THE PARIS REAL ESTATE MARKET

By Schuyler Hoffman

The Paris real estate market—already up dramatically over the last few years—is still healthy, according to the latest statistics to be made public. Figures show that property values increased by as much as 15% in the first three months of this year over the same period in 2001. An analysis of the figures indicates that apartments and other real estate deals in Paris can still be good investments.

Statistics also reflect the characteristics of an arrondissement that lead to an increase in
property values. Real estate professionals predict property values will continue to rise an average of 10% over the prior year. With good short-term rental apartments available in the $200,000 to $400,000 range, Paris continues to be a city ripe for foreign real estate investment.

The fashionable areas Smart investors will start by making an accurate evaluation of the property. In Paris, like in many other places in Europe, that means comparing the price per square meter with the average price per square meter of other apartments in the area as well as with the square meter price of comparable properties throughout the city. If you’re interested in buying an apartment in Paris as an investment with short-term rental value (so it can at least partially pay for itself), it may be wise to consider property in one of the three currently prime arrondissements—the 4th, 6th and the 7th.

How do prices in these fashionable areas currently compare with those in the rest of the city? In the first quarter of 2002, the average price per square meter for Paris as a whole was 3,218, or about the same number of dollars in today’s economy where euros and dollars have been at or near parity. By contrast, the average price was 5,335 in the 6th Arrondissement, 4,999 in the 7th and 4,176 in the 4th. While apartments in these arrondissements generally have higher short-term rental value, their investment value may actually not be as good as it is in some other areas.

For example, property values in Saint-Germaindes- Prés, considered to have the highest rental value, increased by 7% in the first three months of 2002 over the same period in 2001, while apartments in the 1st, 2nd and 3rd arrondissements rose in value by 10.5%, 15% and 12.9% respectively. Exuding charm Location in the heart of Paris is one reason why apartment prices in these areas are above the average. This is where tourists want to stay and foreigners like to live, driving up prices. In general, the farther from the center of town, the less expensive apartments become.

It’s hardly surprising that apartments in the 4th, 6th and 7th arrondissements command top prices. These areas exude charm and put residents in touch with the history of Paris. Moreover, they have some of the best nightlight and restaurants in town. The 6th also gained a reputation as an intellectual center in the years following World War II, when philosophers, movie makers, painters and musicians met in the Saint-Germain-des-Prés cafés, which had earlier been the hangouts of leaders in existentialism and surrealism.

Today, with more than 100 publishers in the 6th, it is still very much an intellectual center. Over the years, the area has become smarter and more bourgeois than it had been during those legendary 1920s and 1940s. The designer boutiques and affluent art dealers in the area show signs of gentrified change.

The center point of the 6th arrondissement is the Romanesque Église Saint-Germain-des-Prés, the oldest church in Paris. Built during the 11th century on the site of a 6th century abbey, the church was originally “in-the fields,” as the words des prés suggest. Surrounded by walls and a moat, the medieval abbey was self-sufficient. It housed its own bakers, butchers and other providers, and it even had its own law courts and defense force. Today, the abbey precinct has become a quarter of small hotels, antique shops, rare bookstores, and l’Ecole des Beaux Arts at 17, Quai Malaquais.

Across from the église are the three famous literary cafés—Café de Flore, Les Deux Magots and Brasserie Lipp, and they’re all going strong today. Over the years, the three cafés have been full of celebrities, including James Joyce, Oscar Wilde, Marcel Proust of earlier eras and Sharon Stone, Francis Ford Coppola and Catherine Deneuve in our own
time. Property values also reflect the popularity of the area’s great landmarks, including the Luxembourg Gardens and the Church of Saint-Sulpice.

In the 7th Arrondissement, there’s not only the Tour Eiffel and the Invalides but also dozens of fascinating streets lined with classical mansions and highwalled gardens. We owe it all to Malraux As in the 6th, the streets between the river and boulevard Saint-Germain are lined with elegant antique shops. In fact, this section calls itself Les Antiquaires du Carré Rive Gauche (Antique Dealers of the Left Bank). Every spring, the shops decorate their windows with special artifacts, according to a pre-selected theme.
rule, truly extraordinary.

The Marais itself is at the heart of the other arrondissement where property values are reaching new peaks. At the end of the 15th century, the rich, cultivated, and noble people of Paris discovered the Marais as an attractive garden spot within the walls of Paris. The Marais became the heart of the capital and continued as such for nearly 200 years.

The Marais is still one of the most fascinating and beautiful parts of Paris. Within its confines are scores of old mansions that were rescued by André Malraux (then de Gaulle’s minister of culture), who in 1962, pointed out the historic value of many historic sites, which at the time were deteriorating. Restoration followed and along with it came fancy boutiques, fine restaurants and art galleries. Many of the former private mansions in the Marais have now become museums and libraries. The Marais is also the site of one of the most beautiful (and expensive) pieces of real estate in Paris—the Place des Vosges, a plaza steeped in history.

Location, of course, isn’t the only factor in determine the value of an apartment. The condition and prestige of the building are also critical. An apartment in a charming 17th century building in good condition will have more value than a similar apartment in a lesser building across the street. As elsewhere, the amenities that a building offers will also figure into an apartment’s value, especially whether it has an elevator, a caretaker or concierge as well as the availability of parking.

But unlike apartment and condominium buildings in the U.S., each apartment in a building here is often unique. Floor plans vary, ceiling heights differ, and space
utilization is not always the same. For that reason, two apartments in the same building—of the same size and on the same floor—can vary greatly in value and price because of these factors.

Cost per square meter and return on investment are cut-and-dried objective aspects of
evaluation. Other factors that affect price and value are more subjective and open to your personal evaluation. With up-to-date information on property values and an understanding of the factors that go into housing prices, you will be able to evaluate any property you’re interested in and determine if it’s a good value for you or not.