BET ON REAL ESTATE INVESTMENT!

L'EQUIPE - 10/03/2021

While the Covid-19 pandemic has radically altered our perception of much that we previously held true, there is one sector that the health crisis has not so far adversely affected: real estate. It must be said that most of us have never spent so much time at home, and for many this has been a gamechanger! Numerous Ile-de-France residents have taken the decision to move, looking for a change in their lifestyle and their environment. More space, more peaceful, more greenery and more distant ... A close-up on a market that continues to thrive.

In 2020, the real estate market proved once again that it was more than capable of resisting an attack ... in this case a totally unprecedented health crisis which has damaged and continues to affect numerous sectors not only in France but across the globe. Although the country was in lockdown several times, in total for some 3 months and 10 days in 2020, house prices nonetheless continued to rise in France and the volume of transactions has in no way collapsed. By the end of 2020, nearly 1.025 million old-build assets had been sold in comparison with 1.070 million in 2019, a drop of just 4% as opposed to the near 20% plunge some had predicted. As for prices, they attained + 6.5% at the end of the year’s last quarter, with however some differences to be taken into account depending on the location.

More than resisting, the real estate market has even found a new lease of life since the outbreak of the pandemic. For the first time in nearly 4 years, the prices of houses have increased more than those for apartments (+ 6.6% for the former, +6.3 % for the latter). Proof that the French dream not only of having more space, but above all, an exterior! This need for fresh air is drawing many city dwellers away from built-up urban areas as they seek to improve their quality of life in less congested and smaller towns. Nearly 36% of Parisian residents say that they pine for the great outdoors! A significant figure which may to some extent explain why prices in the capital are stabilizing while prices of housing in the inner and outer suburbs are on the increase. A desire for leafy greenery is however not incompatible with the luxury segment of the market in the capital, a segment that is adapting to the crisis and has seen the demand for assets with an exterior, a terrace or a garden explode. An increase in French buyers has countered the drop in purchases from international buyers, and particularly Chinese and American clients. In 2020, over 3 out of 4 sales of exceptional assets at prices in excess of 3 million euro were to French buyers... a remarkable figure unprecedented in this market segment!

"The Ile-de-France, a great place to be”. So where do our sportsmen and sportswomen live?

When you think "sport” and “Ile-de-France", Paris Saint-Germain naturally comes to mind. This iconic football club’s star players have invested the capital and its neighbouring towns, much to the delight of real estate agents!

Among places most popular with these wealthy clients looking for exceptional properties, take for example Neuilly-sur-Seine in the Hauts-de-Seine department. A fervent representative of his adopted city, Zoumana Camara, former defender and now assistant coach, convinced many of his comrades to join him in this "beautiful, peaceful and verdant town”, according to Javier Pastore, the club’s midfielder between 2011 and 2018. From Edinson Cavani to Marquinhos or Marco Verratti, the inhabitants of Neuilly have over the years rubbed shoulders with numerous footballers.

Closer to the Parc des Princes, Kylian Mbappé chose to settle in the 16th District where he now lives in a huge apartment enjoying a view of the Eiffel Tower. When playing for the PSG from 2012 to 2016, Zlatan Ibrahimovic lived first near Place de la Madeleine, then in avenue Montaigne and subsequently near Place de l'Etoile before finally focusing on three adjacent 200 sqm apartments in a Haussmannian building to the west of Paris.

According to the capital’s specialist luxury real estate agency Daniel Féau, when sports stars are looking for exceptional properties, they favour those in which their anonymity may be preserved. Nicolas Pettex-Muffat, managing director of the agency, said in Le Figaro that properties to let at prices in excess of 15,000€/month in the capital are often rented out to sports stars. Like Neymar today, many former players such as Ronaldinho and Pauleta opted for the Yvelines and particularly Bougival as their place of residence. Not only the area offers a peaceful and natural environment, but Bougival also has the advantage of being close to the Camp des Loges, the club's training centre.

"First Division Luxury"

Sports professionals are not alone in being able to afford luxury assets in the Ile-de-France region. Boosted by the Covid-19 pandemic, the desire of the French to improve their daily wellbeing is on the increase. For the wealthy, this means acquiring a larger, more central main residence benefiting from outdoor space and inspiring views. Others invest in a second home far from the hustle and bustle of city life ... but with no concessions regarding the quality on offer!

“Although foreign buyers have always represented a significant share of transactions at 7-digits and above in the region, it was French buyers who animated the luxury real estate market in 2020” observes Nicolas Pettex-Muffat, managing director of Daniel Féau - Belles demeures de France.

Despite the absence of Chinese and American buyers, historically the most active in this segment of the market, sales of exceptional assets in France remained at a more than decent level last year. Figures for 2020 are comparable to those in 2019, and even higher for certain types of asset. The Sotheby's International Realty France agencies achieved a volume of sales of over 1 billion euro in 2020 (+ 5.5% compared to 2019), while Daniel Féau achieved a sale at prices in excess of 3 million euro every three days, with an average price of 4.9 million euro for these properties and a price/sqm of around 18,667 euro (+ 9.2% compared to 2019). A record!

What defines "luxury real estate"?

There is today an international standard that classifies a luxury asset as one whose value is equal to or above 1 million $. However, for many professionals in the field, this definition is far from pertinent and needs clarification. For Nicolas Pettex-Muffat, a luxury asset is "one whose price exceeds 1.8 times the average price in the sector in which it is located." Applying this argument, a luxury property in the capital’s 16th District would today, for example, have a value of around 20,000€/sqm.

As well as having an above-average price, a luxury property should also boast exceptional features. In Paris where assets on the market are limited, the most sought-after criteria are open views of iconic landmarks or over the rooftops, very high ceilings, and extensive space both inside and out.

In 2020, although the level of transactions remained stable, a shift in demand was nonetheless noticeable.

With many buyers wanting to move away from Paris to settle in the neighbouring suburbs, the Daniel Féau Saint-Cloud agency, for example, saw its sales increase by 54% over the year. Likewise, their Neuilly-sur-Seine agency witnessed a sharp increase in demand for exceptional properties in the capital’s desirable western suburbs.

For a significant number, working from home was a deciding factor in their choice to move further afield to suburbs where exceptional properties are slightly more accessible and the quality of life is better.

In these particularly uncertain times, with financial and stock market investments seemingly too risky, luxury real estate was seen as the most attractive choice for many to invest their capital in 2020.