OLD-BUILD REAL ESTATE IS, FOR THE MOMENT, RUNNING FULL-SPEED AHEAD
LE FIGARO MAGAZINE - BY JEAN-BERNARD LITZLER & JORGE CARASSO ON 06.26.2020
Purchases, visits and sales restarted immediately and with gusto. However questions remain for the months to come.
BUSINESS ACTIVITY : BUYERS AND SELLERS ARE PRESENT EN MASSE
Some may have feared that the controlled lifting of lockdown would lead to a wait-and-see period. This has not happened. Buyers and sellers have resumed their projects, and in greater numbers than before. "The recovery has been strong in all regions" according to Laurent Vimont, chief executive at Century 21 France. “Our June 2020 figures shall be higher than those of June 2019, which was an exceptional year." Although an increased desire to own a property with an outdoor area seems evident (with a possible increase in prices for this type of property), for the moment the rush towards the countryside which was predicted for a moment during lockdown remains to be seen. "The demand for real estate remains" confirms Eric Allouche, executive director at Era Immobilier. The essentials however remain the same, with a strong demand and limited supply concentrated in and around Paris and near dynamic cities. Sellers too are active and seeking to maintain their prices in a market where supply remains inferior to demand.
PURCHASE AND SALES DELAYS: CONGESTION AHEAD?
Although visits and negotiations are ticking over nicely in real estate agencies, finalizing transactions is somewhat different. Lockdown led to tension between between notaries and real estate agents, and this would seem bound to continue. It is true that notary offices are digitized to different degrees and for many of them queues are forming. Other administrative delays may well also complicate real estate transactions: it is often difficult to rapidly obtain a déclaration d’intention d’aliéner (a formality required to sell an asset subject to urban preemptive rights: Editor's Note). Similarly to obtain an état daté, another essential document if the asset is part of a co-ownership. And finally banks have significantly increased the time required to consider a mortgage. With bottleneck following bottleneck, it is highly unlikely that the situation will have returned to normal by September.
A RETURN TO FAVOUR FOR SECONDARY RESIDENCES
Second homes, a market that has suffered for quite a while, would appear to be finding new customers. Rather than simply escaping to the country, wealthy clients are taking the plunge for a property located a reasonable distance from their main residence. "We have a lot of interest around Sens, Compiègne, Chartres, Pacy-sur-Eure and even Marne-la-Vallée," says Laurent Vimont. Lockdown has encouraged these customers to invest in order to live life differently. Thanks to remote working, they plan to spend long weekends away from the city. Of twenty sales recently concluded around Chartres, a third concerned Parisians looking for a second home.
THE LUXURY MARKET: A SOLID REBOOT
In Paris and its western suburbs, since May 11th luxury apartments priced at 1 million euro and above have drawn buyers. "Naturally we suffered during lockdown, but have been astonished by the strength of the recovery" says Charles-Marie Jottras, CEO of the Daniel Féau group. Sellers are also back on the market. However, there has been no significant knock-on effect on prices, for near perfect assets at least. Below 2.5 million euro, there are traditionally numerous buyers for few sellers. Since lockdown terraces or gardens have become worth their weight in gold. "After these two difficult months, a third of our buyers have redirected their research towards a property with an exterior" according to Thibault de Saint Vincent, CEO of the Bames network. Less attractive apartments (poor natural lighting, ground floor ...) are being discounted at 5 to 10% less. Finally, the seaside market is booming, especially on the Atlantic coast. Remote working is no doubt having a significant effect.
FOREIGN BUYERS: THE LIGHTS ARE RED
The market at prices in excess of 4 million euro is struggling. “In this market segment, 90% of buyers are from abroad. Owing to Covid they can't even get on a plane" observes Thibault de Saint Vincent. Foreign customers have in fact disappeared regardless of the price range. Nonetheless, they have not lost interest. The Christie’s website, which lists the Daniel Féau group’s offers abroad, has witnessed a 60% increase in traffic in recent weeks. Professionals are banking on a return to “normal” activity as soon as lockdown restrictions are completely lifted.
