The World’s Most Beautiful City Is a Timeless Investment

In the current issue of International Banker magazine: Paris Property Group’s Miranda Bothe  gives her insights into the eternal draw of Paris and why savvy investors view it as an affordable luxury that provides lasting value.

Affordable luxury in the City of Lights

Paris is the perfect location for a European pied-à-terre: centrally located as a jumping-off point for travel, and with a wealth of cultural and historical gems to explore close at hand.  Each neighborhood in Paris offers a unique mix of architecture and village-like charm. For the savvy investor, Paris also offers steady long-term growth and a safe haven from international financial volatility.

Kathryn Brown, chief of operations at Paris Property Group, explains why: “Even at the height of a crisis, like the subprime mortgage debacle in 2008, the real estate market in Paris simply doesn’t collapse. Conservative lending practices and high acquisition costs have deterred speculative practices, leaving Paris real estate for buyers who are looking to enjoy it themselves while securing a safe long-term investment. Our market is fairly recession-proof because property in the historic center is extremely limited—and Paris is and will always be a top destination.”

Sustained value over time: A strong market gets stronger.

2017 has been a remarkably healthy, vibrant year for the Paris real-estate market.  Real-estate prices in Paris dropped 7 percent overall between 2011 and 2015, but are up 12 percent since January 2016, due in part to a near-record volume of transactions. French mortgage rates are near an all-time low, further boosting the market and continuing the steady growth cycle that began in 2015. What’s more, the luxury market in Paris has blossomed: the number of transactions totaling two million euros or more in the capital was up 31 percent year-on-year.

Beyond recent developments, Paris real estate has been an incredible investment over the long-term. The average price in most Paris arrondissements has tripled or nearly quadrupled over the last 25 years. Paris lovers can still find their dream properties for prices much lower than that of many other top destinations worldwide, including London, New York, Hong Kong and beyond. For prices and building heights in these markets, the sky is the limit.

Paris is a very different market altogether. Few properties, even in the best parts of the city, are priced more than 7 million euros. What’s more, significant zoning restrictions make Paris off-limits to skyscrapers, allowing it to maintain its old-world charm and expansive, iconic rooftop views.

Foreign buyers keep an active market thriving.

International buyers played an important role in a revived French real-estate market last year, accounting for 30 percent of real-estate activity in France. The most active non-resident buyers were French citizens living abroad—particularly in London—who made up 17 percent of all non-resident buyers in 2016, versus 9 percent the year before. This is perhaps the most notable first effect of Brexit on the French real-estate market. Experts predict an additional 50,000 buyers will invest in French real estate from now through 2019 because of the United Kingdom’s decision to separate itself from the European Union.

There are 400,000 French citizens residing in London, and as Brexit makes their status and the health of the UK economy uncertain, they are increasingly diverting funds to their home country. Paris Property Group has also seen an increase in the number of potential UK buyers citing Brexit as their main reason for seeking a pied-à-terre in Paris. Ms Brown, of Paris Property Group, explains, “Expat French nationals see a property investment in France as a means of securing their place at home if and when their UK residency rights are curtailed.” Countering that trend, some British property owners have concluded that the weak pound and their own Brexit concerns make this the right moment to sell their French properties and change their proceeds to sterling for a healthy return.

Bucking the trend: Paris preserves its authentic character and long-term value.

Over the last two decades, many tourist destinations have lost some of their local flavor and uniqueness, as specialty shops and one-off cafés give way to trinket shops, fashion chains and coffeehouses with world-renowned logos. With the explosion of short-term rental accommodations, the most coveted neighborhoods can feel like no one lives there anymore.

The city of Paris, the most visited tourist destination in the world, is no exception to this trend. But rather than succumb to it, the city is defending the charm and character of its residential neighborhoods with some creative maneuvers of its own. Strict rent controls imposed in August 2015 have discouraged excessive market speculation, while fines on owners who have left properties empty for years have encouraged them to rent or sell. Paris is Airbnb’s biggest single market, with 65,000 homes on offer for short-term rental. New rules allow owners to rent out only their primary residences, and for up to only 120 days per year. Starting next year, owners will be required to obtain registration numbers to rent their apartments to tourists; listing sites will have to verify these before putting up ads for the properties. Failure to comply with these laws will carry hefty fines against both the owners and the listing sites.

A nuisance to some and a welcome imposition to others, these preservationist policies are arresting the desertification of neighborhoods and helping to preserve Paris’ vibrant population and the authentic Parisian experience that makes the city a favorite worldwide.

Paris buyers looking to invest in a high-earning tourist-accommodation rental operation can do so with an apartment that has commercial status, allowing it to legally be rented short-term. “As we have navigated the changing legal landscape with our clients over recent years, we have built a specialty in finding commercial status apartments for investor clients,” says Ms Brown. “Thousands of residential apartments will be forced out of the short-term rental market by 2019, leaving a less competitive and more lucrative short-term rental opportunity for those buyers who are correctly positioned for the change. Otherwise, Paris as a lifestyle, as a dream, and as a long-term secure capital placement is what still attracts most of our clients.”

Whether as a pure investor or a Francophile wanting to spend quality time immersed in Parisian life, the time to buy property in Paris is as good as ever.

A Collection of Villages, Paris is a Gem of Many Facets…

The Trendy Marais

With its medieval winding streets and bustling cafés, the central and historical Marais quarter in Paris’ 3^rd and 4^th arrondissements is one of the most sought after neighborhoods for visitors and residents alike.

Rue des Francs Bourgeois 75004 PARIS: 3 bed, 3 bath: renovated modern duplex on rue des Francs Bourgeois in the heart of the Marais – €2,615,000

Located on the famous rue des Francs Bourgeois in the heart of the Marais, this exceptional duplex property of 148 m2 is located on the 1^st and 2nd floors of a well-maintained building (no elevator). Beautifully renovated with top of the line finishes, the apartment offers three bedrooms with three baths, and an open floor plan with high ceilings. A parking place and two storage cellars complete the offering.

The Elegant Style of Paris West

Tree-lined streets, spacious parks, and elegant Haussmannian buildings make the 16^th and 17^th districts ideal choices for wealthy expat buyers seeking excellent international schools and a slower paced life within the city center.

Rue Benjamin Franklin 75016 PARIS: 4-bed, 3-bath: Spacious, 243m2 renovated Trocadero residence with classic details – €3,990,000

Superb 4-bed, 3-bath, 243m2 apartment located just off place Trocadero near the Eiffel Tower in the 16th arrondissement. Bright, spacious, and tastefully renovated, with high ceilings and classic moldings, fireplaces and herringbone wood parquet floors, this apartment combines historic charm with modern amenities.  The prestigious address is close to the chic Passy shopping area with its boutiques, cafés and outdoor markets, making it an excellent place to live, or to use as a base for exploring Paris.

Rue Phalsbourg 75017 PARIS: 3-bed, 3-bath: stunning 237m2 residence just steps from Parc Monceau – €3,710,000

This 237 m2, 3 bedroom 3 1/2 bathroom apartment is the epitome of sophisticated living. Situated on the 2nd floor of a classical Haussmanian building with an elevator, steps from the Parc Monceau, this is a space of pure luxury with modern interiors and quality furnishings.

The Eiffel Tower and the left bank of the Seine

Surrounded by embassies and government ministry buildings, the stately 7^th is an oasis of calm in the city center. Sought after for it’s central location, proximity to parks and pristine buildings, property in the 7^th some of the most expensive in Paris.

Eiffel Tower Orsay Mansion 75007 PARIS: 4-bed, 4.5-bath, 254m2, 2nd floor apartment with balcony – € 4,950,000

This 4 bedrooms 4 1/2 bathrooms property provides ample space for a family and is ideal for entertaining. The location, intricate detail, and mixture of old-world style and modern comforts will charm you immediately. 

The Heart of Saint Germain des Pres – The 6^th

The most coveted area of Paris is home to the prestigious art galleries, antique shops and one-off boutiques that give the Left Bank its bohemian reputation. The area toward Luxembourg gardens has a more grand and spacious feeling just steps from the oldest and most historic parts of Paris.

Rue de Seine 75006 PARIS: 2-bed, 2-bath 120m2 luxury property with balcony on rue de Seine in Paris’ coveted Saint Germain des Pres – € 2,950,000

This luxurious two-bedroom, two-bath property is an updated twist on an elegant and classic Parisian apartment. The moldings, fireplace, and parquet de Versailles flooring have been restored and re-imagined, looking equally at home in this century or the last.