Luxury Insider: Heavyweights in the City of Lights

Every year, around the month of April, I like to check on what’s new & exciting on the real estate front in Paris. It’s a barometer of sort in the world of luxury real estate. The City of Lights has always been a top destination for affluent buyers from all over the world and, as such, a microcosm of the global real estate scene at the high-end. I often use whatever data I can collect as a standard by which to judge the buying & selling activity in key metro centers and as a reference to anticipate on the trends in the luxury market. shutterstock_131191934 smallFirst, it is worth mentioning that the real estate market in Paris (and all of France for that matter) is a little bit of a zoo. There is little cooperation between the 3,500 or so brokers, which means at least 2 things:

  • Prices for similar properties can vary greatly depending on the market knowledge of the various listing agents.
  • For the most part, agents can only show you what their firm or network actually listed. Meaning that if you knock on the wrong door, you may only see 1 or 2 properties and they may not even be relevant to your needs & means.

Of course neither of these two incomprehensible (for US buyers) drawbacks stop anyone from looking and eventually buying a piece of the French capital. It does suggest, however, that you better do your homework before selecting the broker on whose expertise you will rely. It is not as simple as what HGTV House Hunters International would have you believe.

At the high-end, as it is usually the case in any regional market and in any country, there is only a handful of real players. Among them, the unavoidable “Daniel Feau-Conseil immobilier”, our French partner within the Luxury Portfolio International. They “control” as much as 70% of the listings in Paris over $3M.

According to Charles-Marie Jottras, the President of Feau and a friend, last year was characterized by a very poor start and a great finish, although prices, on average, were down 10% for the year. Sales have increased substantially in the last semester thanks to lower prices at the top end. In 2013, Feau’s transactions, ranged from $1M to $20M, with a couple around $55M.

Overall, a pretty good year, considering how gloomy the real climate was a year ago. We were then talking about the “guillotine tax”, the 75% tax rate that would burden the rich in addition to a so-called “wealth tax”. Enough to scare citizens out of the country!...And that is exactly what happened. About 50% of the Paris properties listed last year in excess of $10M, were put on the market because of the “fiscal exile” of the sellers to a friendlier foreign land where their money would rest and prosper more comfortably.

Now that prices at the high-end are more attractive (by Parisian standards), the market is stabilizing. Foreign buyers, who understand that they are not significantly impacted by the tax hike, are now coming back in force to capitalize on lower prices. Even the French are in the mood to buy again, after having been priced out of the luxury market in recent years.

As we are observing in all US luxury markets, the best quality properties, i.e. those around Paris “Golden Triangle” (avenue Montaigne, avenue Georges V) as well as St Germain-des-Pres, are moving swiftly. Not the case for the “B players” lacking modern amenities or the quality wealthy international buyers demand.

Among today’s buyers for the crème-de-la-crème of Paris real estate, we pretty much find the same people who are also buying in London, New York, Los Angeles, San Francisco, Miami, etc. Buyers from the Middle East are prevalent in the French capital, but the Russians have been busy too (before the Crimea episode I guess), and so have the Chinese.

By the way, Americans are many getting in the race to buy in Paris these days! How can we miss on a “bargain”?