"Despite a surge in prices not only for assets worth several million euro but also for “average” housing, professionals are confident that the market is stable.

Can a real estate market where average prices have quadrupled in 20 years (according to figures from notaries) really stay in touch with reality? This question, which would appear to be entirely reasonable, has been on the back of the minds of real estate professionals in Paris for many months (if not years). In the city, the notion of the cost of a residence seems to be on another planet when taking into consideration the evolution of average incomes. Luxury real estate is no exception. However in an annual report, the Daniel Féau network which concludes up to 800 transactions each year and holds a 2019 record at over 37,000 €/sqm for a 90 sqm apartment in the Sèvres-Babylone neighbourhood sweeps away the fears of a possible real estate bubble.

Nonetheless, the network does admit that, in all of its segments of the market, annual price increases are still significant. The price per square metre jumped up 7.5% (to 13,474 €/ sqm for sales at between 1.5 and 3 million euro). Count 6.7% (to 12,071 €/ sqm for transactions at prices between 750,000 euro and 1.5 million), and 3.6% (reaching 18,423€/sqm) at the top end, that is to say for sales at prices in excess of 3 million. Is this reasonable or is it an artificial increase?

Unique in the world 

"The market for Parisian assets at prices in excess of 2 million euro represents less than 500 annual sales, and it is therefore a narrow segment" underlines Charles-Marie Jottras, CEO of the Daniel Féau group and Belles demeures de France. “The Parisian market as a whole is relatively limited in quantity with a stable number of sales from one year to the next. This situation is unlikely to evolve since Paris remains allergic to high-rise developments, and the SRU law has made new construction complex to say the least.”

In the 8th district’s George V neighbourhood, this 4-bed apartment is on the market for 5.5 million euro. Photo credits S. Dondain / Daniel Féau

Faced with this reduced supply, demand nonetheless continues to increase. For both French and international customers, the capital has retained its aura and maintained its place as the world's leading tourist destination and a showcase for luxury. "And it is hard to argue with the opinion that the beauty and elegance of Parisian architecture is unequalled in the world," emphasizes Charles-Marie Jottras. “If you were looking for a 250 sqm apartment or private house in London, your options would more often than not be limited to three floors with low ceilings, narrow stairs and limited natural lighting. In Paris the same surface area would be on one bright floor with high ceilings, parquet flooring, mouldings, fireplaces, etc. ”

As for the most upmarket assets, that is to say at prices in the tens of millions, these are almost exclusively acquired by a foreign clientele which has kept its unwavering faith in the capital. Put end to end, these elements should preserve the capital from a real estate bubble. The Grand Paris project will no doubt ease pressure in the capital and especially for "standard" assets, but the impact on the luxury market should be marginal."

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