The Macron Factor

According to a recent article in the Financial Times, and numerous other publications, just the sheer election of Emmanuel Macron is waking up the Paris property market. It is called “The Macron Factor.” Prices are on the rise once again and in just three months of the second quarter, prices are up nine per cent compared to the year before.

Domestic buyers are the driving force now at the top end of the market because these were properties most hit by the declines, making these properties ripe for quick consumption at bargain prices. Drops in prices were as much as €17,000 per square meter at their top in the posh 16th arrondissement to just €12,000 a year or so ago.

The 6th and 7th arrondissements are more favored by international buyers, those prime locations on the Left Bank sparked by the history of the famous writers, philosophers and artists, also well-visited by the American market. Prices held in these areas, where other districts might have lost, making them less of a risk than most.

Macron has his appeal with Middle Eastern buyers, as well as with the Chinese. This international market swoons to a view of the Eiffel Tower or the Seine with easy access to shopping along the Champs-Elysées. Big bucks abound and properties in the multi-million euro range are of major interest.

Macron’s promise to reform the wealth tax laws are having much to do with this. The tax currently applies to all worldwide taxable wealth over €1.3 million, but he’s pledged to limit it to property, excluding other assets, such as savings, investments, etc., which he claims would contribute to France’s economy. Capitalists know that overtaxing the rich just sends them to greener pastures, which is exactly what happened under Hollande’s administration, hence the devaluation of luxury properties that were abandoned. You may recall when French actor Gérard Depardieu fled to Russia to escape the high taxes of his own native country.

Paris is still a bargain compared to cities like London, where prime locations can yield as much as €30,000 per square meter, where as in Paris, just over €17,000. One of these days, the city will catch up, especially now that Paris has won the 2024 Olympic bid. Big increases in property values are sure to happen if Paris follows the same history as other Olympic Games cities.

Macron is currently focusing on the labor reforms he promised and is battling for, but I suspect we’ll see some news from him regarding reforms that will further spark the French property market. Personally, I’d like to see reforms that encourage investment in secondary properties, so that the struggling countryside will become attractive once again, as well as attracting foreign investors who bring money in from the outside, further boosting the economy in France. He needs to step in and balance the current rental laws in Paris and other major cities so that landlords aren’t punished for having invested in real estate and where short-term accommodations are crucial to an international visitor/temporary resident.

The Macron Factor is also his rise on the global scene from fifth to first place as having the most “Soft Power” influence, all done in the course of one year. The rich are behind him and we will see this influence not only in property values, but in every aspect of the French economy as money starts to pour into France from the outside. The media simply doesn’t stop talking about it.

My expectations are low, but my hopes are high for such positive outcomes from a president who is more financially and economically savvy than his predecessors and who is making an effort to balance the plusses and minuses within a socialist democracy such as France. We’re watching closely and you should be, too. Now is a very ripe time to be plunking some of your own cash in France!

A bientôt,

Adrian Leeds
Adrian Leeds Group

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P.S. A new House Hunters International episode will soon air — one that was filmed here in Paris this past May with our client, Krista Bender, and her friend, Stanley, titled “Champagne Problems in Paris” (Season 111, Episode 11). (I LOVE that it’s an “11” episode — if you know about the power of the Master Number 11!?) The new episode airs in about a month’s time: Monday, October 23rd at 10:30 p.m. EST and 9:30 p.m. CST, then in the early morning of Tuesday, October 24th at 1:30 a.m. EST and 12:30 a.m. CST. I’ll be watching from Paris on HGTV’s live videocast. (See watch.hgtv.com/faq.html to learn more on how to do this.)