Paris real estate market 2019 Overview and 2020 Forecast

2019, a successful year for real estate in Paris

Parisian real estate professionals will remember first and foremost 2019 because it was the year that the symbolic threshold of 10,000 euros per m2 on average was exceeded. In the second quarter of 2019 (March to June), the average square meter was valued at 9,890 euros, already representing an increase of 6.3% over the previous year. This price has continued to rise and finally reached 10,000 euros last August.

Nevertheless, this constant rise in prices has had no impact on sales, which have also continued to grow, especially in old buildings. The sector experienced a considerable success with investors in 2019, with transaction volumes up 10.5% between the first half of 2018 and the first half of 2019. 

One of the main reasons for Parisian real estate success is also due to the particularly low credit rates experienced during 2019. In January, increases were less than 0.05% for 10-, 12-, 15-, 20- and 25-year loans. In addition, a decrease of around 0.02 points was even observed for 7-year credit rates, to 0.86% at the beginning of 2019. This situation, which is particularly interesting for people wishing to invest in real estate on credit, has led to an increase in real estate transactions in France, and especially in the capital.

In Paris, certain districts have seen their success grow with buyers, such as the historic district of Saint-Germain-des-Prés, the Luxembourg Garden, the Parc Monceau and Louvre area.

2019 was also the year that Brexit had its first impact on the French real estate market. Many Europeans and in particular French expatriates in London chose to anticipate the United Kingdom's withdrawal from the European Union by returning to live in France and mainly in Paris. To avert various problems such as residency and work permits, many French and European nationals have in fact reinvested in the French capital by seeking to acquire a property.

While Paris attracts a large number of French citizens (18% of the French population lives in the Île de France region), it continues to attract an increasing number of foreign buyers with varying needs and budgets. Many foreigners choose the French capital for their real estate project whether they are looking for a family apartment or a pied-à-terre.

According to the Chamber of Notaries in Paris, the share of foreign buyers in the French capital reached 8.1%. Among them, 5.2% are foreigners already residents in France, and 2.9% are non-residents.

According to David Scheffler, President of Engel & Völkers France:

"As one of the most emblematic cities, Paris continues to attract buyers from all over the world. Its cultural diversity, luxurious lifestyle, and incredibly rich architectural heritage are unique and contribute to the creation of a very solid, constantly growing real estate market whose price per square meter can reach €60,000 for exceptional properties in the city's most prominent locations."

The Parisian real estate market: what are the forecasts for 2020?

Last November, Propriétés Le Figaro published a report analyzing the challenges of the French luxury real estate market in 2020, providing some possible answers for the real estate scene for the coming year.

According to this study conducted throughout France, 77% of respondents believe that this is a good time to buy real estate. 39% of them have planned to acquire a prestigious property within less than a year, 24% within 1 to 2 years and 15% within 2 to 5 years.

On the other hand, in the list of cities that appear to be the most attractive, Paris comes first for 37% of respondents. 48% believe that the best financial investment is acquiring a property in Paris.

In view of these responses, the French capital seems to keep its influence for 2020 and should remain among the most attractive cities in the world. This is all the more so as many projects are on the agenda in the French capital for the coming years.

The Grand Paris (Greater Paris) project that includes the city of Paris and its immediate suburbs, having begun in January of 2016, continues to grow year after year. This concept's development has strengthened the attractiveness of the French capital for foreign investors in particular.

Many cities in the inner suburbs are becoming more attractive as the Grand Paris project evolves. The expansion of public transport networks encourages real estate investment in cities such as Neuilly-sur-Seine or Boulogne-Billancourt, for example. Easier access to the city of Paris will have a positive impact on the value of real estate, generating significant capital gains.

Lastly, Paris will have the honor of hosting the Olympic Games in 2024, which will have a significant impact on tourism and employment and will play a major role in broadening the French capital's influence all over the world.