There are many reasons why people feel motivated to invest in international real estate. Investors buying in London, for example, are looking for a financial placement, capital gain and return on investment. While Paris real estate is a good investment, the typical Paris buyer is known for being driven by more emotional motivations, such as fulfilling a lifelong dream, being part of the city or simply owning a piece of Paris.
Contrary to that, when asking our client John, a successful American investment analyst who recently became the proud owner of a beautiful pied-à-terre in the historic heart of Paris, he answered without hesitation that Paris real estate is a good investment – whether or not you rent out the property. Here is what he shared with us:
John, you contacted 56Paris Real Estate on the search for an English-speaking real estate search agent in Paris.
Yes, we stopped in Paris briefly on our way to a wedding in Europe during the summer break when the inventory tends to be low. But during the two days, we managed to still view six properties. We got to know Kerstin Bachmann and her team and they grasped our preferences. In the following months, they previewed apartments for us online and we discussed them by phone. We then had them visit and photograph in detail five apartments before we found the one we bought.
Had you already searched on your own?
Just a bit, on websites of different realtors. We contacted one or two, and the detail and timeliness of the responses weren’t satisfying. Given the distance, we had no idea how we could move things forward if we saw an apartment we liked.
We couldn’t drop everything and fly to Paris to look at apartments as they became available. Paris has some 3,500 real estate agencies but no Multiple Listing Service. This is why an experienced buyer’s agent is invaluable for finding your perfect property. The best of them will guide you from the search for your property through the closing process. The guidance we got from 56Paris and the notaire (notary) they referred us to made the process easy.
What attracted you to the idea of buying real estate in Paris?
My wife and I love the city and had a lifelong dream of living there, but beyond that we also felt it would be a good long-term investment. We knew the timing was right to purchase at a relatively attractive price, due to the favorable exchange rate.
Was the strength of the dollar to the euro a decisive factor?
Definitely, for a foreign buyer, the recent significant depreciation of the euro over the past 18 months relative to its 10-year average makes the purchase of Paris residential real estate very attractive as it means savings of 25 – 30 %.
What makes your purchase an asset as an investment expert given that you have no plans to rent out your Paris apartment?
Paris real estate is a good investment. Paris is a unique city for obvious reasons. Its stock of older residential real estate, unlike in other comparable cities, remains premium. Regulations prevent new construction in the best neighborhoods and the market does not desire it. That’s a real underpinning of value for a Paris home, relative to other global cities. Better still, this real asset can be acquired at prices below other comparable residential markets (such as NYC, London, Hong Kong, Tokyo, etc.) and based on the price evolution over the past 40 years, you can count on a sound capital gain. For me, Paris residential real estate is an attractive way to store wealth. It’s a real asset with inflation protection attributes.
What about ongoing costs, now you’ve secured your dream second home in Paris ?
I don’t know how many buyers from outside of France are aware that the costs of maintaining an apartment in Paris are much lower than in other high-end neighborhoods in other major cities. The ongoing maintenance costs and taxes associated with our apartment seem surprisingly low to us. We think that if we visit our apartment for a week or two a year instead of spending the money on a high-end vacation somewhere else, our vacation savings will easily cover the carrying costs of our apartment.
Is the apartment you ended up buying different from what you pictured?
Well, it’s in our dream location in the 7th, and we had a very precise idea of the streets in which we were looking to buy and those we wanted to avoid. The apartment is certainly more compact and has one less bathroom than we had envisaged, but the realtor found us such an amazing apartment that we realized these two trade-offs were worth making. We have not regretted making either one as we have since lived in our apartment.
A nice surprise: Even though I would have said that we knew our neighborhood in the 7th well, we just hadn’t realized how many amazing restaurants, galleries and fine foodshops were within a 15-minute walk from our apartment.
Was there anything unusual about the buying process that you want to share?
Believe it or not, I actually never saw the apartment until months after we closed and completed some renovations and decorating. When they found this apartment I was tied up with business and couldn’t travel, but they gave us enough insight so that we could make the decision sight unseen. Before signing the preliminary contract, my wife flew over just to be sure.
We had enough trust in the process for all decisions on renovation and decorating work to be conducted online. We didn’t have to go back and forth to Paris and it worked out really well as the team at 56Paris put us in touch with excellent professionals.
What advice would you give a first-time foreign buyer in Paris?
I’d recommend they work with a real estate search agent in Paris. You can’t do it yourself with any ease remotely from another country. Don’t even try. We found the 56Paris Real Estate team excellent and their extended network of service providers first rate. They guided us all the way from vision to reality.