Nicholas Wallwork
Editor-in-Chief
Staff member
Premium Member
Are foreign investors supporting the French real estate market?
While the London real estate market continues to remain buoyant there are concerns about the French real estate sector with many areas of the country still nowhere near the 2008 highs just prior to the worldwide economic downturn. There are many factors to take into consideration such as the French economy, currency issues not to mention the political situation which is mired in controversy. When you also throw in the fact that many high earners in France will be hit by additional taxes in the short to medium term there is little in the way of food for the French real estate market. So, are foreign investors supporting the French real estate sector?
There are ongoing signs that international investors now have France in their sights with a recent survey showing that areas of Paris and Calais have shown decent improvements since the 2008 crisis. Indeed prime property values in Paris are up by 14% since 2008 and there seems to be a growing appetite amongst international investors for heritage properties and luxury real estate.
Why is France becoming so attractive to overseas investors?
There are a number of factors to take into consideration when looking at the current situation regarding foreign investors and the French real estate market. These include: –
Currency situation
It is common knowledge that the euro has had a terrible time since the 2007/8 crisis and indeed while progress has been made the European currency and the European economy are not out of the woods yet. Ongoing weakness in the euro has played into the hands of investors holding sterling and dollars in particular because not only do they benefit from the fall in French real estate prices but they also benefit from the weak euro when converting. When you also bear in mind the current state of the European economy it is unlikely that we’ll see any major recovery in the euro in the short to medium term which should leave open a window of opportunity for international investors.
Quote from PropertyForum.com : “While it would be foolish to suggest that the French economy is over the worst, despite confirmation this week that the economy is back in the “growth zone”, there are signs of growing interest in prime properties across France.”
Value compared to London
The London prime property market has performed extremely well over the last two years and while some are predicting a short-term setback, to deflated a potential house price bubble, this has yet to emerge. There is still ongoing demand for London prime properties, and indeed demand for other areas of the UK is growing, but some international investors now see more value in areas such as Paris. When you bear in mind that France remains the most popular tourist destination in Europe and Paris is the figurehead of this particular sector it makes sense that Paris real estate will always attract the attention of savvy investors.
You could also argue that some investors in the London prime property market will at some stage look to liquidate their investments and Paris could be a very attractive medium to long-term bet. At the end of the day when you look at real estate markets it comes down to comparative value for money and there is certainly an argument to suggest that Paris is starting to “offer more value” t its London counterpart. This is a situation which will not go unnoticed by international real estate investors.
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