Foreign buyers see Paris as a safe property haven
British, Italian and German buyers were the most active in the luxury Paris property market in 2011, according to research from Knight Frank, but interest increased from buyers in Russian, the Middle East and Asia.
They were seeking property in €1 million to €5 million price bracket, according to statistics and were attracted by the fact that prices are often 20 to 30% lower than in central London.
According to Mark Harvey of Knight Frank's French desk the city's sixth, seventh and eighth Arrondissements are considered the most exclusive districts and attract the greatest interest from international buyers.
Online property searches peak in the second half of the year in Paris with July and August seeing a surge in search activity.
Over the course of the year prices fell marginally by around 3% in the prime market but it was a tale of two halves. The first half of 2011 saw robust activity, a continuation of the heated 2010 market.
‘Supply constraints eased slightly, particularly in the €2 million to €5 million sector, as vendors brought their properties to the market having seen above average prices being achieved in 2010,’ said Harvey.
‘Summer acted as a watershed, sales volumes weakened in the third quarter which resulted in price falls in the final three months. This change of pace largely mirrored the trajectory of the Eurozone’s sovereign debt crisis,’ he added.
He also pointed out that buyer motives range considerably. Some are pursuing a lifestyle acquisition, others want a base while their child completes their studies in the French capital. There are also an increasing number who, given the financial backdrop of volatile stock markets, underperforming gilts and derisory savings rates, see Paris as their safe haven.
‘Wealth preservation is now a priority for buyers rather than short term capital appreciation, particularly when there are lifestyle benefits attached,’ said Harvey.
‘Paris provides heritage, culture and a vibrant cosmopolitan lifestyle but its added advantage, is that the price of prime property is often 20% to 30% less than in central London. Its history, architecture, boulevards, large squares, boutiques and culinary offer act as a major pull factor for buyers seeking to combine culture with a fun lifestyle,' he explained.
‘Buyers are not simply looking for a bricks and mortar investment, in my experience they genuinely want to spend short, regular breaks throughout the year soaking up the Parisian culture, one that many see as synonymous with fun, passion and a sense of joie de vivre,’ he added.
An apartment in Saint-Germain-des-Prés, located in the sixth arrondissement, with views over The Seine or a Parisian landmark would sit at the top of most buyers’ ultimate wish lists. Budgets here would start at around €6 million.
‘Unaffected by wartime bombing, Paris is devoid of infill sites and 1950s architecture and new homes are not always the aspirational acquisition that they are elsewhere. Heritage is key and for many discerning buyers great importance is attached to a building’s provenance,’ explained Harvey.
‘Many purchasers are searching for older, architecturally rich homes with good views and the period features that they afford such as high ceilings and light, well proportioned rooms,’ he added.
There are likely to be some challenges for the Paris market in 2012. ‘Putting aside the current economic challenges faced by the Eurozone and the French legislative and Presidential elections in April and May of this year, my view is that Paris’s prime market will see prices continue to stabilise in 2012,’ said Harvey.
‘Paris continues to hold the title of the most visited city in the world attracting around 15 million international visitors each year. It has a global appeal and one that shows no sign of weakening. Our outlook is a positive one overall, new supply remains scarce, foreign demand is robust with buyers drawn to its cosmopolitan lifestyle, its heritage and transparent tax and legal systems, which together indicate that Paris’s place amongst an elite tier of global cities is a deserved and secure one,’ he added.