Mainly due to the health crisis and the tightening of real estate financing, the Daniel Féau real estate network observed a drop in sales in Paris at prices between 1 and 3 million euro. The market at prices above 3 million euro continues, however, to more than hold its own.
In 2020 the Daniel Féau agencies achieved in Paris a sale every three days at prices between 3 and 35 million euro with an average price of 4.970 million euro, close to its 2019 sales in this segment. Prices have not dropped, in fact the contrary is true. Sales in this range were at an average price of 18,667 euro per sqm compared to 17,091 euro in 2019, an increase of 9.2%. In the price range spanning 1.5 to 3 million euro, the average price per sqm in sales concluded by Daniel Féau agencies was 14,893 euro in 2020 compared to 14,032 euro in 2019, representing an increase of 6.1%. “Although the luxury and ultra-luxury segment has been affected by the virtual disappearance of Chinese and American buyers who have not been able to come to France for many months, customers from the Middle East have been able to travel thanks to their private jets” the group explains. “And European and French buyers – in particular those returning from the United Kingdom in anticipation of Brexit - have to a significant extent replaced our usual international customers, explaining the very good results in sales in the top of the range segment".
A 35% drop in international customers
At prices in excess of 3 million euro, the share of sales by Daniel Féau's agencies to international customers nonetheless fell from 42% in 2019 to 27% in 2020, a drop of 35%. French purchasers however grew to represent three out of four sales, with customers from home compensating for the decrease in foreign buyers.
“Taking into consideration visits to our websites by foreigners, we observe that international customers remain drawn to Parisian real estate” the Daniel Féau network comments. The capital’s “chic” districts are still highly sought after by both French and international customers, as proven by the intense activity in our agencies as soon as the second lockdown ended. The demand for properties with a terrace or a garden was particularly strong, which goes to explain the remarkable increase in sales by both our Saint-Cloud agency (54% more sales with an average price of 1.520 million euro) and our agency in Neuilly".
The Daniel Féau network continues: “Our Aix-en-Provence agency and, to a lesser extent, our chateau department also benefited from city-dwelling families changing their lifestyle and “heading for the countryside”. They have chosen to live in the provinces where they have a TGV station under 45 minutes away, a reliable Wi-Fi network and, if they have children, good schools nearby. These buyers however remain relatively marginal in terms of the number of sales".
Imbalance in the Parisian market
With a major share of the luxury real estate market, the Daniel Féau network believes that “these figures demonstrate that, in the current context of decline affecting bonds or life insurance, real estate assets remain a safe haven. But they also and above all highlight the structural imbalance in the Parisian market. Notably due to the absence of new build, supply is, and will remain, frozen despite a strong national and international demand".
Finally, the Daniel Féau real estate agency network “can’t imagine how the lack of supply could change in the short and medium term, and a drop in demand is not foreseeable. This imbalance seems more than likely to persist, and the luxury Parisian real estate market will remain in this situation in 2021".