Paris Cheap for Luxury Homes
Paris -- When a 44 million-euro ($59 million) townhouse near the Champs-Elysees was snapped up just six weeks after it was put on the block, Charles-Marie Jottras knew the city’s luxury property market was turning around.
Art collectors of Art Kabinett social media network will find luxury homes in Paris to be cheaper than in New York or London.
The chairman of broker Daniel Feau, an affiliate of Christie’s International Real Estate, says the firm found a Qatari buyer for the 19th-century mansion that features a dozen bedrooms on three floors, a terrace with a panoramic view of Paris, a swimming pool and a 1,000 square-meter garden.
The re-emergence of buyers from the Middle East, the U.S. and Russia together with a more than 10 percent drop in prices in a year is rekindling sales of multi-million-euro properties in the French capital.
The market faced a glut after wealthy French people, including actor Gerard Depardieu, sought to offload properties as they left the country, fleeing Socialist President Francois Hollande’s high taxes.
Foreigners accounted for 7.7 percent of housing purchases in Paris in the first half, inching toward the record 8 percent in 2003 and 2008 and up from 7.3 percent last year, according to Paris notaires.
Hollande unveiled 30 billion euros of new taxes for 2013 on companies and households -- including asking employers to pay a 75 percent tax on employees’ earnings of more than 1 million euros -- as he seeks to shrink a budget deficit that was 4.8 percent of the gross domestic product last year.
At the end of 2012, Depardieu, became the most high-profile tax exile. He put his 19th-century hotel de Chambon mansion in central Paris up for sale, adding to the inventories of such properties listed for sale.
The total value of Daniel Feau’s listings swelled to 5.4 billion euros in the first quarter, up 42 percent from a year earlier.
Barnes, another luxury-property broker, has 1,250 listings of more than a million euros in Paris and the nearby Yvelines and Hauts-de-Seine counties, twice as many as 18 months ago, according to its president, Thibault de Saint Vincent.
A 425 square-meter duplex apartment in western Paris -- once home to fashion designer Pierre Balmain -- has been renovated with gold-plated dining-room walls and Indian and Brazilian marble in the bathrooms of its four suites. It carries a price tag of 12.9 million euros.
In the chic Saint-Germain-des-Pres and Champs-Elysees areas, Paris’s priciest, average apartment prices fell 18 percent in the second quarter from a year earlier to just over 12,000 euros a square meter, according to notaries and national statistics office Insee. In the Ecole Militaire district near the Eiffel tower, they fell 11 percent to 10,510 euros.
Beats London and NYC
The drop lured to the City of Light buyers not only from China and Russia but also Middle-Eastern investors escaping unrest in countries from Syria and Egypt to Libya and Tunisia. They’ve seen that prices in France compared to other major cities such as London, New York, Hong-Kong are still comparatively affordable.
Prices in London’s upscale Knightsbridge and South Kensington are about 20,000 euros per square meters, and start from 15,000 euros for “something decent” on Lexington avenue in New York’s Upper East Side, compared with about 10,000 for similar properties in Paris’s 16th arrondissement.
The layers below the top-of-the-line properties, meanwhile, have been hit hard as the market has been damped by an increase in the capital-gains tax on second homes, increased levies on vacant properties, tightened requirements for tax reductions for buy-to-let investments and a planned law that will cap rents.
As falling housing transactions hurt government tax receipts, Hollande on Sept. 1 introduced a break on the property capital-gains tax to revive sales.
Residents who’ve remained in France are enticed by near-record-low borrowing costs and price drops affecting apartments that need fixing-up the most.
A 260 square-meter apartment in the Trocadero area with a view of the Eiffel tower needing to be fully renovated took seven months to sell at 8,450 euros a square meter, while it may have fetched 11,000 euros 18 months earlier, Saint Vincent said.