France’s popularity amongst international investors has risen in 2018. From champagne on the Champs-Élysées to sunshine in the Riviera, France has always been desirable from a lifestyle perspective. However, Paris in particular has seen a recent increase of investors, and the reasons for this go beyond lifestyle choices. With insight from some trusted specialists, we’ve delved into the why, what and where of the French HNW property market—with some interesting results.
A recent study revealed Paris has beaten London as the most attractive European city for investors, for the first time in over a decade. The report, published by Ernst & Young, surveyed the intentions of global businesses in regard to foreign direct investment. 37% opted for Paris, which sends a clear message about the city’s future on the global stage.
This presumably follows Paris’ active attempt to position itself as Europe’s next financial centre, in preparation for the UK’s exit from the EU. Whether London will hold its position as Europe’s financial centre is still unsure, but Paris’ future certainly looks bright as many firms have hinted they may move staff or offices to the city in order to retain an EU foothold. Paris is also actively attempting to broaden its appeal to international investors from the Middle East; Paris’ financial institutions have pledged to increase their Sharia-compliant finance services.
Investor intention isn’t the only thing that’s seen a boost; property prices are on the up, too. As a result, many are keen to invest now before prices rise too much further. Knight Frank’s research shows that Paris recorded 12% price growth last year, with another 9% rise predicted for luxury properties. Healthy price growth is also forecasted to continue through 2018. Global research teams have predicted a 9% rise in luxury property prices – the highest of 13 hotspots in Europe, USA and Asia.
Local expert Susie Holland, CEO of VINGT Paris, agrees that 2018 has been an exceptional year for Parisian property. “Whilst the Paris property market has long been regarded as a safe investment, it’s fair to say it’s never been quite as strong as in 2018. As of last December, the price for older apartments in the city had increased almost 9% year on year, according to the Notaires de France, and prices are continuing to rise rapidly.”
As an agent who deals with HNW international clients on a daily basis, Holland is ideally placed to identify many reasons. “There’s the eternal appeal of the French capital. Widely regarded as one of the most beautiful cities in the world, Paris is overflowing with culture, brimming with luxury brands and the food scene here is huge. The other consistent big driver is lack of product. As a relatively small city, demand always exceeds supply.
But despite the recent price rises, Paris remains remarkably good value when compared with either London or New York. The buoyant rental market in the city is also an important plus point for those buying as an investment. But even beyond all that, the stars have aligned to make this a particularly auspicious moment for the Paris property market. With the arrival of Macron last year, we at last have political stability in France as well as a strengthening economy. Then there’s the blossoming business scene in Paris, with innovations such as Station F, the world’s biggest start-up campus.
We also have the 2024 Olympics on the horizon, with all the investment that will bring, and now the city has an extra allure thanks to Brexit. Enquiries are flooding in from relocating companies. Indeed, the city has become the main meeting point in Europe for true internationals, whether businesspeople, creatives or intellectuals.”
Beyond the physical property market, the current mortgage market in France makes now a very desirable time to secure finance. Enness’ MD, Hugh Wade-Jones, comments: “Prices may be rising, but finance is historically cheap, so there’s never been a better time to invest in France from a mortgage perspective. There’s also plenty of options, whether you’re buying a residential property, refinancing an investment, or need development finance. Clients may also wish to consider their mortgage options in regard to wealth tax, under which buyers are liable for any equity in the property. Mortgage options could potentially decrease a client’s tax liability if organised effectively.”
So investor intentions are up—but does this reflect a global interest, or are certain demographics leading the charge? Holland has noticed that one group in particular are keen to invest in Paris. “We are currently seeing enquiries from all four corners of the globe, from Britain and the US to China, the Middle East and Russia. However, it’s perhaps the US market that remains the strongest for us, with buyers further attracted just lately by the stronger dollar.
Interestingly, many of these are “empty-nesters”—i.e. people in their 60s, whose kids are away at college, so now it’s the moment for them to live their dream. In terms of lifestyle, it’s hard to think of anywhere better than Paris. Buyers can jog on the Champ de Mars, attend the top fashion shows, enjoy the fine dining, go to the French Open and shop for antiques or contemporary furniture in the best boutiques. They also like the idea of having a place in Paris to pass down to the next generation. The excellent rental return they can enjoy when they are away also adds a new dimension for our clients.”
Enness also spoke with Tim Swannie, Director of Home Hunts, to gain his insight. Swannie has likewise seen a global influx, but has particularly identified a large uptick in British clients looking to build a post-Brexit base. “For us, we have seen an increase in clients from the Middle East, USA and China for Parisian property over the past 2-3 years. There’s also been a significant increase in British buyers in the past 12 months, some of whom are buying secondary homes, spurred on by Brexit. Some of our British clients are London based and working in finance. They’re buying as an investment, but with the view it could become a more permanent home if they are relocated.”
For those considering an investment, Swannie shared his thoughts on what areas are doing well and why. “The 6th and 7th arrondissements are extremely popular, but we have found the largest amount of interest has been in the 8th and 16th districts. These wealthy and famous districts are where you find some of the world’s finest shops, hotels and restaurants, as well as the famous landmarks such as the Eiffel Tower, Arc de Triomphe, Trocadero and the Elysees Palace. These two areas offer high financial security for investors. Prices keep increasing; there was a 6.9% average increase in prices last year in the 16th and 7.3% in the 8th. For us, the most popular demand is for 2-3 bedroom apartments within period buildings, ideally with a caretaker. Many clients also wish to have a view of one of the famous landmarks if possible.”
It’s clear that whatever happens with Brexit, Paris is enjoying more than just a moment in the spotlight. A number of factors have aligned to make 2018 the perfect time to invest in France’s capital city, so savvy international investors should certainly be considering the City of Light. Finding the right property is the first step, of course, but investors should also put themselves in the best possible position by thinking early about the mortgage options available. There is a wide range of choices on the market, but accessing this finance can be tricky—especially for international clients who lack local contacts and an understanding of the technicalities. Throw language barriers into the mix and it becomes very challenging. Fortunately, Enness are experts in securing large mortgages for international investors in France—so if you’d like to talk more about the options, our team are waiting to advise.