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The real value of real estate in Paris

Publié le 12 décembre 2017 à 4:15

To answer to difficult questions such as : What is the future value of the real estate ? Is it worth to still invest in Paris Area? Many micro economic and macro economic elements should be taken into account:  

Negative elements: The economic contest is of a weak growth. More or less it would be probably the same the same in the next 5/10 years. Average Salaries would in the next 10 years have a very slight growth. French taxes are absolutely delirious and globally things improve (maybe?) very slowly and with difficulties. The French State spends 57% in public expenses and the most of those expenses are not investements but global running cost to keep a very high social standard. French seem to accept the situation to keep these social advantages. The prices of flats is very very hign with a growth of 300% in 20 years (1997 to 2017). The quality of the real estate is in average not very good. Interest rates will definetely raise: this will have a huge impact on public expenses and also (but less important) on privates' ones.

Positive elements: Paris is one of the 5 most important economic areas in the world and is just in the middle of the European Union. With the Brexit, Paris is the natural center towards some companies will give a look. Transportation is very good and cheap. Grand Paris is a wonderful project that could possibly give a new growth to the area. Paris will organize Olympics games in 2024. In spite of the other most important 4 macro areas, Paris has also a touristic interest and is a beautiful city and it is a place to live. One can not say the same of London, Frankfurt, Tokyo, Bejing, etc. The Paris real estate is cheaper than London, Hong Kong, New York. Just the 57% of citizen owns his flat: here there is a potential market since one day French state will decide that doing real estate is not within is competences and attributions. Interest rates are very low: around 1.8% on a 10 years loan.

Conclusions:  the risk of a slow and long decrease is significant in France. We are less confident in fixing the timing. This risk is strictly linked with the raise of interests rates. In our opinion Paris will partially excluded from a bubble or a big fall. Foreigner investor and the lack of offers will in any case limit the fall in the center. Of course the quality of the investment will be the key. In our opinion a very well placed flat in the golden triangle, well entratained  will resist far better than a peripherique one in bad conditions. 

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