificate”, is carried out in several phases. First, there is the search for compensation. Expert companies in the field exist. Likewise, some social landlords transform offices into homes, which allows them to offer (local) spaces in compensation. Then comes the stage of buying the compensation voucher. There is no official price list (yet). However, be aware that the location of the property affects the price negotiated between the buyer and the seller. In Paris, prices vary between 400 euros and 3,000 euros approximately per square meter. The signing of the compensation document is followed by the filing of the request for change of use. Note that for compensation premises, an urban planning authorization for a change of destination (building permit or prior declaration) is mandatory when submitting the application.

Commerciality: Why change the destination of a property?

Why can it be interesting to change the destination of a property? For an owner of a mixed building, for example, this allows him to simplify the management of the building. For a business, this can mean expanding without having to change addresses. A change of destination can also be synonymous with the valuation of a property. In addition, transforming offices into housing allows, as mentioned above, the owner (s) to receive compensation that may be particularly interesting.

Commercial transfer: how much does it bring?

Buying a business in Paris can be an excellent opportunity for individuals who want to invest in short-term rentals. However, it can also prove to be a challenge for those who are not familiar with the real estate market in Paris and the buying processes. In this article, we are going to provide you with detailed information on buying a commercial in Paris for short-term rentals, in order to help you make an informed decision.

First of all, it is necessary to understand what a commercial is and how it differs from other types of real estate investments. A commercial is real estate intended for commercial activities, such as shops, restaurants or boutiques. Unlike an apartment or a house, businesses can be more difficult to rent and manage, as they often require repairs or upgrades to adapt them to the needs of each tenant. However, businesses can also offer higher returns than other types of real estate investments, due to their intensive use and strategic location.

When buying a commercial in Paris for short-term rentals, it is important to consider several key factors. First of all, location is a crucial factor. You want to make sure that the business is in a central, convenient, and popular location, in order to maximize rental chances. In addition, it is essential to check zoning provisions to ensure that commerciality is authorized for short-term rentals.

The size and condition of the business must also be considered. You want to make sure that the commerciality is big enough to be profitable and that the necessary repairs and upgrades are feasible. In addition, it is necessary to consider the cost of repairs and upgrades, as well as future maintenance and service costs.

Finally, it is essential to consider the costs associated with short-term rentals, such as advertising costs, cleaning costs, and management costs. Also, take note of these costs in your budget and make sure you have the funds to cover them.

When you have taken all of these factors into account, you are in a position to make an informed decision about buying a commercial in Paris for short-term rentals. Use professionals such as realtors, real estate lawyers, and accountants to help you navigate the buying process.

Understanding local laws and regulations when it comes to short-term rentals in Paris is essential. Know what the short-term rental restrictions are, the taxes that apply, and the tax obligations associated with short-term rentals. It is essential to know how you can ensure the security of your investment and how you can deal with issues that may arise during the rental.

In conclusion, buying a business in Paris for short-term rentals can be a great way to invest in real estate in Paris, but it is important to fully understand the challenges and opportunities that come with it. By considering key factors, engaging professionals, and understanding local laws and regulations, you can ensure that you are making an informed decision and maximizing the chances of a successful investment.

Do you have questions about this concept? Are you simply looking for a property in the Paris region? Do not hesitate to contact us.