The main drivers of the general French market are a thriving economy, low house prices and cheap finance, but there has been a ‘cherry on the cake’ for the wealthy buyers at the top end of the market.
The Wealth Tax – introduced by President Hollande in 2012 – has been replaced by "L'Impot sur la fortune Immobiliere" or IFI. The tax only applies to real estate assets (whether held directly by individuals or as company shares) and all of the other associated taxes have been abolished, making France a more appealing destination for high net worth individuals (HNWIs) and ultra-high net worth individuals (UHNWIs).
What’s more, notaires have estimated that there will be a 22% increase in UHNWIs in Paris over the next five years.
Prime prices driven by Paris
Prime prices rose by around 5% in 2018. To date, it has been the strong demand from French buyers that have led to the price increases.
However, over the last 12 months, international buyers have jumped from being 9% of the prime market in Paris to 14%, as investors see the value of property here compared to other global capitals such as London, New York, Singapore and Hong Kong (where the price per m2 is double that of Paris).
There are also major infrastructure projects in place, including the Grand Paris Express project – the largest urban renewal project in Europe. With such strong demand remaining within the ‘périphérique’, the future of prime property in the French capital will be ‘particularly rosy’.
The Alps adapting to stay ahead
With France and the USA both attracting in excess of 54 million skiers every year, competition remains fierce. The difference being that in the US, most of the skiers are American, whereas, in France, over one in four are visitors to the country.
To keep France in the top spot, resorts have been investing in new lifts, hotels and infrastructure, with over 100 new lifts set to be opened in the Alps this season.
They have also been attracting sporting events and festivals aimed at bringing visitors in 365 days a year. The Tour de France is just the tip of the iceberg, with the cycling boom making the French Alps a highly desirable summer venue for visitors. This will lead to higher rental returns for investors and profitable holiday homes.
This investment has paid dividends in terms of attracting wealthy buyers back to the Alps. Courchevel 1850 continues to lead the way in terms of price (over €30,000 per m2 for a truly prime location), closely followed by resorts such as Val d’lsere, Meribel and Megeve.
What do prestige buyers want?
While ‘location, location, location’ remains the most important factor, it is no longer good enough just to be in the right area.
Wealthy buyers also demand high-speed broadband access and other benefits that will make the property attractive to the rental market. This includes a terrace or balcony in the Alps, proximity to high-class restaurants in the country and a garage or parking space in cities such as Paris, Lyon, Nice or Bordeaux.
Looking ahead, technology will play an increasing role in what buyers are looking for. Creating a ‘smart house’ in Paris or Nice is easy, but less so in rural areas where broadband is patchier and local architects may not be so advanced with their specifications.