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French Property Insider by Adrian Leeds - Paris, France


French Property Insider

Volume XVII, Issue 41
Thursday, October 17, 2019 • Paris, France

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"From Vancouver to the Vineyards of Epernay, France"
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A wine connoisseur (Christine Campbell) moves with her family (Dave Small and their daughter, McKenzie) to Epernay, France, in the heart of the Champagne region. They consider the options between the sprawling vineyard countryside and the bustling town center, but there's no easy answer as they decide what's best for their 8-year-old daughter.

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Bonjour French Property Insider Subscriber,


The press is having a field day with the word "bubble." When it comes to Paris and other major metropolitan areas across the globe, certain cities risk the bursting of the "bubble," Paris being among them. Have fun. Read just a few or read them all:

"Negative interest rates are inflating real estate prices. These cities are at risk of a bubble

"How can we explain the sharp increase in residential property prices per m² in Paris? Are we at the height of a Parisian property bubble?"

"The Paris & France Housing Bubble"

"UBS: These 7 cities are most at risk of a real-estate bubble"

"UBS Global Real Estate Bubble Index 2019
Find out the latest property prices and cost of living in global cities."
Download the pdf report here.

UBS global real estate bubble index 2019UBS global real estate bubble index 2019

The question I ask myself is: Is this true?

It's tough to argue with the economists, but that's what I'm about to do. They are dealing with facts, but their facts only talk about the past, not what lies in the city's future. I'm not the only one who doesn't share the same view about their negative predictions. Other agencies in Paris seem to agree with my own point of view...that the economists aren't considering Paris' bigger picture.

I've personally watched Paris property prices mount, from the time I bought my own apartment in mid 2000 when it was still almost at the price bottom, until now when it's worth five times what I paid for it. My timing was perfect, because the increase of value enabled me to take out four subsequent equity release loans to buy other properties, as each increased in value over the years. That's called "leveraging." When the short-term rental market was fluid, the rents from three of those properties covered the mortgages of all five! Graph

In 2008 when the U.S. sub-prime mortgage crisis hit property Stateside like a ton of bricks, Paris was barely moved. French property on the average fell a few points, but Paris remained stable. We had a whole year without a single purchase ourselves, because our American clients had lost their savings or investments in the crash, rendering them helpless to make a purchase in France. The rate of exchange at the time was one euro to about $1.40, adding insult to injury for the American buyer.

Rentals were ripe at the time and those who purchased prior to 2008 and renting their properties short-term were laughing all the way to the proverbial bank — this was before the rental regulations kicked in about 2014 when newly elected mayor, Anne Hidalgo, took on the housing shortage project with a vengeance, enforcing the laws that prevented secondary properties from being legally rented for less than one year. (See Erin Zaleski's article "Paris for Parisians! City Hall Rousts Out Airbnb Clients") 

The economists predicted the recovery would be slow after 2008, but they were wrong. It bounced back much more quickly than anyone predicted. Low mortgage rates have been one of the important factors to a healthy volume of sales, everyone agrees, but there is more to the story than meets the eye. Things that I believe prevent the bubble from happening in Paris as they might elsewhere are these few key facts:

A Vendre - For Rent

Rent control increases rents

Schengen Visa Statistics 2018

Zaleski France - Airbnb

* Closing costs are high (7 to 7.5 percent) discouraging the "flipping" of properties to make a fast buck.

* Sellers are morally obligated to accept asking price — this means that there are no bidding wars that inflate the prices fast.

* Statistics are gathered and reported regularly, meaning that the value of a property is easily determined, leaving little to question or over which to bargain.

* Paris is a finite market. City zoning laws prevent Paris from growing up or out. My 17th-century apartment building will always hold it's value because it is irreplaceable, as is much of the city. If districts 1 to 4 go pedestrian, you can bet those districts will become even more valuable than they are now.

* The suburbs are much less expensive than Paris, but gaining ground in price, too. As Paris prices mount, so do the suburbs, especially as transportation connecting them with the city center and with each other is improving all the time. The volume of sales is up, diminishing the stock, contributing to the price inflation. (Basic laws of supply and demand.)

* Brexit is affecting sales as French nationals move back from the U.K. As the financial market moves from the U.K. to France, so are their workers and their families, too. The trend is increasing as firms are relocating.

* Tourism to Paris is up, with 24 million hotel arrivals in 2018, a record high. You might not think tourists contribute to the housing demand, but they need accommodations — whether in a hotel or an apartment. And they fall in love with the city to the point of wanting to relocate.

* That leads me to immigration — according to the government, almost 256,000 visas were issued to foreigners in 2018, including just over 83,000 for students, which set a new record high. Refugees and asylum seekers make up a huge portion of that, but immigration by Americans is up ever since Donald Trump was elected president. The consulates in the U.S. became so overwhelmed by the number of visa applications that they outsourced the job to VFS Global

* Then, there are the Paris Olympic Games scheduled for 2024. This has investors and developers seeing euro signs in their eyes adding to the demand on property. Prices will go up as a result, but when the games are over, will they stay up or adjust for the inflation? I believe one can expect a bit of an adjustment, but much depends on how effective the city is in creating infrastructure that supports the growth. Areas that are better served by transport will definitely see growth and value, which in the case of Paris, means Saint-Denis and Val d’Oise, both which will become major transportation hubs.

* Last, but not least, are the rental laws which serve to have an opposite affect of their intention. The intent in reducing transient habitation in the city (short-term rentals) is to open the city to long-term full-time residents, free-up housing designed for tourists, and make housing more affordable. In addition, rent control was put in place as a way of reducing the cost of housing for those full-time residents. Also, keep in mind that the laws governing rentals favor the tenants over the landlords. That all sounds like a great idea, but it's counter productive and actually contributes to the housing shortage and increases rents.

Google it and in five minutes you'll learn why. Economists all agree that free trade is what keeps rents down and that rent control reduces the supply and quality of affordable housing. All of the controls the city has placed on the fluidity of the rental market reduces supply and contributes to the increased costs of housing.

I'm also waiting for the city officials to wake up to the reality that we live in a global society and in an international city where people have a variety of housing needs that don't fit into their pretty little boxes. People can now work virtually from anywhere in the world, and that's growing all the time. Transiency is the future. So, what is short-term? What is long-term?

If you come to Paris on the 90-day visa waiver program, you are not entitled to housing based on the current rental laws. So, where are you living? In a hotel for three months? Can you afford that? Are you not considered a resident if you stay less than one year? The only people who qualify for such housing must prove they are in the city for business or education (under the Elan laws). What if you just want to experience life in Paris for the time you can legally be in the country without a visa? Guess what? You're out of luck.

Then, even for long-term renters, there is the issue of getting landlord approval, once you've identified the property. Because the laws favor the tenant, the landlord must protect his interests by securing the rent payment. In most cases, this means the tenant must tie-up a year's worth of rent in an untouchable escrow account, or take out an insurance policy that protects the landlord (!). Who can afford these things? Certainly not the less rich for whom the regulations were intended!

I could write a tome about this gross negligence on the part of the backward thinking or unthinking politicians who dream up their own silly solutions, but I won't. The point is that no matter what the press says about the risk of a Paris property price bubble, I don't see it least not any time soon.

The bottom line: it's easier to buy than to rent, believe it or not. Since prices are still going up and we believe that trend will continue, then it's not too late to get into the market, especially given the favorable rate of exchange and low mortgage rates. Besides, why pay someone else's mortgage by renting?

A bientôt,

Adrian Leeds - in Nice, France Oct 2019

Adrian Leeds
Adrian Leeds Group


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25 rue Paulin Méry, Paris

One-bedroom, Newly Renovated, Fully Furnished
29.43 m2 (317 sq. ft.), Second Floor

Paris Apartment for sale - Le Diamant Bleu
This 30 square meter apartment (317 square feet), newly renovated and fully furnished by Interior Architect and Designer, Martine di Mattéo, is located on rue Paulin Méry in the quaint neighborhood of Les Buttes aux Cailles just steps from Place d’Italie.
Asking Price: €359,000
Reference: #148
See the apartment's page on our site for photos and more information.

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