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Paris is 5th Worldwide For Luxury Property Market, Says Study
A comprehensive review of the world’s top 50 luxury property hotspots for 2017 shows Paris in the top 5. How does it compare to other world class cities on the practical, financial and emotional factors that appeal to high net-worth individuals?
Unsurprisingly, London (1st) and New York (2nd) dominate the rankings once again, receiving scores (out of a hundred) of 77 and 75 respectively. Tokyo received 70 while Sydney is some way behind with 61. Paris is hot on its heels with a score of 60.
Warburg and Barnes International’s index measured three categories of factors. Practical factors include connectivity via air travel, access to learning institutions, personal safety and environmental performance. Emotional factors take into account the number of ultra-high-net-worth individuals (UNHWI, those worth over $30 million), cultural richness and luxury shopping. Financial factors include ease of doing business, value for money, tax climate and safe haven status.
Paris is comes 19th for practical factors, the category being dominated by the US and London (first). Those two are ranked superior on transportation connectivity and globally respected learning institutions.
Paris performs much better in emotional factors, ranking 4th. A wealth of cultural heritage, luxury shopping and services is a strong pull factor for the rich and famous. This allows the city to compete with New York, London and Tokyo (who occupy the top three spots for the category), despite being comparatively smaller. Paris is 3rd for cultural richness.
For financial factors, Paris again finds itself outside the top 10 – actually coming last out of the 50 cities – though recent efforts have been launched to streamline the process for setting up businesses in hopes of attracting firms fleeing Brexit. The Grand Paris metro expansion, which will begin coming on line in fall 2017, should also make lower cost housing in the suburbs surrounding Paris much more accessible to the city centre, consequently there has been a resulting boom in new construction along the periphery of the city.
The city has 3,475 UNHW Individuals residing in it with an average net worth of $315 million, the highest of the top 5 cities. The report highlights Paris’ ageing infrastructure and density as a bulwark to significant luxury property development in the centre. Future opportunities will be found in the peripheries and suburbs.
A similar report on worldwide wealth, this time from Knight Frank global real estate consultants, placed Paris as 12th. Their ranking had a more general focus, as well as scoring for future potential, meaning Chinese cities figure much more prominently. Paris ranked 19th for current wealth, 5th for investment, 11th for connectivity and 27th for future wealth in that study. One bright spot from that study is that Paris is significantly more cost effective than Monaco, Hong Kong, New York, London, Geneva, Singapore and Shanghai. Beijing is just ahead of Paris in terms of affordability.
Slow growth in Paris’ luxury property market is seen as a negative factor. The fastest growing arrondissements are not the classic luxury hotspots – the 1st through the 8th, and the 16th – but those to the north and east, driven by younger couples and singles who are rapidly gentrifying former working class neighborhoods.
sources: Warburg and Barnes International, Knight Frank