Prime Residential – 2019

REPORT Savills Research Paris

Savills_Paris_p01_coverv_2.0.indd 2 05/11/2018 11:04 Foreword

A confident performance

Renewed confidence in Francehas Prime Paris still offers value Summary driven the prime Paris residential on the world stage, too. After Pricing and demand property market to new highs. The 10 years of underperforming exceed 2011 peak election of Emmanuel Macron in against its global rivals, a period May 2017 accelerated the recovery of catch-up is to be expected. Prime Paris prices of the market, and a pro-business Highly land constrained, only increased by 3.5% in agenda coupled with tax reform tiny amounts of new stock are the year to June 2018. has boosted France’s appeal as added through conversions, and Transaction volumes a place to invest and do business. restricted supply will sustain reached their highest This has stimulated the market prices over the long term. levels since 2011. for international buyers. In spite of rising international However, Paris’s prime residential demand, price growth is The prime market market remains a domestic one, so likely to increase at moderate continues to be driven it is French buyers who have driven levels, given the reliance on by domestic buyers, this growth. Prices reached record domestic wealth. but international highs last year, and transactions are buyers accounted at their highest volumes since 2011. for 14% of prime transactions last The top prime districts of Paris – year, up from just characterised by the highest prices 9% in 2016. and best-quality stock – have all

returned to growth in the last two The average Paris years, but it is the less-established property is now arrondissements that have on the market for performed best. The 3rd and 10th Paul Tostevin Associate Director 45 days, down from are the two stand-outs – where World Research 59 days in 2014. This prices have outperformed the +44 (0)20 7016 3883 compares with 78 top districts from a lower base. [email protected] days across France.

Paris has been selected as the new home for the European Banking Authority, and recently overtook Frankfurt as the top location for anticipated finance job relocations.

HOW WE DEFINE PRIME PARIS RESIDENTIAL

Prime Typically priced Ultra prime Typically between €2 million and priced over €4 million, or €4 million, or €12,000 to above €20,000 per sq m, €20,000 per sq m, prime ultra prime covers the most property is usually found exceptional properties in in the 1st, 2nd, 3rd, 4th, the prime arrondissements. 5th, 6th, 7th, 8th and 16th They may enjoy a special arrondissements – though view, benefit from large it can be anywhere given outdoor spaces or be in the right neighbourhood. buildings of the highest architectural quality.

3

Savills_Paris_p02_v2.0.indd 2 05/11/2018 11:05 Savills_Paris_p03_intro_v3.0R.indd 3 06/11/2018 09:37 Residential market Residential market

€4m+ (rest of Paris) 1%

Average days All France Distribution €4m+ (Prime arr.) 16%

on the market 78 days of €2m+ sales (from 94 for properties in Paris, 2017 €2-4m (rest of Paris) 13% in 2018 in 2014) Paris €2-4m (Prime arr.) 70% Source Savills 45 days (from Source Savills World Research World Research 59 in 2014) using Notaires de Paris

Paris price growth by arrondissement Including prime FOREIGN BUYERS and mainstream districts, to September 2018 ARE BACK In 2017, international 10th Prime Paris on the rise buyers made 14% of all 18th purchases in the prime Paris’s prime market has recorded its best performance since 2011, with prices up 3rd market, up from 9% the across the board. However, some arrondissements have fared better than others year before. This is the 9th highest proportion of 5th international buyers since Prime Paris residential prices have now risen Prices are now rising all across Paris, and Where the 3rd comes first 2008. President Emmanuel 19th for four successive years, up 3.5% in the year 86% of transactions over €2 million took place The best-performing prime arrondissement Macron’s pro-business to June 2018. Transaction volumes exceeded in the prime arrondissements last year (see has been the 3rd, where prices stand 16.6% 20th stance, along with France’s their 2011 peak at the end of 2017, as domestic chart, top right). But our analysis reveals above 2011 levels, increasing by 23.1% in the 11th improved economic and international buyers, as well as returning the relative underperformance of some of last five years. North of the Marais, this small performance, has helped 2nd French expats, competed for available stock. the best-established prime arrondissements but well-located district offers an extensive stimulate demand from According to the Chambre des Notaires over the longer term. range of independent retail outlets and 17th foreign nationals. Americans are especially de Paris, average prices across the city stand Prices in the 16th arrondissement grew by restaurants, and has risen in stature. 14th at €9,300 per sq m (as at Q2 2018). Prime 4.6% in the year to September 2018, but remain The 10th, meanwhile, is the best-performing active, attracted by the prices range between €12,000 and €20,000 2.4% below their 2011 high. Characterised by ‘mainstream arrondissement’. Prices here are 13th political environment and Arrondissement per sq m, with ultra prime prices starting at large properties just outside the core, the 16th now 21.5% above the former high of 2012, and 15th favourable exchange rate. €20,000 per sq m (see page two for prime was the district hardest hit during the market have increased by 21.8% in the last five years. Francophone Europeans 1st definitions). An average Paris property is now downturn. The 6th, 7th and 8th – among the With parallels to London’s King’s Cross area, – such as the Belgians and on the market for just 45 days (down from most expensive arrondissements – have also this regenerating district is home to the Saint- 12th Swiss – are also present, Prime arrondissements 59 in 2014), though momentum is beginning recorded lower levels of growth since their Martin Canal and two major railway stations 4th along with buyers from the Growth from 2011/12 peak to slow as buyer and seller expectations former highs, though all are now seeing price – Gare de l’Est and Gare du Nord – the latter Middle East. The Chinese, 8th Annual growth (Sep 17-Sep 18) have become misaligned in a rising market. rises (see bar chart, right). of which provides direct links to London. a huge tourist group, are 7th Mainstream arrondissements still to make their mark – Growth from 2011/12 peak perhaps because these 6th Annual growth (Sep 17-Sep 18) Prices are now rising all across Paris, with the buyers favour new builds, 3rd the best-performing prime arrondissement 16th of which there are very -5% 5% 15% 25% few (most prime Paris Price growth stock is 19th-century). Anecdotal evidence Source Savills World Research, MeilleursAgents.com suggests that French expats are also returning to Paris. French citizens Prime Paris and London compared The French capital is steadily rising who left for London and Luxury apartment, Brussels in the Hollande Key Prime Paris prices (indexed) Prime Paris transactions Champs-Élysées, Paris era are now investing in

Prime London prices (indexed) Prime London transactions Total transactions (four-quarter rolling total) 150 2,500 Parisian property, where they see value and 140 growth potential.

2,000 130 Prime Paris prices 120 exceed 2011 peak 2015 1,500 9.8% 110

100 Macron elected 1,000 Index (2007 = 100) 90 2016 9.2% 80 500 Prime transaction 70 Hollande elected volumes exceed 2011 peak 60 0 2017 14.3% 2011 2017 2012 2013 2015 2018 2016 2014 2010 2007 2008 2009

Notes Prime Paris prices: transactions over €1.8m across all of Paris. Prime London prices: Savills Prime London Index. Prime Paris transactions: transactions over €2m across all of Paris. Prime London transactions: transactions over £2m across all of London. Source Savills World Research Source Savills World Research, MeilleursAgents.com, Chambre des Notaires de Paris, Lonres using Notaires de Paris

savills.com/research 4 5

Savills_Paris_p04-05_v3R.indd 4 05/11/2018 14:55 Savills_Paris_p04-05_v3R.indd 5 05/11/2018 14:56 World city World city

A global icon Paris is attractive Paris in a Tech leads the way to business, talent and international visitors New infrastructure and funding make Paris increasingly attractive global context for tech investment, while Brexit may fuel fi nance job relocations Moving up the ranking of top-tier world cities, Paris Anticipated fi nance job relocations looks increasingly attractive thanks to tax reforms from London to Paris and its major rivals 6,000 Tourist hub Travellers Date of survey spent a record 17.1 million Spring 2018 A global ranking How has tax reform impacted the market? hotel nights in Paris in the Autumn 2017 Despite enjoying a strong international The wealth tax has been replaced by a new fi rst half of 2018. Visitors standing, the Paris residential market tax, L’impôt sur la Fortune Immobilière (IFI), spend, on average, twice remains mainly domestic. This is a key which applies to real-estate assets only. It 5,150 what they do in London. reason why prime residential prices are covers real estate held directly by individuals, 5,000 well below those of its global peers. The as well as shares in companies (regardless of city ranks 7th in our league table of top- legal status and localisation). The threshold tier global cities, having overtaken San remains unchanged at €1.3 million. All other Francisco in the past 12 months. Prime aspects of the former wealth tax (eg taxes on Station F prices on a square-metre basis stand 66% fi nancial assets) have been abolished. This campus, Paris below prime Hong Kong and 19% below has helped improve the attractiveness of the Prime London, in euro terms. French tax regime for wealthy individuals. 4,000

Paris is making a drive to position itself as Corporate HQs The Paris Prime league of top-tier global cities Prime prices in 2008 and 2018 an attractive destination for tech investment. region is home to more The government has set up an investment corporate bases than any other city in Europe. Key 2018 fund of $12 billion for tech start-ups and 2008 introduced a new tech visa, targeting skilled Worldwide, it ranks third by the same measure. €40,000 employees from outside the EU. By 2025, the tech industry is expected to account for 3,000 13% of total employment in the Paris region, according to Oxford Economics. €30,000 Tech employment in Paris has risen by an average of 2% per year over the past 10 years,

compared with 0.5% for total employment. Number nance of fi jobs 2,200 €20,000 Incubator and co-working spaces – such

as Station F (above), the world’s largest 2,000 start-up campus – are providing the physical 2,000 1,800 Price per square metre square per Price infrastructure to support growth. Olympics host In 2024, €10,000 Paris is also positioning itself to gain Paris will host the Olympic from jobs relocating from the UK as a result Games for the third time. of Brexit. The city was selected as the new This will be a catalyst for € - home for the European Banking Authority, infrastructure investment, and recently overtook Frankfurt as the top 1,470 especially in the north. Hong Tokyo London Singapore New Shanghai Paris San Moscow Dublin Dubai Madrid Kong York Francisco location for anticipated relocations of fi nance 1,000 jobs (see chart). Ease of access to London and a vibrant city environment compared with Frankfurt may be contributing factors. 612 250 200 150 407

0 Luxury retail Last year, Paris had the highest share

Paris of luxury store openings

Dublin in the world. Homegrown Frankfurt Unknown luxury groups LVMH and Amsterdam Source Savills World Research Source Reuters survey Hermès are world leaders.

savills.com/research 6 7

Savills_Paris_p06-07_EconomicStory_0.3.indd 6 05/11/2018 11:08 Savills_Paris_p06-07_EconomicStory_0.3.indd 7 05/11/2018 11:08 Prime residential market Prime residential market

Prime and ultra prime trends The latest market intelligence on price growth and residential values in Paris’s most desirable arrondissements – and their most sought-after streets

1st arrondissement 4th arrondissement 7th arrondissement Price growth 2.6%* Price growth 1.6%* Price growth 6.2%* Most prestigious streets Most prestigious streets Most prestigious streets Place Dauphine Quai de Béthune Avenue Émile Deschanel Rue de l’Amiral de Coligny Quai d’Orléans Rue du Bac Place de Valois Place des Vosges Quai Voltaire

Paris’s smallest district is Also known as Le Marais, this Home to many state institutions characterised by very low area’s highest prices range from and historic private mansions, transaction volumes. In the €15,000 to €30,000 per sq m for prices here have risen steadily – heart of the Right Bank, it property on Île Saint-Louis with especially in the Saint-Thomas- offers history, fashion and views over the Seine. There is d’Aquin district. Highest prices culture. Iconic addresses high demand for pieds-à-terre (between €20,000 and €30,000 include apartments with and prestigious apartments in per sq m) are commanded by views on the Le Palais Royal, 17th- or 18th-century mansions. properties with private gardens 16th Tuileries Gardens or Place and/or panoramic views. 8th Dauphine, and prices range between €15,000 and 5th arrondissement 2nd 1st €30,000 per sq m. Price growth 7.3%* 8th arrondissement Most prestigious streets Price growth 4.8%* 3rd Quai de la Tournelle Most prestigious streets 2nd arrondissement Place du Panthéon Avenue Montaigne Price growth 1.2%* Rue Laromiguière Avenue George V Most prestigious streets Rue du Faubourg Saint-Honoré 7th Rue Volney French families are attracted by Rue des Capucines high-quality schools here, but A district of contrasts – the most 4th Rue Danielle Casanova family apartments are in short luxurious homes in the south 6th supply. Prices grew by 7.3% in and businesses and family homes This small arrondissement the year to September 2018 – in the north. Inside the ‘Golden is home to La Bourse (the outperforming the city average. Triangle’ between the Champs- former Paris stock exchange) Élysées, Avenue Montaigne and 5th and numerous bank HQs. It is Avenue George V, prices average an area undergoing change, 6th arrondissement €15,000 to €30,000 per sq m. attracting entrepreneurs and Price growth 3.6%* start-ups. Prices stand 13.6% Most prestigious streets above their 2011 peak. Rue Guynemer 16th arrondissement Rue de Seine Price growth 4.6%* Rue Bonaparte Most prestigious streets 3rd arrondissement Avenue Foch Price growth 6.3%* Still the highest-value district Avenue Georges Mandel Key Price per square metre Most prestigious streets in Paris, the 6th arrondissement Avenue du Président Wilson €7,800 and under €7,801-€8,300 Rue des Quatre-Fils encompasses both the Jardin Place des Etats-Unis €8,301-€8,800 Rue du Parc Royal du Luxembourg and the Saint- €8,801-€9,100 Rue Elzévir Germain-des-Prés quarter. It Paris’s largest district is popular €9,101-€9,400 is emblematic of ‘l’esprit Rive with expats and locals, thanks to €9,401-€9,700 Also known as the Haut Marais, gauche’ (the spirit of the South its beautiful buildings and good €9,701-€10,000 this district has seen prices rise Bank) with trendy boutiques, schools. The north is defined by €10,001-€10,400 faster than in any other prime antique shops and plenty of prime and ultra-prime homes €10,401-€10,900 area – 22.6% in the past five cafés and bistros. It is a highly on broad avenues, with views of €10,901-€11,600 years. Independent shops and sought-after location for the Eiffel Tower and the Arc de €11,601-€12,700 a vibrant restaurant scene have pieds-à-terre in the historic Triomphe. Prices here average €12,701+ supported the district’s rise. heart of the city. €12,000 to €18,000 per sq m. In the south, values are much lower. Map source MeilleursAgents.com Note *Price growth, year to September 2018

8 9

Savills_Paris_p08-9_Paris_areas_v3R.indd 8 05/11/2018 14:56 Savills_Paris_p08-9_Paris_areas_v3R.indd 9 05/11/2018 14:56 Outlook

13%

By 2025, the tech industry is expected to account for 13% of the total employment of the Paris region

La Défense financial district

Outlook for the Paris market Expansion and infrastructure are key to the city’s future growth Savills Research We’re a dedicated team with an unrivalled reputation for producing well-informed We anticipate continued Major infrastructure The European Central London looks to remain and accurate analysis, research and commentary across all sectors of global property growth in prime Paris projects, such as Grand Bank is not anticipated to Europe’s financial capital prices, but at a slower rate Paris and the Olympic increase interest rates until in the wake of Brexit, but as the ‘bounce back’ Games, will support growth the autumn of 2019. Any Paris is set be the biggest Research Global Residential ends. We also expect the of outer Paris and the rises in the near term beneficiary of any job Paul Tostevin Anh Nguyen Hugo Thistlethwayte geography of prime Paris Île-de-France residential are likely to be small and relocations. Paris’s Associate Director Analyst Head of International to expand as demand markets. There is specific will mainly impact the vibrancy, relative scale and World Research World Research +44 (0)20 7409 8876 outweighs limited stock growth potential around mainstream markets. ease of access to London +44 (0)20 7016 3883 +44 (0)20 7877 4541 hthistlethwayte available in this land- new and expanded stations. gives it an edge over its [email protected] [email protected] @savills.com constrained city. other European rivals.

Savills France Agence Varenne MeilleursAgents Will Woodhead Catherine Erith Hugues de La Morandière Gabriel Malassis Thomas Lefèvre CEO Residential Valuation Co-founder Consultant Directeur Scientifique +33 (0)1 44 51 73 21 +33 (0)1 44 51 94 35 +33 (0)1 45 55 79 20 +33 (0)1 45 55 79 20 +33 (0)1 43 20 58 62 [email protected] [email protected] hdelamorandiere@ gmalassis@ tlefebvre@ agencevarenne.fr agencevarenne.fr meilleursagents.com

Savills plc is a global real estate services provider listed on the London Stock Exchange. We have an international network of more than 600 offices and associates throughout the Americas, UK, Europe, Asia-Pacific, Africa and the Middle East, offering a broad range of specialist advisory, management and transactional services to clients all over the world. This report is for general informative purposes only. It may not be published, reproduced or quoted, in part or in whole, nor may it be used as a basis for any contract, prospectus, agreement or other document without prior consent. While every effort has been made to ensure its accuracy, Savills accepts no liability whatsoever for any direct or consequential loss arising from its use. The content is strictly copyright and reproduction of the whole or part of it in any form is prohibited without written permission from Savills Research.

10

Savills_Paris_p10-11_Outlook_contacts_v3R.indd 10 05/11/2018 14:57 Savills_Paris_p10-11_Outlook_contacts_v3R.indd 11 05/11/2018 14:57 33 Margaret Street London W1G 0JD +44 (0)20 7499 8644

Savills_Paris_p01_coverv_2.0.indd 1 05/11/2018 11:04