Research article

Location by Location: France

The French residential market remained resilient following the global financial crisis.

The French residential market proved resilient in the years immediately following the global financial crisis. Relatively modest price falls of 9.7% were seen between 2008 and 2009. A period of recovery quickly followed, and by 2011 prices and transaction levels had exceeded their 2007 highs.

This recovery proved short lived, and the last three years has seen suppressed transaction volumes and sliding prices, set against a faltering Eurozone economy and rising national unemployment. As of March 2015, prices in France were 8.4% down on their Q3 2011 high, while transactions stood 15.7% down over the same period.

Record-low mortgage rates have improved market liquidity, and it is low interest rates that will keep any further falls modest in 2015. Challenges lie ahead in consolidating public finances, improving competitiveness and reducing unemployment. Weak economic growth is forecast, which will bear down on the city’s real estate markets although a change of rhetoric in President Hollande’s policies toward the wealthy has helped the prime markets.

Well located, well appointed property is selling best in the capital and elsewhere and the market is likely to remain quality-sensitive while broader economic issues persist.

Figure 20

FIGURE 20France market performance (2006 – 2015)



Paris is a top-tier world city that enjoys a steady flow of foreign investment into its property markets. The city has many characteristics that make it favourable for buyers from around the globe: a major centre of business and finance, quality cultural institutions, luxury retail and celebrated architecture and urban environment.

The prime Paris market is driven by French buyers, while international purchasers are present at the very top end. Paris continues to see a flow of buyers from the Middle East seeking a safe haven in light of continued unrest in their home region. The city boasts the kind of large, lateral apartments favoured by such buyers, at cheaper prices than London.

The price of Paris flats, as recorded by INSEE, have fallen by 6.3% since their peak of Q3 2012. Small, easy to let apartments in good locations have held their value, while larger apartments suited to families have seen price corrections of up to 15%.

Paris would be competing much more strongly with London for inward investment in prime real estate were it not for ongoing economic wand Eurozone jitters. Given a weak euro, the suppressed market represents a window of opportunity for non-euro denominated buyers. Supply is up and prime property remains cheap compared to London with room for price growth. Limited development opportunities in historic central Paris will keep the supply of new build property constrained.

Buyers now recognise value in the prime markets and 2015 has seen renewed market activity, aided by low interest rates and for international buyers, a weak euro.

One area that Paris outcompetes almost every other location is tourism: it is one of the world’s most popular tourist destinations, attracting 32 million visitors per year, half from overseas. Big spending Chinese visitors are second only to Americans and money spent during their stay is directly on shopping. This has fuelled huge investment in the luxury retail sector, which will remain important in coming years. If even a small part of this can be translated into real estate purchase, Paris may find itself with a large demand base.

Prime market in Paris is driven by French buyers

French Riviera

The French Riviera, or Côte d’Azur, remains among the world’s most exclusive and desirable destination for second home ownership. Including the towns of St Tropez, Cannes, Antibes and Nice, the stretch of coast was one of the first modern resorts, tracing its origins as a winter retreat for the British upper class at the end of the 18th century.

Today, the Riviera is a popular additional home location for the global super-rich. The region offers many of the most desirable characteristics of an established resort, such as marinas and coastal property, but also has many city-living benefits with high-end retail, restaurants and a full social calendar. This means it is especially appealing to the new wave of young, globally-mobile high-net-worths.

Like the rest of France, prices have fallen in the region and the market is a buyers’ one. The most desirable spots, such as Saint-Jean-Cap-Ferrat, a peninsula of land east of Nice, are characterised by extremely limited supply. There are around 500 properties on the Cap, and only a handful come onto the market in any single year. Supply is kept low and prices high by wealthy buyers who are not generally forced to sell.

Russian buyers have been active in the region, especially in Cap Ferrat, where they have accounted for 65% of buyers in the last four years, followed by the British, at 14%. Russian activity has slowed as economic sanctions restrict these buyers’ international ambition. St Tropez, by contrast, is a more domestic market. Even at the super-prime end of the market here 45% of purchasers are French.

New development opportunities on the coast are extremely limited. Some developers have taken advantage of weaker market conditions to buy properties on large plots and subdivide into smaller, multiple units.

The expansion of tourism, driven by improved connections across Europe via low-cost airlines, has had the effect of expanding the second-home market into lower price points. Smaller, higher yielding units in Nice and Cannes, for example, have gained favour with investors given depressed sales prices but stable rents. In the mainstream markets websites such as Air BnB broadcast short-term rental opportunities.

The Riviera is a home location for the global super-rich

French Alps

The French Alps are home to some of the world’s most exclusive residential markets. Courchevel 1850 attracts UHNWI purchasers from around the globe, benefiting from quality skiing across 150km of pistes and six Michelin star restaurants. Ultra prime prices here exceed €34,000psm. Val d’Isère is another a long established ultra-prime French resort attracting ‘old world’ money. These resorts proved relatively resilient during the global economic crisis. Transaction levels slowed somewhat as finance-reliant purchases fled, but prices held firm.

A rising star in the French Alps is St Gervais, an affordable alternative to the better known Megève. This resort benefits from a strong summer season, attracting visitors to its thermal spa along with mountain biking and hiking activities.

Prospective purchasers in the region may turn their attention to typical ski conditions. French resorts compare favourably to their Swiss and Austrian counterparts, with average season lengths but higher levels of snowfall, resulting in reliable skiing.

High snowfall resorts such as Val-d’Isère enjoy a peak season that runs well into April. Resorts with strong summer seasons are less reliant on skiers to occupy accommodation and pose greater rental potential. Chamonix attracts a large number of summer climbers, Mont Blanc tourists, hikers and glacier skiers.

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