As Solid An Investment As The Stones From Which It Was Built

Not EVERYONE wants to live here…even I can concede that fact!…but more and more we encounter people who dream of owning that “petit pied-à-terre” for the few times per year they want to enjoy the City of Light — something they can call their own and feel like they’re truly residents, even if for a short time.

If you’ve got plenty of money and appreciation is all you’re seeking, then ownership is pretty simple: You search, you find, you buy, you furnish, you enjoy. A few years down the road, your property will be worth much more, even in the least appreciating parts of town. The average evolution for one year was reported at 12.4%, some arrondissements as high as 17.7% and some as low as 7.8%. One client we had bought an apartment not long ago for 350,000 Euro that had been purchased 30 years earlier for 18,000 Euro — an average appreciation of 11% per year! Not bad while doing nothing but enjoying your property.

In yesterday’s French Property Insider, Jocelyn Carnegie compared the rise in prices of apartments over the last 16 years and measured it against the senior French securities index, the CAC40: “Whilst all markets are to some extent cyclical, more or less according to the vagaries of fashion, economic health or illness, demographics and geopolitics, the property curve shows a steadfast solidity beside the harum-scarum world of stocks. Remarkable in the fact that it has wavered little in the 16-year life span of this chart, these results may not show the startling results of the CAC40 in 2000, nor present shorting opportunities but they do show that real estate in France has been as solid an investment as the stones from which it was built.”

But, what if you want to profit from the property while you’re enjoying it? We’ve learned that most Francophiles who are thinking about owning an apartment in Paris see the advantages of renting it while they’re not making use of it.

Paris is a city that has a year-round rental season. With the exception of a few short down periods (August being the worst!), you can virtually keep an apartment in Paris rented much more than 50% of the year — in fact, an 80% occupancy rate is not unusual.
To maximize the rental year, an owner can choose

to stay in the apartment during the low rental periods leaving the most desirable periods open for tenants.

Some parts of Paris have more rental appeal than others. The most risk-free neighborhoods are: Ile-Saint-Louis, Saint-Germain-des-Prés (6th) and Le Marais (4th slightly better than the 3rd). It is no surprise that these are some of the most expensive property locations, too. Arrondissements 1 through 8 in the center in Paris can all attract renters, but you can’t expect the same returns as the other three previously mentioned.

There are some types of apartments, too, that rent better than others. There is such a shortage of two bedroom apartments, particularly those with two baths, that anything fitting that description stays rented virtually 100%. These apartments are harder to find and of course, much more expensive.

Apartments that are very well furnished (luxury) rent better and for higher rental rates. The look and quality of Ikea-style furnishings reduce the ability to rent to a high caliber tenant and regardless of location, the rates achieved will be much lower. Plus, because low quality furnishings don’t endure the test of constant usage, replacing things will be costly and ultimately more expensive.

There are many professional rental agencies to assist you in booking tenants, maintaining the property as well as renovating it. Each of them operates a little differently and offer a variety of services at different fees. We highly recommend that you shop around. The International Living Paris Office offers these services to apartment owners that fit a certain criteria (certain locations and high standards).

International Living owns two apartments in Paris we rent to our readers. The first one we purchased in April 2002 on rue Mazarine in the 6th arrondissement rented 50% of the time the first year yielding a return on investment of 5.6%. The first year is always the hardest to establish, but if the property is viable, then customers return and book in advance, creating an established base from which the occupancy can grow.

We have developed a tool that is an easy way of analyzing if that property you’re considering buying has the potential of being a good investment or not. It’s a big plus to the search process (eliminate those that aren’t up to profit standards) and when making the final decision between those that seem to fit the bill.

The properties we offer you in today’s newsletter fit that bill! Be sure to scroll down.

A la prochaine,

Adrian Leeds
Editor, Parler Paris
E-mail: [email protected]

P.S. For more information on how to get the best return on your investment from a rental property in Paris, do not hesitate to contact Porter Scott, Property Rentals Manager at [email protected] or Jocelyn Carnegie, French Property Consultant at [email protected]. To subscribe to French Property Insider, visit /frenchproperty/insider/subscribetofpi.html