Luxury Real Estate: Is Paris the most attractive city for large fortunes vs. New York or London?

Luxury Real Estate: Is Paris the most attractive city for large fortunes vs. New York or London?

December 12, 2011, Monday, 13:15 GMT | 08:15 EST | 18:45 IST | 21:15 SGT

Being wealthy is good, living in the most attractive city is even better. Paris, New York or London? What is the best city for great fortunes? Nestoria addresses this issue.

After the financial crisis (and a decrease from 7% to 12% in price), high-end real estate has taken off in 2010 (a 20% increase in Paris between January 2010 to January 2011) to reach a new rhythm in 2011 (+5% increase since the beginning of the year).

The reason? Massive foreign investment. According to the two most important agencies in real estate Barnes et Féau, prices should stabilize.

Paris: a sure investment for a diverse international clientele.

Paris offers a variety of housing that definitely attracts of large number of buyers. There are three types of markets:

1- Family apartments in the prestigious areas of Paris (an average of 10 000 €/m²).

2- Famous “haussmanien” apartments with hardwood floors, moldings, and fireplaces (an average of 15 000 €/m²).

3- The exceptional property with an average price of 25 000 €/m² and prices acan even exceed 50 000 €/m² (for example, a 7 room apartment with a surface of 350 m² with a price that is above 34 000 €/m² luxury apartment paris).

Prices tend to increase with the arrival of wealthy foreign investors. Whether they be South American, Chinese or Italian (in the Marais, nearly 1 buyer out of 2 is Italian according to the Chambre des Notaires de Paris). Wealthy foreign investors consider Parisian real estate as the safest of investments.

The main reason is that the construction of new buildings with high standing is rarely possible. Paris retains its appeal: the housing is expensive but very well located, in fact, that is what the Beckham couple seems to be looking for (David Beckham will shortly be joining the PSG).

The desire of this star couple, a triplex in a beautiful Parisian building, shows us the type of goods that this wealthy clientele is looking for: an apartment “à la Parisienne”.

This type of exceptional accommodation is of course very expensive and over one million Euros (between 3 and 5). If they choose to move to atypical apartments or private houses, it will definitely be over 5 million Euros. (for example, an apartement in Paris quai de Béthune Paris 4e with a surface of 333m² is priced at 9 000 000 € : luxury apartment in Paris).

The only obstacle to wealthy Hollywood stars or big fortunes in the French capital is: French tax which is rather heavy and complicated for people residing in several countries (see Johnny Depp’s interview on Europe 1 on November 9th, 2011).

 

 

What about London and New York? Is the investment worth it?

The French capital is closely followed by London with average prices ranging from 14 000 €/m² (Chelsea) to 14 000 €/m² (Knightsbridge).

London therefore offers prices that are about 20% more expensive than Paris, but despite this gap, London is currently a great deal because prices are usually twice as high than in Paris. The decline in the Euro and the overall atmosphere with the crisis has had its effect.

The luxury real estate is still attractive with an average price of 5.7 million Euros for the large homes in Kensington, Chelsea, or Knightsbridge.

To an equivalent scale, New York offers much cheaper prices (average low of 12 000 €/m² and even 7 000 €/m² in the East Side) although the gap is reduced this year compared to 2010 due to a lower dollar currency rate (1.5 vs. 1.36 in 2010). Today, it will cost on average 560 000 € for a studio with a surface of 45 m² and 1 million € for a 2 room apartment.

In conclusion

Paris is still the safest city for long term investment regardless of currency fluctuations. London can emerge as an alternative but less so in the aim of surplus value. If the objective is to achieve the best deal, then New York is undoubtedly the best choice even if the city does not have the same charm as Paris.