London and Paris used to vie for the attention of prime property buyers. However, it seems that a combination of factors is increasingly positioning Paris ahead of London as the place where wealthy buyers want to pick up a luxury home.
In the UK, London has struggled to market itself to would-be home buyers ever since the country decided to leave the EU and the ongoing saga of the Brexit process is doing nothing to reassure wealthy buyers.
According to Hometrack, property turnover in the British capital has dropped by 17% since 2015. Meanwhile, recent figures from Acadata and LSL Property Services show that London property prices fell by 2.7% in September – their sharpest pace of decline since 2009.
Over in France, Paris is enjoying quite the opposite effect. While the UK’s politics are in disarray, France is enjoying the benefits of the Macron effect. The dynamic new President’s confidence is serving to inspire a new era in French politics – and in Paris’ property market.
Apartment prices in the French capital rose by 5.5% in the year to Q1 2017, according to La Chambre des Notaires de Paris. They are expected to continue their steep rise in the wake of Macron’s election in May. Demand is also up, with a record 848,000 housing transactions in 2016, based on figures from the European Central Bank. In Paris, the spike in demand was reflected in a 23% rise in the number of apartments sold in the year to Q1 2017. In Ile-de-France, that figure rose to 32%, according to La Chambre des Notaires de Paris.
The Macron effect is also spurring on residential construction in Paris, with the number of dwellings authorized up by 6.7% year on year in July 2017, according to L’INSEE.
“We’ve seen a notable uptick in appetite for French property in the past few months, particularly in and around Paris. Second home buyers are keen to take advantage of President Macron’s commitment to reduce taxes for property owners. At the same time, Paris offers a great deal of stability that London no longer can, which is extremely attractive to buyers from overseas.”
Annick Dauchy, Property Business Development Manager, FrenchEntree
Overseas buyers in Paris hail from around the world. Russian buyers can’t get enough of the French capital at the moment, while US buyers are also active in the £1 million plus market, according to premium French property agents FrenchEntrée.
Le Marais is the most sought after arrondissement by this group, who love its village-like vibe.The Haut-Marais area, close to Republique Metro and further away from the river is a hip and happening base for fashionistas and trend setters, with a vibrant atmosphere and bustling nightlife. An active local mayor ensures plenty of cultural and community events, creating a fabulously unique atmosphere.
The area’s popularity has pushed prices up – buyers need to budget around €12,500 per square metre as a base point (compared to €8,450 for Paris as a whole). They also need to move quickly if they’re to have any hope of snapping up one of the area’s hugely sought after studio apartments.
Buyers from the Middle East, meanwhile, love the glitz and glamour of the 8th arrondissement. In addition, buyers from the UK and elsewhere in Europe have been looking at Paris with fresh interest since President Macron took the helm.
Macron’s commitment to reduce property taxes is not the only draw. His pro-business approach is working in conjunction with the new French Tech Visa and Station F (the largest start-up campus on the planet) to attract new wealth and energy to Paris.
France has already moved ahead of Germany in terms of the amount of venture capital it is attracting, with Atomico reporting that venture capitalists invested £2 billion in France last year, and just £1.6 billion in Germany. The UK is still ahead of France (with venture capital investment of £4.7 billion in 2016), but the phenomenal acceleration of investment in France means that it has a realistic chance of catching up very quickly.
With Paris positioned as one of the world’s leading cities for business, wealthy buyers are keen to pick up appropriately grand properties there – and Paris certainly doesn’t disappoint in this respect. An elegant, four-bedroom apartment in the 9th arrondissement will set buyers back a cool €2.69 million, while a stunning loft apartment can be had for just €1.9 million.
Of course, this news is likely to reinforce calls within the industry for urgent action on UK property taxes – but for now, at least, it seems that London needs it’s own ‘Macron’ if it is continue to hold it’s allure for the rich and wealthy.