Luxury Insider: From Paris, With Love!

I am originally from Paris, so allow me to be somewhat partial to the City of Lights where I left –a century ago it feels like- so many wonderful memories and much of my shopping money! I always think of Paris when I write about luxury real estate because it is indeed THE reference in the global market, together with London & New York, and a barometer of what’s going on or what is likely to happen at the high end. After all, France is the most visited country in the world and Paris, according to most polls, is the top-of-list city where super wealthy people would love to own a pad. Many do.

Nobody can talk about the estates market in Paris better than Feau, the leading brokerage in the luxury market. It can be said that they “own” the high end, as they represent better than 70% of the listings over $2.5M in a highly competitive environment. Charles-Marie Jottras, a good friend and CEO of Feau, just sent me the study they put together on the state of affairs at the top of the price pyramid. It is quite an education, one that I would like to share with you.

The first thing that jumps at you when reading the report is the dramatic surge of new listings which has been hitting the Paris market every month for the last 12! .…Exactly the opposite of what most cities in the US have been experiencing over the same period. The surge is not just in the number of properties for sale but in the overall value of the available top heavy stock, as the top end is driving this phenomenon. There was $7 Billion worth of active inventory in the Quarter that just ended…

You may wonder why? Well, one of the crowd-pleasing initiatives that the government has been promoting is to raise taxes on the wealthy. Nice concept to gain popularity here, there & everywhere these days, but the French pushed it to the extreme level, the “guillotine level”, by announcing a…75% tax rate! Granted foreigners are not affected by the new measures, except for capital gains, but the French citizens who own pricey real estate can’t pack their bag fast enough to leave this “fiscal inferno”, hence the explosion of new listings.

Case in point, looking at the entire listings inventory: just in the second quarter of last year, 25% of sellers of $2.5M+ homes were on their way out of “Douce France”. Above $9M, the exodus reaches 44%, including 28% absentee owners for whom the decision is not quite as painful.

Paris is no exception to the rule of supply & demand. When a big wave of listings hits, prices usually adjust downwards. The volume of sales, in Q1, was 20% lighter than that of 2012. No surprise. The good news is that buyers can now pick & choose, and they can even negotiate, which is a pretty new thing in Paris. Some smart buyers are jumping on the opportunity, while many are sitting tight hoping for lower prices yet. Good luck!

So, who is buying these days in the French capital?

Buyers from the Gulf come first. They cannot have enough of Paris. They are pretty busy in London as well. The Russians too are avid of Paris real estate. Price is no object. Only the best. People from the Mediterranean Basin come next, followed by….Us, genuine American buyers with good money and a love for Paris. Could not be better timing to show your love!