Airbnb Wins and Prices Rise

EU COURT SIDES WITH AIRBNB AGAINST FRANCE

I love it. The European Union court is taking Airbnb’s side of the argument with France. Charged with violating the France Hoguet Law, Airbnb, whose offices are located in Ireland, denies acting as a “real estate agency” and the EU court agrees. The Loi Hoguet requires that “individuals or legal entities, that on a regular basis deal with or assist in transactions involving real estate assets owned by others — relating for instance to the sale, purchase, or letting of said assets — must hold a license (‘carte professionnelle’).”

The EU court views the Airbnb WEB portal as a digital service provider free to operate across the European Union. The French hotel industry made the initial complaint, accusing Airbnb of acting as a real estate agency, but they’re not buying it and I’m thrilled that finally someone “gets it!”

It’s important to understand that Airbnb is simply an online platform that connects a landlord with a tenant. It’s that plain and that simple. They eliminated the middleman. It is not an agency and doesn’t represent either the landlord or the tenant. It only provides a central marketplace where information is shared. It’s brilliant. It works. In fact, it’s worked so well, that one no longer rents “an apartment or a house”…they rent “an Airbnb,” having changed the language forever, like “Kleenex” is to tissues, Airbnb is to vacation rentals.

I admit, Airbnb gave us a real run for our money when we were representing short-term vacation rental apartments in Paris. The strength of the concept that enabled just about any landlord to post his property online and any would-be renter find his perfect rental, has been the demise of many a rental agency in Paris (and all over the globe), while Paris became its second largest market after the U.S. with a listing base of about 65,000 apartments (this is at least, what they claim).

Sure, cities across the world are battling their success — because Airbnb’s easy-to-rent platform threatens neighborhoods into becoming “tourist-only zones.” Regulations of all kinds have popped up to try to curb what I think is an inevitable change in our lifestyles, but (in my opinion) they’ve gone about it in the wrong way and aren’t thinking about the future.

The world is a more transient place. People are more transient as we can openly communicate and work from just about anywhere, as long as we have an Internet connection and transportation. This is not going to go away and will certainly become even more prevalent. As we have the ability to live anywhere in the world, not having to show up at an office five days a week, we will have the need for short-term accommodations. While buildings, neighborhoods, cities and countries are trying to fight it, they ultimately will lose the battle…so why not try to take advantage of it while managing it to our advantage and with an eye on the future rather than suppressing it?

Kudos to the EU courts and to France I say, take a lesson and get smart!

PRICES UP IN PARIS AND ILE-DE-FRANCE! ARE WE SURPRISED?

Real estate in the Paris region as of February 2019 continues with strong sales volumes and price increases that could become a little stronger by the summer!

According to the Notaries of Greater Paris, 41,410 resale homes were sold in Ile-de-France from December 2018 to February 2019, an increase of 4% compared to the same period last year. The increase in sales volume was slightly stronger for houses (+7%) than for apartments (+3%). The volume of housing sales recorded during the period is 19% higher than the average over the last 10 years.

The activity was particularly good in February 2019. This dynamism should continue and according to the first indicators, activity will remain as well in March. The Paris market, constrained by the lack of products and very high prices, is again slightly behind. Sales are down 4% when we compare December 2018-February 2019 for the same period a year ago.

Activity is generally stable in the Petite Couronne for apartments and up 4% for houses. The Grande Couronne, where prices are more moderate and supply more developed, shows new increases for both apartments (+15%) and houses (+8%).

In Ile-de-France, from February 2018 to February 2019, prices for resale dwellings increased by 4.4% (4.7% for apartments and 3.8% for houses). Annual price increases remain more contained in the Grande Couronne (0.4% for apartments and 2.8% for houses) than in the Petite Couronne (respectively 4.4% and 5.9%).

The price of resale apartments reached €9,670 per m² in Paris in February 2019, up 1.3% in 3 months and 6.4% in one year. According to prices from pre-sale contracts, the price should reach €9,920 per m² in June 2019 in the Capital, with an annual growth rate of prices that would remain around 6.5%.

In the Petite Couronne and still according to our leading indicators on pre-sale contracts, the rise in prices would become a little more sustained and approach that which has been observed in the Capital city. The annual rise in prices will be 5.3% for apartments (up to 6% in Seine-Saint-Denis), and 5% for houses.

In the Grande Couronne, annual growth in apartment prices will remain limited to 1.2% in one year in June. It will be a little faster (3.4%) for houses.

FYI: STUDIOS COST MORE…USUALLY

Generally, buying a studio is more expensive per square meter than that of a larger apartment. This extra cost is often explained by the presence of a bathroom and a kitchen whose cost is distributed over a smaller number of square meters than when buying a larger dwelling. The demand of investors for this type of property with smaller budgets is another possible explanation for this additional cost. Paris is an exception, where large apartments of 5 rooms and more are found at the highest per square meter price (€9,960/m2), followed by 4 rooms (€9,760/m2). These two types of apartments are more expensive than studios (€9,600/m²).  

DOWNLOAD THE REAL ESTATE PRESS RELEASE OF APRIL 25, 2019. LINK TO PDF HERE

SEE THE PRESS RELEASE DATED APRIL 25, 2019 READING FORMAT.

A bientôt,

Adrian Leeds
Adrian Leeds Group

 

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P.S. Have you made your plans for May’s Après Midi? You won’t want to miss author Timothy Jay Smith Tuesday, May 14. Details are on our website. See you there!