A resilient yet demanding market
Le nouvel Économiste by Romain Thomas the 08/04/2022
Buyers are still active, but hyper-selective regarding the quality of both assets and services
As a direct result of the Covid-19 pandemic, French buyers have replaced international clients in the luxury real estate segment in France, and particularly in Paris. Despite a significant increase in price per square meter, customers are still in the market for luxurious properties offering state-of-the-art amenities. However, owing to administrative specificities and the historical character of certain buildings, some of their demands for the latter cannot be satisfied…
Although widespread gloom and doom accompanied the global coronavirus pandemic, luxury real estate seems to be resisting in France. “Despite an uncertain economic context and a low number of foreign buyers, 2021 was a record year for our network with, in particular, a doubling of sales at prices in excess of 3 million euro compared to 2019, which was itself a pre-pandemic record year” sums up Nicolas Pettex-Muffat, managing director of the Daniel Féau group and Belles demeures de France. At the same time, he adds, prices have remained high as “not only the available stock of luxury assets is low today but, largely thanks to attractive conditions for credit, real estate assets remain the safe haven par excellence for the wealthy”. Moreover, he points out that sales have never been so rapid in the luxury and top-of-the-range segments, with some properties finding a buyer just hours after they are marketed.
Exceptional and extensive properties in high demand
As a result of repeated lockdowns, customers in the luxury real estate segment are today particularly looking for leafy greenery and more space. “For more and more clients today, outside areas and gardens are a must. In major cities like Paris, they are looking for over two or even three hundred sqm of living space, favouring more than ever apartments with terraces, or alternatively single-family homes and private mansions in neighbouring towns such as Neuilly-sur-Seine, Boulogne, Saint-Cloud and even Versailles” underlines Nicolas Pettex-Muffat.
Sales have never been so rapid in the luxury and ultra-luxury segments, with some properties finding a buyer just hours after they go on sale.
However, this increased demand for exceptional and extensive properties is not limited to the cities, but may also be observed both in the provinces and on the coast. “While rural locations are popular, traditional coastal destinations from the Côte d'Azur to Corsica via the South-West and Brittany are running flat out” says Patrice Besse, president of the Patrice Besse group.
“Luxury new-build is becoming increasingly rare today, especially in the capital, due to a lack of available land.”
Nicolas Pettex-Muffat, Daniel Féau & Belles demeures de France
The unquestionable charm of many regions in France is undoubtedly a magnet for customers looking for luxury real estate. “The geographical diversity of the country is matched only by the richness of its historical and architectural heritage” he adds. France, starting with timeless Paris, is chockablock with real estate gems to seduce wealthy clients. Magazines specializing in luxury real estate are full of magnificent freestone Parisian buildings with apartments boasting high ceilings, as well as chateaux and private mansions all over France. Rare, however, are those benefiting from picture-postcard views of a renowned landmark or a breathtaking vista, such as the Eiffel Tower or the Mediterranean. According to the professionals interviewed, a number of criteria must be satisfied in order to qualify a property as truly “exceptional”: a superbly appointed property, a prestigious address and a breathtaking view…
“Wealthy clients are above all looking for a property with few or preferably no defects” points out Nicolas Pettex Muffat. And to meet such exacting requirements, the price/sqm is naturally significantly higher than that for other more classical properties located in the same neighbourhood.
Mainly French buyers
Clearly, whatever is rare is expensive, sometimes above the symbolic threshold of 20,000€/sqm, and on occasions for exceptional assets, significantly more. Prices that don’t seem to put off those with the deepest pockets, including foreigners looking for a luxury residence in France and a certain “art de vivre”. However, although remote visits have become commonplace, most international buyers nevertheless have preferred to wait before making an acquisition in France because few are ready to buy a property without having physically visited it. And although wealthy Americans and Asians have been largely absent, as Patrice Besse reminds us, “European buyers, and in particular the Belgians, Dutch and Germans, are still in the market”. Despite this, according to figures published by notaries of the Metropolis of Greater Paris, the share of foreign buyers in the capital has fallen over recent years: representing 2.6% of all sales in 2018, this figure fell to 2.2% in 2019 and 1.8% in 2020.
Today, professionals in the sector are mainly seeing French buyers on the market. Among them, many former expats who, concerned about the impact on their professional careers following Brexit, have returned from the United Kingdom.
In the luxury segment, French buyers have in fact more than replaced international buyers, which goes to explain why prices are holding up despite the health crisis.
An extensive range of amenities
Properties boasting the crème de la crème in terms of equipment, decoration and amenities similar to those usually found in palaces or luxury furnished residences command prices in keeping with what they have to offer. Air conditioning in all rooms, private screening rooms and even indoor swimming pool or spas are increasingly requested by wealthy customers. Similarly, 24/7 concierge and security services are important to many buyers, and especially those from North America. They not only want to feel safe, they often consider it an essential to be able to benefit from home catering, a laundry service, shopping deliveries and third parties to book tickets for shows and taxis, for example.
Many buyers, especially those from the USA, find it essential to be able to benefit from home catering, a laundry service, shopping deliveries and third parties to book tickets for shows and taxis
Although relatively common across the pond, this type of service is not widespread in France, even in the most luxurious Parisian buildings where often other residents are not always ready to pay the additional associated fees.
Some desires and requirements are incompatible
Wealthy clients sometimes point the finger at what they see as another sticking point: administrative rules and regulations regarding major work and “in particular when it comes to listed buildings for which, according to the “Code du Patrimoine”, work is subject to a special administrative authorisation procedure” points out Patrice Besse.
However, even if work were permitted, castles, chateaux and private mansions built hundreds of years ago were not designed to accommodate many 21st century amenities, and this is also the case for most of the capital’s prestigious Haussmannian buildings. And opting for a modern bespoke alternative is problematic as “luxury new-build is becoming increasingly rare today, especially in the capital, due to a lack of available land” recalls Nicolas Pettex-Muffat. This to some extent explains why prices have not dropped in the Paris region, and why the luxury real estate market’s future in the capital and elsewhere in France appears rosy.
Key figures
30% of those questioned think that luxury real estate in France is a safer bet in terms of investment than before the health crisis. For 45% of them, its attractivity has increased, compared to 32% in 2020 and 39% in 2019.
