A Window of Opportunity

Tuesday evening I am one of three professionals speaking at the “Residential Property Investing Seminar” sponsored by BNP Paribas Investment Partners. My topic is:

Outlook for the residential property market in Paris and the South of France

In preparation for the event, I took a serious look at how the price of property in Paris has changed for the last 20 years and what that means to the future. The future is one of those illusory things – something that actually doesn’t exist and never will come, but something for which we must plan and consider, particularly when making such a large and important investment as real estate.

Without ‘giving away the show’ I will tell you that Paris property did actually take a dip at one time – in 1998 when it reached a low at an average of 2,260€/m2. Today the per-square-meter average in the capital is 8,150€ — almost four times higher in the last 13 years. Lending rates were double in 1998 to what they are today, so borrowing power wasn’t as interesting. If your income was based in dollars, then you had a different kind of advantage – because the rate of exchange at the time was $1 = 0.91€. Today it’s 0.75€.

So, let’s take a property in Paris of 50 square meters. In 1998, you could have purchased it for 113,000€ or $124,175. That same property today is valued at 407,500€ or $543,333 – more than 4.3 times in dollar value. In 1998, rents (long term) were on the average 15€ per square meter per month, so the rent on this same 50 m2 apartment would yield a little more than 9,000€ per year. Today, at an average rental of 30€ per square meter per month, your rental yields would be 18,000€, or double.

As the future is illusory, hindsight is perfect vision. Don’t we all wish we had invested in French property at that time?

But, we didn’t…and it doesn’t matter. You have to start somewhere and take long-range goals to achieve the highest rewards.

With the change in the capital gains tax laws, there is a new and small window of opportunity for would-be investors. Owners of property longer than 15 years, but less than 30 years, are putting their properties on the market between now and February 1, 2012 when the laws take effect to take advantage of the tax benefit. This small flood of properties is bringing prices if not down, to at least a stable current level. Lending interest rates areexceptionally good – about 3%. The rate of exchange is lower than it’s been in 10 months.

If you’re considering jumping into the market, now is the time. I am mean NOW. Because the moment the future date of February 1 rollsaround, that window closes – and all those owners will be holding onto their properties another 15 years, reducing inventory and forcing prices us. And since we don’t know what the future will bring, interest rates and foreign exchange rates are pure guesswork.

If you want to learn more, attend the seminar Tuesday or contact us personally.

Note:

“Residential Property Investing Seminar” Tuesday, October 11, 2011 from 4 p.m. to 8 p.m.

Join Adrian Leeds and other property professionals at this free international event for investors wishing to learn more about France’s dynamic property market. Speakers include experienced, independent property investors from France and around the world. Come to network with key players in the property industry and keep up-to-date with changes in the market. The event will run from 4 p.m. to 8 p.m., followed by drinks nearby.

BNP ParibasInvestment Partners
Auditorium (level -1)
14 rue Bergère, 75009, Paris

For more information and to reserve your spot, contact: [email protected]

A bientôt,

Adrian Leeds
Editor, French Property Insider
Email: [email protected]

P.S. Investment in Nice and the Riviera is an alternative to consider, with prices about half of Paris and rental rates close to the same. If you are interested in learning more about the opportunities there, be sure to contact us: [email protected]