THE SRU LAW HAS DRIED UP THE MARKET IN THE WEST OF PARIS
LESECHOS.FR - BY MARIE-CHRISTINE SONKIN ON THE 02.01.2020
"The imbalance between supply and demand is growing for family apartments in the west of the capital.
How is “luxury” real estate defined?
It is customary to speak of "luxury" real estate when the cost of a transaction exceeds 1 million euro. In Paris, 92% of sales are at prices below this figure. In the capital, the "luxury" market represents just 3,000 sales per year, and it is also important to “segment” this market for there is little in common between an asset valued 1.5 million and one valued at 5 million.
Between 1.2 and 1.6 million, the clientele is mainly made up of well-off families. It is in this segment that demand is strongest ... and is also the most unbalanced in relation to supply. 3-bed apartments offering between 135 and 150 square metres of living space are sold almost immediately and are only very rarely to be found on websites. The provisions of the SRU law, in place since 2000, require that 25% of apartments in new buildings (alongside those sold to first-time buyers) must be reserved for social housing. While the law is undoubtedly well meant, it has however made construction outside the areas to the northeast of Paris practically a pipe dream. As a result, the supply deficit has widened; without this obligation, if the pace of construction of previous decades had simply been maintained, some 20,000 new dwellings would have been built.
For apartments priced at between 2 and 2.5 million, the situation is more balanced and relatively fluid.
And even the most exceptional properties, if they are at the right price, are snapped up; for example, Féau sold an apartment at a price exceeding 12 million and at 39,000 euro/square metre in the capital’s 16th district. Located on the Trocadéro hill, the apartment benefits from an extraordinary view of the Seine – and was sold after a single visit.
What are the buyers' requirements?
Those seeking to acquire a luxury asset are looking for renovated apartments or properties with a stylish contemporary decoration, as well as en suite bedrooms with bathrooms. One bathroom serving 2 or 3 bedrooms is prohibitive for many buyers. Other important criteria are ceiling height and an outside space (balcony, terrace, garden).
A very generously proportioned Haussmannian apartment which does not benefit from a view and which has not been renovated since the seventies or eighties is much more difficult to sell, and may remain a long time on the market. Compared to another smaller 150 sqm apartment in the same street, it may well be hit by a reduction of between 10 to 15% per square metre.
Are there any new “trendy” neighbourhoods for luxury real estate?
Saint-Germain-des-Prés and Faubourg Saint-Germain which still boast superb private mansions remain in strong demand from a clientele both from home and abroad. On the Right Bank, avenue Montaigne is always keenly sought-after, with prices ranging from 25,000 to 30,000 euro per square metre for quality apartments.
The new kid on the block (or rather the kid who has once again become fashionable) is no doubt the south of the 16th District and in particular the Auteuil neighbourhood. Over the past two or three years the market has become particularly fluid thanks to keenly sought-after near 140/150 sqm family apartments near good schools. We also note that, following a craze for the historic Marais neighbourhood, other districts have been drawn in such as the central 9th District, and even the previously somewhat unappealing 10th and 11th districts.
And, by the way, the possible ban on renting furnished tourist accommodation in the heart of Paris will not suffice in order to restore the balance between supply and demand."
