High-end real estate Paris: everything you need to know
It is not a crisis for everyone! Some people can thus afford to invest in high-end real estate in Paris. Focus on a market that continues to attract investors.
Overview of the high-end real estate market in Paris
An encouraging start to the year
The year 2014 ended on a positive note for Parisian luxury real estate. Indeed, significant sales volumes, often under 10,000 euros per square meter, have been achieved. A trend that will certainly continue in 2015: the first few months are already encouraging.
Professionals who have chosen to specialize in luxury real estate even talk about a level of activity that they had not experienced for two years. For them, 2015 could therefore be the year of recovery, in particular thanks to a “consolidation of the market” and to selling prices more in line with the true value of the goods. However, justified (and justifiable) prices are synonymous with more confident buyers. Buyers who, in addition, benefit from incredibly low interest rates.
The French capital is once again becoming a serious competitor for other major cities such as London, Hong Kong or even New York where prices are rising. In addition, Paris abounds in properties that are as diverse as they are beautiful and this offer attracts investors. Let's not forget the weak euro, an additional argument for buyers attracted by high-end products. However, it should be noted that transactions over 4 million euros remain rare.
The recovery of the high-end real estate market in Paris is therefore mainly explained by the fall in the price per square meter and in interest rates.
But who are the buyers of these prestigious properties?
Who are the buyers of luxury goods?
At the end of 2014, a survey conducted with 145 people (interviewed between October 20 and November 15, 2014) revealed that 70% of people buying luxury goods in France were over 50 years old and that nearly a third of buyers received more than 200,000 euros in annual income. While this sum is very comfortable, it is also down compared to June 2014. Those responsible? The crisis that France is going through, but also increasingly severe taxation for the most affluent households.
Among buyers of exceptional properties, 72% are active and 91% are second buyers. In addition, 75% of them own more than two properties and 28% live in France. Foreign or expatriate investors therefore represent an important part of luxury real estate customers in France. They mostly live in Switzerland, Belgium and Great Britain. Another observation to note: buyers of high-end properties are making a return on the rental investment market (17%).
There are therefore two main categories of buyers — French and foreigners — and various sub-categories, such as that of buyers attracted by decent homes allowing them to negotiate lower prices and that of wealthy buyers looking for irreproachable properties at the best possible price. This second sub-category has more foreigners.
But who says goods for sale says sellers. So who are these people who put luxury goods up for sale?
Who are the sellers of high-end goods?
The sale of a property can be motivated by various reasons: divorce, change of life, departure abroad...
When it comes to selling luxury properties in Paris, the reasons that motivate them are the same with a predominance of departures abroad. These are explained by less advantageous French taxation than in other countries and/or by less attractive job opportunities than in Switzerland for example.
In addition, many sales occur when children in a family become adults and leave the family cocoon. The surface area of the property then becomes too large for parents who prefer to sell to invest in another smaller property.
In Paris, there are numerous luxury real estate properties. But which boroughs are doing the best?
The most popular districts
It is in the 5E, 6E and 7E districts of Paris that luxury properties are the most successful. In the 5E arrondissement, the median price per square meter oscillated, as of December 31, 2014, between 9,380 euros (Jardin des Plantes) and 10,940 euros (Val-de-Grâce). In the 6E arrondissement, prices were around 11,710 euros. In the 7E Finally, the district had to count on average 10,710 euros, with the square meter being particularly expensive in the Invalides area (13,670 euros).
In Paris, the districts of the left bank attract more investors thanks to various famous districts such as the Sorbonne (5).E), Saint-Germain-des-Prés (6E) as well as the Invalides mentioned above and located in the 7E borough.
What is the maximum amount investors are prepared to pay per square meter? Around 17,000 or even 18,000 euros according to professionals (compared to 20,000 euros at one time). Transactions for luxury goods are more around 14,000 euros per square meter on average, but in some districts, it is difficult to exceed 10,000 euros per square meter. In addition, investors are becoming more and more demanding.
Concretely, what types of properties can we find on the high-end Paris real estate market and what are the prices charged?
Examples of goods and indicative prices
The price per square meter changes quite regularly. However, by looking at various real estate ads available online and elsewhere, it is possible to get an idea of the prices charged in the French capital.
So, for an apartment of one hundred square meters located in the 16E arrondissement, the buyer will have to pay just over 1,100,000 euros. For those who would like to find, in the first district, an apartment with an area of about 140 square meters, they will have to spend more than 1,600,000 euros.
On the side of 3E arrondissement, an apartment of 95 square meters, a surface area that is quite significant for a couple as for a family, costs approximately 860,000 euros.
In the 2E arrondissement of Paris, a two-room apartment whose surface area is between 55 and 60 square meters costs more than 700,000 euros
If you want to invest in a beautiful building of about 600 square meters in the 11E arrondissement, you will have to spend the tidy sum of 5 million euros.
As for homes, to enjoy almost 200 comfortable square meters in the 15E district, more than 4 million euros are needed.
Remember that these prices are indicative and that they may vary over the months. As for the areas, they are given in square meters as defined according to the Carrez law, detailed in the last paragraph of this article.
Perhaps you are attracted to the high-end real estate market in Paris? If you want to find a luxury property, there are two solutions available to you.
Search for high-end real estate in Paris
It's a fact, the Paris high-end real estate market is doing relatively well in the Paris region. If you yourself are looking for a luxury property in the French capital, here are some tips to guide you.
First solution: do the research yourself
Do you like Paris so much that you want to buy an exceptional property there? You can choose to do the research yourself. Many ads are available online, all you have to do is go through them and list the ones that caught your attention. Then, make an appointment with the sellers or their representatives to visit the property (s) you have selected.
The visits stage is essential since it allows you to go from words in an announcement to reality. Unfortunately, by going there, buyers sometimes have unpleasant surprises. You should therefore not skip this essential step and make sure to take the time necessary to scrupulously analyze the asset (s). Nothing prevents you from asking for a second visit or even more if you feel the need.
You have fallen in love with a property, all you have to do is make an offer to buy it to the seller. If the latter accepts it, you will have to take other steps, such as hiring a notary, for example, in order to continue the sale and close it. The final step is the signing of the sales agreement at the notary.
Described in this way, the steps of buying a property seem to require little time and are within everyone's reach. But in reality, it is more complicated. This is why it is also possible to call on a real estate hunter.
Second solution: opt for the intervention of an apartment hunter
Hiring a real estate expert to find high-end Paris real estate for you? It is entirely possible and offers numerous advantages.
Previously, we mentioned the search and selection of properties to visit, a relatively time-consuming first step. By calling on a real estate hunter, the purchaser entrusts him with his search. It is therefore the professional (after signing a search mandate) who will prospect in order to find a property that meets the criteria and budget of his client. He will also be able to benefit from the help of his network and thus have access to more goods.
The next step, i.e. visits, also takes a long time. The apartment hunter puts his availability and his expert eye at the service of the buyer and goes on site in order to carry out what are called pre-visits. Is he noticing major flaws? Can choose to discard the property or to offer it to the customer anyway by evoking a possible negotiation of the selling price. Does he think that one or more properties could seduce the purchaser? The hunter writes reports and submits them to the hunter who will decide whether or not he wants to visit them.
Then, the real estate hunter can help his client in writing the purchase offer, the various procedures to be carried out or even the signing of the sales agreement.
The advantages of using this professional are multiple: the buyer does not waste time with unnecessary trips and visits, he saves money, especially if he lives abroad and benefits from the expertise of a real expert in high-end real estate in Paris. In addition, he only pays for it if he has completed his mission.
Focus on the Carrez law
As mentioned earlier, the Carrez law is not known to everyone. So it can be useful to explain what it is.
The Carrez law is used to inform a buyer about the area of the condominium lot he wishes to acquire, regardless of the nature of this lot (housing, business, etc.). How is this area calculated? You have to measure.” the floors of enclosed and covered rooms after deduction of the areas occupied by the walls, partitions, steps and stairwells, ducts, door and window embrasures. The floors of the parts of the premises with a height of less than 1.80 meters are not taken into account ”.
Some parts are not subject to the measurement requirement. This is the case of garages, cellars and other lots whose area is less than 8 square meters. The Carrez law does not require the intervention of a professional to perform this measurement. However, it is recommended to have recourse to an expert given the difficulty of measurement and the penalties incurred in the event of erroneous measurements.
What are these sanctions? If the area is not mentioned, the buyer can simply request the nullity of the sale, i.e. its invalidity. If errors are found in the measurements, the buyer can take action, within one year from the signing of the bill of sale, so that the price of the property is reduced.
The high-end real estate market in Paris is therefore doing quite well at the beginning of 2015. Investors return to the French capital, whether to live in the property purchased or to rent it out. If you are also looking for a luxury property in Paris, do not hesitate to use our services.
