According to statistics from the National Chamber of Notaries of Paris, between March and May 2013, 30,700 homes were sold in Île-de-France (Paris and its suburbs). This figure is 15% lower than in the same period in 2011 and 18% lower compared to the average number of sales from March to May in 1999-2007 (a period when French real estate experienced a 'boom').
According to Knight Frank, Russians are among the most notable buyers in the Paris housing market. They account for 20% of all residential real estate transactions in Paris, according to the company. According to the portal Indriksons.Ru, Russians buy only expensive real estate in Paris. Among luxury real estate transactions – worth over 5 million euros – non-residents account for 85% of deals, and Russians rank second in this market segment, second only to the Chinese.
In expensive districts of Paris, housing costs 12,000 euros per square meter, in less prestigious ones – half as much – 6,000 euros per square meter. The price of luxury real estate is estimated by experts at 20,000 euros per square meter.
According to experts, real estate prices in Paris, as well as throughout France, are now relatively stable, with a slight decline. 'The state closely monitors the real estate market and, as necessary, activates effective protective mechanisms that protect the market from both excessive growth and sharp price drops. This makes the playing field in France quite predictable and fairly safe. And although in France as a whole and in Paris in particular there is a strong risk of continued price declines, it cannot be too drastic either in the second half of this year or next year, 2014,' explains Igor Indriksons, real estate investment manager and founder of the portal Indriksons.ru.
'In 2013, the negative impact of macroeconomic factors on the Paris residential real estate market will persist; we expect further price reductions of 3%,' says Anna Shvetskova, Deputy Director of Research and Analytics at Knight Frank.
However, according to experts, not everything is certain. 'The increased supply of luxury real estate at the beginning of this year led to forecasts of price drops of 10-20%. At the same time, large foreign investors are pushing prices up in this region. Therefore, no one is willing to give an unambiguous forecast,' notes Anna Batizi, head of the overseas real estate sales department at Moscow Sotheby's International Realty.
A feature of the rental market in France is that rent can be revised only once a year. According to the portal GlobalPropertyGuide.com, about 57% of housing in France is owner-occupied; accordingly, almost half the population rents housing. According to the portal, the yield from renting apartments in Paris is 3.39-3.67% per annum.
Thus, the average rental cost in Paris is 32-38 euros per square meter. For example, a small apartment (35 sq. m) would cost 494,800 euros, and the rent would be 1,515 euros per month. An apartment of 75 sq. m would cost 888,400 euros, and the rent would be 2,621 euros per month.
Yulia Kozhevnikova, an expert at the portal Tranio.Ru, advises focusing on studios and one-bedroom apartments for subsequent rental – these will be the easiest to rent to tourists or students. In this case, it is worth considering the 5th, 6th, and 13th arrondissements of Paris, which have many universities (Jussieu, Pierre and Marie Curie University, Paris 1 Panthéon-Sorbonne University, etc.). 'About 70% of the total housing stock here consists of small apartments. Prices range from 7,500 to 8,500 euros per square meter. Students also prefer to rent housing near the Abbesses metro station on Montmartre (18th arrondissement). But investors will find it difficult to find anything cheaper than 10,000 euros per square meter here,' says Yulia Kozhevnikova.
However, according to Igor Indriksons, a yield of 3.5% is low: 'The consequences of the global crisis taught buyers of foreign real estate from Russia a good lesson, and now the vast majority view this type of investment as a way to preserve capital, rather than as a way to earn money from renting or resale. Investments in French residential real estate provide this opportunity.'