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Wealthy French expatriates and foreign investors are saying au revoir to homes in London and Brussels to buy property in Paris, as a wave of economic optimism grips the country.
That renewed investment is driving luxury inventory to historic lows and pushing prices back up toward pre-financial crisis levels. Agents and economists are predicting homes in France will continue to gain in value over the next couple of years—so if you’re a Parisian property owner itching to sell, it may pay off to wait at least another year. Meanwhile, buyers may want to take advantage now before prices hit new peaks.
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The election of President Emmanuel Macron, a former banker and political outsider, in May 2017 has helped revive the French property market, said Roddy Aris of the international team at brokerage Knight Frank. His pro-business agenda, following five years under socialist president Francois Hollande, has attracted entrepreneurs, companies—particularly in the technology sector—and wealthy expatriates to the country over the past six months.
“He’s brought in this gulp of oxygen and has changed overnight the outlook of the economy,” Mr. Aris said. “We’re seeing transactions in Paris that we haven’t seen in five years.”
Critics are now calling Mr. Macron “president of the rich,” and though it’s meant as a slight, well-heeled property owners have certainly benefited from his presidency, so far.
As of December, prime housing prices in Paris had risen an average of 12% year-over-year, according to data from Knight Frank.
Even still, the city has got a lot of ground to make up for since the global financial meltdown, Mr. Aris said. Knight Frank estimates luxury housing in Paris will appreciate an additional 9% in 2018. So sellers who can might be wise to hold off until sales in their neighborhood approach pre-crash levels before putting their home on the market.
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The British vote to exit the European Union has also benefited France, as some companies have relocated their European headquarters to the continent from the U.K. And in contrast to the British stamp duty hike in 2016 that crippled activity in prime central London, Mr. Macron is promising to reduce taxes, said Annick Dauchy, property business development manager at listing site FrenchEntree.
“Second-home buyers are keen to take advantage of President Macron’s commitment to reduce taxes for property owners,” Ms. Dauchy said. “At the same time, Paris offers a great deal of stability that London no longer can, which is extremely attractive to buyers from overseas.”
For instance, wealthy foreigners living in France will be free of the country’s impôt de solidarité sur la fortune, or wealth tax, of up to 1.5% on worldwide property and assets over €1.3 million beginning Jan. 1, according to FrenchEntree.
Pro-business reforms, such as the new French Tech Visa and Station F, a new start-up campus in the capital’s 13th arrondissement that houses more than 1,000 early-stage businesses, has helped attract new wealth to Paris, the property site said.
Marie-Hélène Lundgreen, director at Daniel Feau, an affiliate of Christie’s International Real Estate, said they’ve seen a flood of Americans, particularly buyers from Silicon Valley, drawn to the blossoming tech industry.
“The number of Americans buying in Paris has doubled since last year,” Ms. Lundgreen said, including “investment from very big American budgets from Silicon Valley.”
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High-end second home markets outside of Paris have also seen a boost in activity. Brokers are reporting increased activity among $10 million-plus (€8.4 million) homes in destinations like Cannes and Nice.
Meanwhile, buyers can benefit from relative deals that abound in some of the ritziest parts of Paris, which have not yet bounced back completely from pre-crisis peak levels.
Paris’s 16th arrondissement, long associated with great wealth and home to Fortune Global 500 companies like PSA Peugeot Citroën and LaFarge, fell from peak prices of around €17,000 (US$20,228) per square meter five years ago to €12,000 (US$14,279) in mid-2016, Mr. Aris said.
For instance, Knight Frank is marketing a three-bedroom apartment near the Trocadero in the 16th arrondissement that is listed for around €14,400 (US$17,134) per square meter, still well below the neighborhood’s 2012 peak.
Savills is marketing a luxurious, five-bedroom duplex in the 16th for €5.775 million (US$5.775 million), around €14,440 (US$17,180) per square meter.
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