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Where’s the best place to purchase a brand new home in France?
When investing in new rental property, choosing the right location is key. A recent study reveals the top locations to buy freshly built real estate in 2016 in France.
As is shown by the steady recovery of the new build sector, the Pinel law has proven to be a success. The legislation, which came into force in January 2015, offers rental investors attractive tax rebates if they rent out new property in high demand areas. It is credited with helping sales of new homes swell by 18.9% in the first nine months of 2015, with investors comprising 54% of sales — the highest percentage since 2011.
Online credit broker Vousfinancer.com recently published a study revealing the top French cities for investing in new property. Quoted in the report, Renaud Cormier — CEO of Théséis, a real estate consultant firm who contributed to the study — warns that while “the beginning of 2015 saw exceptional growth in the new property sector, mostly thanks to the switch from the Duflot law to the Pinel law,” it is still crucial for individuals to carefully research specific areas’ economic and real estate situations when selecting property to invest in.
To this end Vousfinancer.com advises rental investors to keep a number of factors in mind regarding new property and the Pinel law: buyers should remember that the Pinel law only applies to certain “tight” areas and they are advised to properly research rental amounts per district in order to make a profitable investment.
The credit broker also notes that while rental investors are tempted to prospect for property near where they live, this is often not necessary with new real estate. Damage guarantee ensures necessary works are covered and the quality of new construction means no maintenance is necessary for several years.
In order to establish a ranking of the 50 best French cities for investment in new property, the study authors compared locations according to the following criteria: population size, average income and unemployment rate, vacancy rates in the housing stock, ratio of new housing to new households, and quantity and quality of companies operating in the area, among others. Referring to the last criteria, the report explains that “the presence of skilled jobs plays a key role in the attractiveness of cities and therefore in housing needs.”
At the head of the ranking is southwestern favorite Bordeaux. The regional metropolis is particularly dynamic and is increasingly on the radar of individuals looking to buy a home to settle down in and investors alike. Toulouse and Lyon come in second and third place respectively, both benefitting from favorable demographic and economic conditions, as well as from the high proportion of residential renters versus homeowners — over 50% in both cities against 25% in the whole of France. Unsurprisingly, Paris also does well in the ranking, coming in fourth place.
The study cites a number of “surprise” cities where investment should be considered: Boulogne-Billancourt, Saint-Denis, Montreuil, Courbevoie and Versailles for instance, all of which are in the capital’s periphery but offer higher profitability than properties in central Paris.
Generally, investors are the ones driving the new build sector’s recovery. This is particularly visible in Toulouse, where they were responsible for 69% of sales in 2015’s third quarter.
Regarding prices in this sector, the Nice Côte d’Azur metropolis tops the charts, with average prices for new property exceeding 5,300 euros per m2. No wonder then that sales there plummeted by 36% between July and September. The second most expensive place in France for new builds is unsurprisingly Paris’ region, Île-de-France, where median prices reach 4,868 euros per m2. Cheapest new apartments are found in Rouen — with an average of 2,976€/m2 — and Orléans, at 2,980€/m2.
Where housing stock is concerned, it is the Île-de-France region that has fared best of late, with a 7% increase in available new property in the third quarter of 2015. There, investors are responsible for 67% of transactions. In contrast, Lille and its suburbs are currently suffering from an imbalance between offer and demand: its new property stock has collapsed by 19%. Similar figures appear in Lyon, where offer has decreased by 16%.
Feature photo credit: Rotschild’s Villa Ephrussi in Côte d’Azur, Wikimedia Commons /Berthold Werner