LUXURY REAL ESTATE BOUNCES BACK AFTER THE CRISIS
LE FIGARO - BY JORGE CARASSO ON 19.06.2020
"After a forced standby, the market is recovering despite the absence of foreign buyers.
The luxury real estate market did not escape the Covid crisis. When lockdown was announced, the shock was brutal and visits, along with offers, dried up. And although a number of projects did not survive the economic downturn, since May 11th a bounce-back has been clearly witnessed in Paris and its desirable nearby western suburbs. Buyers looking for luxury houses and apartments and ready to put over a million euro on the table are back, and many offers have been made. "It feels like clients are making up for lost time" according to Thibault de Saint-Vincent of the Barnes luxury real estate network.
Since the lifting of lockdown the supply of upmarket assets has risen sharply. The time may seem right to sell when the economy is still significantly bolstered up by the government and the consequences of the crisis have not yet become clear. However, this return of supply has not significantly affected prices, for demand remains extremely strong in this market segment and particularly for family apartments at prices ranging from 1 to 2.5 million euro.
Apartments with terraces are worth their weight in gold
Although sales agreements plummeted during lockdown, they came back with a vengeance from May 11th on, taking many by surprise. In June 2020 in and around Paris, the number of sales agreements bounced back to the record level of June 2019. This return of buyers is confirmed by all agencies. “We were somewhat surprised by the strength of the recovery. Since May 11th we have signed some 110 sales agreements, and this is actually more than usual” confirms Charles-Marie Jottras, CEO of the Féau group, another luxury real estate network in Paris and the desirable western suburbs.
Following the lifting of lockdown, assets with terraces or a little garden have become worth their weight in gold. "Since the crisis a third of buyers have changed their project to acquire a property with an outdoor area" confirms Thibault de Saint-Vincent. Assets that are not perfect are penalised even more severely than before the health crisis. The prices of gloomy ground floor apartments have inevitably taken a hit. "However, there is no crash whatsoever. Prices were stratospheric at the beginning of the year, so a slight drop of 5 or 10% is totally acceptable, "explains Nathalie Naccache at Fortis Immo, an agency in central Paris.
This strong recovery is however limited to a certain price range. For Barnes, at the top end of the market with assets valued at over 4 million euro the absence of foreign buyers is significant. "Almost 90% of these assets are acquired by foreign buyers who are now stranded in their respective countries. But I'm not worried, it may take a little time, but they will come back” explains Richard Tzipine, managing director of Barnes.
Finally, the financial problems experienced by many buyers do not affect the clientele for luxury real estate who are used to paying cash. "To such an extent that sellers often refuse offers when they are accompanied by a suspensive condition regarding a loan” explains Charles-Marie Jottras."
