In France, there has been a stable rise in prices in the real estate sector over the past 10-15 years, and not even the pandemic could «knock down» the cost of a square meter in the largest cities of the country. At the same time, interestingly, demand is not falling either — over the past year it has grown by an average of 13%. The French real estate expert Togrul Aliyev told one of our Realting.com journalists what makes the phenomenon of the French market possible.

In Paris, the cost of a square meter goes from € 12,000; in Nice, from € 6,000, but the state helps the buyer

— France is one of those countries where the cost of a square meter has only been on the rise over the past 20 years. As far as I know, France is now in the top 5 European countries with the highest cost of housing. Moreover, even the French themselves consider their cities very expensive to live in.

In Paris, the cost of a square meter in new buildings in the middle-price segment starts from € 12,000. In the outskirts of Paris, meaning about 7-8 kilometers from the Eiffel Tower, the cost of a square meter in new buildings will start from about € 6,000.

In Nice, the cost of a square in the primary market can vary in the € 7000— € 9000 range. I emphasize once again: we are talking about the middle-price segment. If we consider luxury apartments, the cost per square meter will be ten times higher. For example, in the center of Paris there is a residential complex where the cost of a square meter starts from € 25,000

Given the pandemic, the real estate market in France, like in many other countries, was able to adapt to the modern buyer. Now there are all conditions necessary for buying real estate online. The scheme is quite simple: if you really like an apartment, you can book it for 48 hours, then contact the realtor and get all the necessary information. If the buyer does not have time to solve all the legal nuances in 48 hours, then you can deposit some symbolic amount to the developer’s account and reserve the option you like for a longer period (up to two months). Depending on the residential complex, the deposit can range from € 2000 to € 5000. After that, you can safely sign all documents remotely and purchase a property without even coming to France.

Separately, I would like to emphasize that the state helps buyers of new buildings. If you buy housing on the secondary market, then the transaction tax will be about 7-8%; if it’s on the primary market, then it will total 2.5%. Moreover, the transaction tax on apartments in some properties has now dropped even to 0%, but this applies only to those construction projects where the developer takes on these expenses. The buyer can even be exempted from property tax for 1-2 years. 
If you have a source of income in France (business or company), then income tax can also be zero. 

Real estate in the major cities of France, of course, has a fairly high price, but the non-declining demand shows that this price is justified. According to analytical data, the demand for apartments in 2021 increased by 12%, and for houses — by almost 20%. Some buyers buy flats for subsequent renting, and this is a good way to invest with 4-5% annual return. You can get an annual yield of 6-7%, but then we are talking about buying an apartment, which has its own nuances. For example, it is impossible to obtain registration in an apartment; in fact, the buyer acquires not the walls, but the right to own the space. Basically, this is like buying a room in a hotel or guest house, and there are both advantages and disadvantages. 

And in the case of buying flats, and in the case of buying apartments for the purpose of renting them out, you will not have to look for tenants on your own. We, ourselves, have construction companies that take over the management of properties and help apartment owners find tenants and have a stable income.

«What are the guarantees that the construction will be completed?» A little about construction insurance

In fact, the state very clearly regulates the reliability of construction companies. For example, if a developer wants to put a project on sale, they first need to secure a bank guarantee. In fact, this is insurance against construction failure, and if the developer suddenly goes bankrupt or something goes wrong with the project, the insurance company undertakes to complete the construction and cover all the necessary expenses. If this happens, then the bank most often transfers the construction site to another developer, and the project is not frozen. 

In addition, all the money during the transaction goes through a notary — the developer does not receive anything directly from the buyer. Thus, the buyer receives even more guarantees of the safety of their own funds.

In addition to the above insurance, there are several other insurances that are required for the developer:

  • insurance of the entire building against any breakdowns for 10 years (if the roof leaks or something similar happens, the insurance company will fully cover the cost of the repair), 
  • energy saving guarantee (today buildings in France spend 8 times less energy than in 2012, and there are certain norms for how much apartment owners should spend on electricity. However, if the cost of electricity is higher than these indicators, the insurance company pays the difference), 
  • guarantee of flawless completion (if the homeowner, upon accepting the apartment, finds any flaws, such as a scratched door or knocked down paint on the walls, the insurance will cover all repair work).

Why do prices continue to rise even during a pandemic?

During the pandemic, property prices rose dramatically for several reasons. Firstly, all people were waiting for some kind of global world changes and this uncertainty strongly acted on the nerves of those who had free money. One of the most obvious ways to invest this money is to buy real estate, which many have done. Moreover, this concerned properties both in the primary and in the secondary market. 

On the other hand, many non-native French people left the country because of the lockdown and took their apartments off the market in the hope of simply weathering out the hard times. Accordingly, the supply decreased significantly, which influenced the rise in prices in the secondary market. This decrease in supply in the secondary market increased the demand in the primary one. Developers did not stand aside and also began to raise prices (here you can also recall the increase in the cost of building materials).

In general, I can say that a pretty good situation has now developed on the French new-build market: both the seller and the buyer have a choice. This also applies to the price, and the location of the house, and other equally important characteristics. Plus, oddly enough, the good mortgage conditions that can now be obtained when buying real estate also played a role in the rise in prices. The annual mortgage rate is currently about 2% per annum. 

What apartments can you buy right now in France?

Now we propose you take a closer look at the new buildings in France. For example, a 44-square-meter, one-bedroom apartment in Nantes is being sold for € 231,000. We are talking about a new building, which will be commissioned in the third quarter of 2024, which means that the cost of this apartment will only grow in the future.

According to the seller, the property is located in the heart of the city of Nantes, which means that the owners will be able to enjoy all the advantages of the convenient location of this new building. Not far from the residential complex there are shops, public transport stops, schools, shopping centers, a hospital. 

For € 532,000, you can buy a three-room, new-building apartment with an area of 66 square meters in Chaten-Malabry. The completion date of this residential complex is the II quarter of 2024. 

One of the advantages of this property is the ability to change the layout of your future apartment immediately during the construction phase. According to the realtor, «Ideal for living or investing, the residence opens the door to a privileged living environment.»
4 room apartment
Pornic, France
€905,000
4 Rooms 107 m²

Another interesting residential complex is located in the small commune of Pornic. This new building is attractive, first of all, because of its location — it is right on the coast of the Bay of Biscay. There is a tourist area as well as and wild beaches with unique flora and stunning landscapes. 

But the cost of housing is much higher here than in the two previous cases. You can buy a four-room apartment with an area of 100 square meters for € 905,000.
 

 

 

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