High-end real estate: still a dynamic market

Publish the 05 September 2022 in Latest News

After a year 2021 characterized by an already high volume of transactions, Mercure Forbes Global Properties notes that trends for 2022 remain very good in Paris and the Île-de-France region, with exceptional sales. The prestige real estate group observes that, despite the many challenges and uncertainties for 2023, the  high-end real estate sector seems to retain its attractiveness for luxury properties.

High-end real estate : Excellence properties in the City of Light, as attractive as ever

The success and dynamism of high-end real estate has been maintained in the first half of 2022. Since the beginning of the year, transactions have remained equivalent in volume and value, andhigh-end-real-estate-paris demand is not slowing down, explains Matthieu Arquembourg, director of the Mercure Forbes Global Properties agency in Paris Rive Droite. “On the contrary, we’ve even achieved some quite exceptional sales, such as a charming house in Montmartre for around 4 million and a magnificent private mansion in the 17th arrondissement that sold for almost 8 million,” adds him. This trend is justified by the increased liquidity on the market, with more people looking to invest in real estate and greater capacity to buy their primary residence. In addition, international interest, particularly from the UK, is on the rise. According to Charles Daireaux, director of Mercure Forbes Global Properties Paris Ouest, “the Brexit effect is leading to renewed interest in Paris, which is regaining its place as an economic and financial capital. While further transfers of international banks from London to Paris are expected, the French capital continues to attract millionaire bankers from the City.” Although Paris itself continues to attract French and foreign buyers, the low supply of Excellence properties and the desire for space and nature are also driving demand around the capital. Western Paris continues to attract buyers looking for luxury properties, both in the inner suburbs, notably Hauts-de-Seine, and in the outer suburbs, such as Yvelines. Central and eastern Paris are also benefiting from this displacement effect, as Matthieu Arquembourg observes: “The very high-end homes around Vincennes or Saint-Maure are attracting more and more buyers. Luxury is not concentrated in Paris; some towns on the outskirts offer neighborhoods with magnificent Excellence properties”.

A two-speed high-end market in the Paris region

The Mercure Forbes Global Properties group has observed a reinforcement of the segmentation of the luxury property market. On the one hand, the traditional high-end, often situated in the two to five million euro range; on the other, we are witnessing the acceleration of the very high-end market, with properties worth over five million euros. The first of these two categories, the traditional high-end, is enjoying a healthy level of activity, with many transactions, despite a slight slowdown due mainly to the scarcity of properties on the market. A quality property at an appropriate price can easily find a buyer, sometimes in just one visit. The second category, that of the very high-end, has seen its dynamism strengthen in recent years, despite the pandemic: while in 2020 and 2021 transactions were mainly with French buyers, the gradual return of foreign buyers is stimulating this segment of the market. The latter have a particular appetite for “turnkey” apartments, which are sold fully renovated and furnished by decorators, offering greater comfort. However, this market remains relatively small, as Paris, and more generally the Île-de-France region, have few properties of this nature on the market. This has led to the development of “off-market” transactions: a growing number of prestige properties are not visible either online or in dedicated magazines. According to Charles Daireaux, “Many Excellence properties are gone in a single visit, before they can even be marketed. Due to growing demand and limited supply, these properties are becoming true rarities.

Outlook for the second half of 2022: crisis after crisis?

Today, large fortunes are flush with cash, which encourages them to invest in property. This market-friendly situation could change in the event of an economic or confidence crisis. Nevertheless, historically and from a long-term perspective, the Paris luxury sector is relatively unaffected by the various effects of the crisis”. The real estate market has continued to do well and has done so since the crises that affected the sector in 2012 and 2013, Charles Daireaux points out. Recently, the covid crisis, which brought transactions to a standstill during the various confinements, finally contributed to an exponential recovery when these ended. The post-covid recovery has been particularly dynamic since the beginning of the year. According to Mathieu Arquembourg, director of the Mercure Paris Rive Droite agency, “Buyers immediately positioned themselves to buy, and reacted quickly to exceptional properties being put on the market. In fact, the exceptionality of the Paris market lies in the capital’s appeal to foreign buyers, particularly Americans, who have already invested in the market in large numbers. Nevertheless, foreign buyers only account for around 5% of the total.

Second homes stand out in high-end real estate

The pandemic and the various crises have not revolutionized the sector. Buyers on the market come from the most privileged socio-professional categories, with a concentration of senior executives, professionals, and managers. In addition, we are now seeing the arrival of people in their thirties, a younger segment of the population who have access to cash thanks to the sale and resale of businesses. Finally, acquisitions in the City of Light are often used as primary residences for French buyers, while they are used more as second homes for foreign buyers. A certain proportion of acquisitions are also made with a view to investment, even for prestige properties: “the majority are investments in well-located properties of between 30 and 40 m², with a view to renting or providing an apartment for their children’s studies”, according to Charles Daireaux. As a result, “despite the various crisis outlooks, the crisis may not have a significant impact on the Paris prestige real estate sector”.

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