The love for the city of lights – Why the elite Chinese millionaires can’t stop buying multi-million dollar homes in China

More than 14 per cent of properties sold in the French capital to non-resident and resident foreigners during first three months of the year were bought by buyers from China

Chinese investors are saying oui to owning property in Paris – pushing out Italians as the biggest group of foreign buyers of homes in the French capital.

Chinese have edged out the Italians as the biggest buyers of property in Paris.

The change has been noted by real estate company, Paris Property Group, based on first-quarter 2019 data from the Notaries of Grand Paris.

Kathryn Brown, the company’s director of operations, says she is not surprised by the study’s findings. In the first three months of the year more than 14 per cent of property acquisitions by both resident and non-resident foreigners in Paris were made by buyers from China.

in terms of numbers, British investors are traditionally the most active non-resident foreign buyers in France, but Brown says their focus is outside the capital.

“More than 14 per cent of property acquisitions by both resident and non-resident foreigners in Paris in the first three months of the year were made by buyers from China”

“British buyers have tended to buy holiday homes in the countryside,” she says. “But they have lost [the] incentive to buy in France as they will no longer benefit from European Union [EU] tax protections when they sell due to Brexit [the withdrawal of the United Kingdom from the EU].

“On the other hand, Brexit buyers are buying in Paris, but I don’t think [their numbers] offset the drop in holiday homebuyers.”

The 13th arrondissement in Paris has the largest Chinese population in the city.

Brown believes the Paris market is “absolutely” benefiting from Brexit uncertainty.

“The London market has plummeted, and it isn’t on anyone’s top buy list now,” she says. “Paris is picking up a lot of the buyers because it is the most attractive market in the region.”

At the same time, Chinese buyers are looking for ways to diversify their holdings, she says. “We hear from Chinese buyers looking for large estates outside Paris, as well as residential flats in Paris, primarily in the Golden Triangle area [the 8th arrondissement].”

“French President Emmanuel Macron’s election and his pro-business stance, along with a resurgent commercial property market, has helped put Paris back in the spotlight” – Roddy Aris, partner, Frank Knight

Although it is a prime market, prices are not high compared with London and New York, she says. “A penthouse property with a rooftop terrace in pristine condition and with a view is under €5 million [US$5.6 million] in Paris. It’s hard to beat that for high-end buyers.”

Foreigners hunting for homes in the capital typically want top-end properties in perfect condition, located near the most chic shopping districts, with their luxury brands and iconic hotels.

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“The price point for these properties is around €3 million to €4 million,” Brown says.

In her experience, Chinese buyers prefer the Golden Triangle area of Paris, between Parc Monceau, Etoile and the river, where there is an abundance of luxury properties that have been renovated to modern standards.

Paris property is popular with Chinese buyers.

Other popular areas are the 13th arrondissement, which has the largest Chinese population in Paris and “all the markets, restaurants, and products that they are accustomed to from home”, along with the 3rd arrondissement in the northern part of the Marais, with its Medieval buildings and winding historic streets.

An increase in Chinese buying activity in Paris is also reflected in Knight Frank’s recent residential research. Roddy Aris, a partner at Knight Frank, says this is “one of the reasons the market is performing so well”.

He says their activity is part of a general rise, evident in the market since mid-2017, which is continuing to gain momentum.

“[French] President Emmanuel Macron’s election and his pro-business stance, along with a resurgent commercial property market, has helped put Paris back in the spotlight,” Aris says.

“The initial surge came from domestic buyers who were later joined by French expats, particularly those that had relocated in the wake of [former president] Hollande’s wealth tax in 2012, and later overseas buyers.

Asian buyers have been playing a part in driving up market prices.

“Cheap finance as well as Paris’ relative value compared with other global cities persuaded many to raise their footprint in the French capital.”
Paris remains one of Europe’s and the world’s top-performing residential markets, Aris says.

“The city has recorded more than 17.3 per cent growth over the last two years and Knight Frank has forecast this growth to continue into 2019 with a 6 per cent increase predicted.

“Macron has been encouraging wealthy French to return and we see much more foreign investment as well, including Asian buyers who are playing their part in driving the market and increasing prices.”

Paris property in the 16th arrondissement

Perhaps the fear of missing out also comes into play.

Aris says: “There is a finite number of properties available in Paris and, as a result, every arrondissement is now on someone’s wish list – not just the best known 4th, 6th, 7th and 8th. Investors are looking at the 19th and 20th arrondissements, too, and price rises have suddenly put these two areas on the map.

“Paris is also a Unesco World Heritage Site, the Olympic Games will be hosted here in 2024, and the Grand Paris development plans are all playing a part – all putting the spotlight on Paris and making it an enticing option for investors.”

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Gabriel Malassis, consultant at luxury real estate agency Agence Varenne, Savills’ associate in Paris, agrees that there are forceful reasons for investing in the French capital.

“Paris remains a domestic market even if the share of international buyers is slowly increasing,” he says. “This characteristic makes the Parisian real estate market less affected by external factors, and therefore, a safe place to invest.’

The prime property market “has seen three remarkable years” – both in terms of price increases and transaction volumes, Malassis says.

Apart from the election of Macron – which Malassis credits as the starting point, injecting optimism and a promise of stability – he says that “the other fundamentals are excellent.

“Historically low bank rates and stronger demand than supply has helped to drive prices up to record levels.”

Along with companies relocating their activity in Paris and expatriates anticipating a return post-Brexit, international investors have also redirected their investments towards the French market which offers “a secure and stable political environment with a promising economy and a sound exposure to the euro”, he says.

Paris property in the 16th arrondissement

Malassis believes prices will rise by as much as 7 to 8 per cent this year – a figure similar to the past three years. By August, average home prices in Paris are likely to rise above the symbolic €10,000 per square metre, he says.

“Even if prices have increased significantly in recent years, Paris remains more attractive and affordable compared to its peers, such as London, New York, Hong Kong and Sydney, and the growth potential is certain.”

Paris remains a domestic market even if the share of international buyers is slowly increasing.

Buying guide
What you can buy for €6,450,000:
An elegant flat in the heart of Ile Saint-Louis on Quai d’Orleans, one of the most prestigious addresses in Paris.
Situated on the second floor of a historic 18th-century building, and enjoying a view of the Seine, the flat has been renovated by an architect to offer spacious reception rooms, three bedrooms, two bathrooms and an office.
Agent: Knight Frank

What you can buy for €850,000:
A one-bedroom, one-bathroom flat in the 15th arrondissement, of Paris, with unobstructed views of the Seine and the Eiffel Tower.
The 70-square-metre flat is located on the 11th floor (with lift) and includes an entry, large living room/dining room, bedroom, bath, separate toilet and laundry space.
Agent: Paris Property Group

Note – This story was originally published on SCMP and has been republished on this website

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