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) rolling (four-quarter transactions 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.