How Paris’ Haussmannian legacy has made ‘Paris Ouest’ en vogue with buy-to-let investors23rd April 2013
Just like central London, central Paris has an aspirational population of young professionals who prefer to live and work in the centre rather than commute long distances (central Paris constitutes the arrondissements 1-20 inside the peripherique ring road).
The latest figures from Capacim the French real estate research organisation show that in the 3rd quarter of 2012 out of all the first-time-buyers in the entire Ile de France region (Paris’ greater London equivalent) just 18.6% had the ability to purchase a property in central Paris. This is down from 18.8% in the previous quarter. With Parisian FTBs being priced out of the central Paris market, an emerging ‘three stage process’ towards eventual owner occupation has developed, consisting of flat share, to sole rental to purchase. This means that smaller properties (sole rentals) are now en vogue with investors.
But where are investors investing as a result? Surprisingly, the answer is ‘Paris Ouest’ the city’s most expensive district and it’s all down to Georges Haussmann. Haussmann was the ‘civic planner’ responsible for the redesigning of Paris into what everyone knows the city for today – its ornate, wide boulevards and building with large use of stone, both plain and effortlessly ornate at the same time. But the interesting thing here is that Haussmann’s designed his new Paris to house the families of Paris, which means that in the arrondissements that have a higher proportion of Haussmannian properties there are very few smaller properties which could be rented by today’s young Parisian professionals. These arrondissements with few smaller properties have become hot spots for buy-to-let investors.
‘Paris Ouest’, the city of light’s equivalent to that of Mayfair in London or Upper Eastside in New York, is where the investors are heading. Paris Ouest constitutes the 7th 8th & 16th arrondissements and is the most prestigious area of the capital. Figures from INSEE (the French ONS) show that the 8th and the 16th arrondissements have by far the fewest studio and one bedroom properties. Just 43.0% of the 8e’s properties are studio/1 beds with the 16e holding just 44.2%. This is compared to the (also central) 2nd Arrondissement which has way more studio/one bed properties (66.9%)
So Hollande’s wealth taxes have caused the top French earners to flee thereby stumping the very top end market, but the market for buy-to-lets in good locations remains a tour de force. And having the best mortgage rates since WWII doesn’t hurt either.