The Sexiness of Paris Property Investment
Standing in the Rain at the Htel de Ville Talking About Property Prices in Paris
French Property Insider
Thursday, August 26, 2004
Bonjour French Property Insider Subscriber,
Yesterday afternoon I consulted with a client who has been debating whether he should invest in a hassle-free Leaseback property or an apartment in Paris.
My first question: “Is it purely for investment or is there ‘heart’ involved in the purchase?” After two hours of looking at all the financial angles and exploring the emotional aspects, he concluded that if he could afford it, buying both would be just perfect.
The Leaseback is a hassle-free way of guaranteeing a return on your investment, even if a small one, but lacks the heart of owning your own pied–terre in Paris or stone farmhouse in France. With a good rental apartment, you can earn more in both rental returns and appreciation, but there is risk and hassle managing the property. The big advantages (we decided to call them “sexy” advantages) is the ability to visit and stay in the property as often as you like and have a place to retire to. Leasebacks aren’t meant to satisfy those desires.
After our meeting I headed to the celebrations of the 60th Anniversary of the Liberation of Paris at the Parvis de l’Htel de Ville. I was with a friend (and past client) whom we helped get the loan on her 53 square meter apartment in the 5th, with a perfect view of Notre Dame. As we were standing in the rain observing the festivities, we began to speak with our neighboring Parisians. It was a most fascinating affair — discussing politics and real estate with total strangers who had no hesitation in expressing their opinions, politically correct or not, while in the midst of a tight crowd all hoping to get a glimpse of Jacques Chirac or Bertrand Delano.
One woman’s pet peeve was clearly the continual rise of property prices in the city. She feels it is pushing out the average, middle-class Parisian and it is unjust that ordinary citizens can’t afford to enjoy living in their own city.
I asked her, “Do you own an apartment here? Isn’t that good for you, that the value should be increasing?” She agreed for herself that might be fine, but she took a more egalitarian viewpoint that it should be good for all. I’ve discovered this is a very French way of looking at life.
In this issue, we report on the statistics issued by the Chambre de Notaires de Paris for the first quarter 2004, showing continual increases in sales and prices. Egalitarian or not, I’m not unhappy! I purchased my apartment four years ago for approximately 3,150 euros per square meter. Today, it is worth 6,800 euros per meter (2.15 times!). If you factor in the rate of exchange from the time I purchased it till now, with a weak dollar, it has increased in value more than 3.18 times based on U.S. dollars!
So, while I enjoy the French egalitarian point of view, as an investment, it’s tough to deny that owning property in the City of Light can make you richer…but the best part is it makes you richer in many more ways than monetarily.
That’s the “sexy” part.
Editor, French Property Insider
Email: [email protected]
P.S. If you haven’t yet registered for the Living and Investing in France Conference, don’t delay — there are still a few seats left. And if you’re in the DC area, but not attending the conference, don’t miss an opportunity to meet us at one of the optional activities open to the public! Visit http://www.adrianleeds.com/parlerparis/liveinfrance/LIF_DC/LIF_DC_optional.html
Volume II, Issue 35, August 26, 2004
In this issue:
* The “Paris Scavenger” Gets into Politics and Entertainment
* The Never-Ending Rise in Paris Property Prices
* Discover the Best Parts of Paris to Make the Best Buys
* Don’t Be Duped — Statistics Not the Whole Picture
* Three Days in D.C. Will Enable You to Live in France
* Currency Exchange Update
* Hot Property: The Historic Marais and Place des Vosges
* Property For Sale: The Center of Paris
* Classified Advertising
FPI Subscribers: To read the issue in its entirety go to
To access this password protected page: username: fpiuser and the password: paris1802.
THE PARIS SCAVENGER, EPISODE FIVE:
SCAVENGING THE PRIME MINISTER’S PLACE WITH CATHERINE DENEUVE IN MIND
By Porter Scott
After spending several hours hovering over my computer, I just went out for a late night walk on the streets of Paris, honest. It was a lovely mid-August evening on some of the most elegant and exclusive streets of Old Paris. I was simply t
aking a breather. I had no intention of reverting to my disgustingly dirty Parisian Scavenger mode. After all, all of France is on vacation at this time of year. Even I have to take a break from time to time.
I have lived in France long enough now to adapt to the traditional seasonal rhythm — that is, to go with the flow of French life. Besides, all of the major renovation projects that kicked off in early July are now well on their way to completion. You must keep in mind that it is only during the early phases of renovation projects that the antique building materials and other encumbrances (like broken antique furniture and ancient attic inventory) are thrown out on the streets or into dumpsters. Like we say down South, “The pickin’s are slim” towards the end of the summer.
As I strolled down the lovely old streets, down the rue de la Chaise, then up the rue de Grenelle, then down the rue du Dragon, I savored the distinctive architectural details of so many venerable Parisian buildings: the 17th and 18th-century facades, the magnificent entrance doors, the elaborate doorknobs, and on and on. Just short of salivating, I had to reign in my overpowering acquisitive instincts in order to simply admire architecture that is not going to be dismantled anytime soon. Besides, maintaining my dignity and integrity requires me to draw distinct lines between legitimate scavenging and coveting someone else’s property.
I shall now endeavor to qualify man’s instinctive desire to acquire in the light of French socialism. Ever since the age of enlightenment, when the great thinking of French intellectuals led directly to the French Revolution, a unique brand of socialism has taken root in direct response to the injustices of the past. Modern day French socialism is designed to temper the acquisitive nature of man and prevent the rise of robber barons, capitalistic cardinals, domineering dukes, and any other form of economic and social inequity.
In response to this French way of thinking, I will simply say you should never underestimate the ingenuity of those who desire to acquire and to build an estate. In my specific case, scavenging has proved to be a way to improve my lot in life (going from a lowly American student to a distinguished property owner). I have added to my estate without being taxed on the increase in my overall net worth by scavenging…after all, how can you determine the value of things that have been thrown out on the streets? (I will admit to having paid for a few apartments in Paris, here and there).All of this brings me to the foot of the former Socialist Prime Minister Lionel j2999pin’s private residence, which happens to be in a building on the street where I have one of my apartments.
As I was returning from my late night stroll to go to bed, I spied some large boxes placed against the wall. Since the boxes were clean (no dog urine) and appeared to have been placed there very recently, I peeked inside to see what was there: books — lots of books — leather bound books — classics by Victor Hugo, Molire and Racine — books on philosophy and books on mathematics as well as books on how to become a judge (these guys are cultured!). In short, I had stumbled upon someone’s library being discarded for who knows what reason — maybe the prime minister was fed up with it all? Maybe someone was just too rich and was having to comply with the egalitarian principals of the reigning Socialist ideology (in the building at least) by throwing out all that surpassed his quota of books.
Whatever the reason, an overabundance of wealth is certainly the main culprit. I could not resist the literary temptation, so I proceeded to plow through the boxes of books, loading up my car with everything that was worth saving. This was about as clean and intellectually enlightening a scavenging operation as can be imagined — no dirt on my hands and the hope of improving my mind! This was highbrow scavenging at its most prominent and I felt privileged to be able to build my library at no cost!
If you like this story, just wait until I tell you about Catherine Deneuve’s bronze swan bathroom faucet I scavenged out from under her pretty nose!:
You may remember Alain di Tuoro, the Italian origin fireplace specialist who rebuilt the International Living 18th-century stone mantle on the rue de la Huchette? Well, he works regularly for the actress Catherine Deneuve. Catherine had told him she wanted a bronze swan faucet for her bathroom. Alain dutifully found her one in his used goods network and when he presented it to her, she turned up her nose at it saying she did not think that it was the right one because the bronze was too gilded looking.
Alain, in an act of generosity, asked me if I wanted it because Catherine did not. Do you think I hesitated for one instant? It is a top of the line bronze faucet that most likely cost more than some people’s entire bathroom. A few weeks later, Alain told me that Catherine had changed her mind about the faucet. He told her it was too late. I just laughed. “Tough beans for La Belle!,” I said. As a general rule of thumb, once something has disappeared in the scavenging network, it does not come back. If Catherine wants her faucet back, she is going to have to come to my place to get it! I can just see her now, at my door, politely inquiring about the swan faucet: “Catherine, I’m so sorry,” I’ll say, “but the swan faucet has already been installed. I would be delighted to offer you a lovely book from Lionel j2999pin’s library though!”
Editor’s Note: Porter Scott is IL’s Property Rentals Manager. For more information on how to get the best return on your investment of a rental property in Paris, rent your Paris apartment or renovate and maintain it, do not hesitate to contact Porter Scott at [email protected].
UP UP AN AWAY… PARIS PRICES ON A CONTINUAL RISE
By Adrian Leeds
In the early part of 2004, property sales continued to rise along with Paris property prices. Sales rose a remarkable 5.4% in spite of the history of the past three years where sales in the first quarter dropped as much as 8.5% (2001). Prices rose yet again, up to an average of 4,139 euros per square meter in Paris, an increase of 3.1% from 4th quarter 2003 and 12.3% for the year from 1st quarter 2003 to 1st quarter 2004.
There are three factors contributing to the continual increases:
1. A foreseeable rise in mortgage rates…so now’s a good time to lock in an interest rate.
2. An uncertain economic future which encourages more savings and investments a
nd sees that real estate is a worthwhile investment.
3. Changes in retirement pensions, a subject often written about in the press, encouraging future inheritance by trading rent payments for mortgage payments.
The reports indicate that activity in the market will remain constant throughout the first half of 2004, but there is caution in predicting beyond that. If interest rates rise, sales and prices could take a down turn.
THE BIG PICTURE: PROPERTY PRICES IN PARIS FOR FIRST QUARTER 2004
By Adrian Leeds
Sales of secondary market apartments in Paris rose 11.4% for the first quarter of 2004. Of all the sales in the Ile de France, 48% were in Paris proper.
Sales of primary market apartments (new construction) rose as much as 22.5% in Paris, but don’t be fooled — it only represents a little more than 10% of the total real estate market due to the lack of available land on which to build.
Prices rose in Paris in all but one arrondissement — the 7th where sales are slack. The average price per square meter in Paris was reported at 4,139 euros. The most expensive arrondissement was still the 6th at 6,446 euros/m (+7.1%) followed by the 7th at 6,062 euros/m. In contrast, the least expensive arrondissement was the 19th at 2,908 euros/m (+13.3%), preceded for the first time by the 18th at 3,261 euros/m (+15.2%), eclipsing the 20th at 3,332 euros/m (+19.8%) normally in last place.
The arrondissements which rose in value from most to least were:
12th + 20.4% (4,050 euros/m)
20th + 19.8% (3,332 euros/m)
11th + 18.4% (3,822 euros/m)
1st + 15.3% (5,301 euros/m)
18th + 15.2% (3,261 euros/m)
3rd + 14.5% (4,852 euros/m)
4th + 14.4% (5,863 euros/m)
2nd + 14.1% (4,539 euros/m)
13th + 13.9% (3,954 euros/m)
9th + 13.3% (4,117 euros/m)
19th + 13.3% (2,908 euros/m)
14th + 13.0% (4,469 euros/m)
5th + 12.8% (5,687 euros/m)
17th + 12.6% (4,030 euros/m)
15th + 11.6% (4,469 euros/m)
10th + 11.3% (3,347 euros/m)
8th + 8.3% (5,403 euros/m)
16th + 7.9% (5,012 euros/m)
6th + 7.1% (6,446 euros/m)
7th + 0.0% (6,062 euros/m)
The arrondissements price per square meter in order of most expensive to least were:
19th 2,908 euros/m (+ 13.3%)
18th 3,261 euros/m (+ 15.2%)
20th 3,332 euros/m (+ 19.8%)
10th 3,347 euros/m (+ 11.3%)
11th 3,822 euros/m (+ 18.4%)
13th 3,954 euros/m (+ 13.9%)
17th 4,030 euros/m (+ 12.6%)
12th 4,050 euros/m (+ 20.4%)
9th 4,117 euros/m (+ 13.3%)
15th 4,469 euros/m (+ 11.6%)
14th 4,469 euros/m (+ 13.0%)
2nd 4,539 euros/m (+ 14.1%)
3rd 4,852 euros/m (+ 14.5%); 16th 5,012 euros/m (+ 7.9%); 1st 5,301 euros/m (+ 15.3%)
8th 5,403 euros/m (+ 8.3%); 5th 5,687 euros/m (+ 12.8%); 4th 5,863 euros/m (+ 14.4%)
7th 6,062 euros/m (+ 0.0%); 6th 6,446 euros/m (+ 7.1%)
But, don’t look at just the statistics and conclude that because the 12th is appreciating more than the others, that it’s the best part of Paris to hang your hat. By the same token, you can’t assume it’s no-risk to own in the most expensive parts of town. It’s more important to keep track of the trends and watch what the future holds in store for each arrondissement.
My favorite picks for live-ability, rent-ability and invest-ability: 2nd, 3rd, 4th! (Notice how they fall more in the center on both charts — for appreciation and average price per meter?)
For complete information and reporting, visit http://www.paris.notaires.fr.
A FEW NOTES ABOUT THE LATEST STATISTICS
By Adrian Leeds
The notaires collect all the data above at their own cost. The statistics are made available to the public free of charge. For Paris property prices, official statistics are published at http://www.paris.notaires.fr. For the latest statistics, once on the site, click on “march immobilier,” then “Les prix.” For property prices in France but outside Ile de France, the official statistics are published at http://www.immoprix.com.
When reading the data, keep in mind the average prices per square meter are generally 30% to 50% lower than the true current market prices. If you take the reported statistics as conclusive, you’ll be shocked when the apartments you visit are considerably higher per square meter price than what is reported! The reasons for this are:
1. Lag time. Statistics for 2004 were recently reported, now six months earlier than today’s market. The signing of the final Acte de Vente traditionally takes two to three months to complete, therefore add another delay, meaning the properties were purchased nine months earlier than today’s market.
2. Asking price is normally 5 to 15% higher than selling price.
3. Reported selling prices often do not include cash transactions between the buyer and seller, although illegal, it’s still done (reduces the notaire fees).
4. Reported selling prices often do not include the value of unattached furnishings such as kitchen cabinets and appliances, built in closets, etc. (reduces the notaire fees).
5. Reported selling prices often do not include agency commissions, when paid in cash (reduces the notaire fees).
6. Properties in poor condition bring the averages down and may be unlikely candidates in your search for the perfect pied–terre.
Mark your calendar for the exciting upcoming conferences sponsored by the Paris Office!
Living and Investing in France
September 10 – 12, 2004
Dinner and Virtual Tour of Paris with Thirza Vallois
Walking Tour of French-Speaking DC
LIF_DC Walking Tour
Single in the City of Light
(And Loving It!) with Adrian Leeds and Ruth Mastron The Westin Grand – Conference Site
LIF_DC Single in the City