Renewed growth in acquisitions by non-residents in France
BNP Paribas International Buyers has published the 7th edition of its annual Observatory of the non-resident real estate market in France. In 2014, the number of transactions started to rise again with a 1.5% increase. British buyers contributed significantly to this growth with a sharp increase (33%) in the number of transactions. However, we observe large disparities for the other nationalities studied. The average transaction amount continued to be high despite a 10% drop over the previous year. The study also examined the differences in attractiveness of the various French regions.
Sales picked up in 2014
After two years of decline – a 1% drop between 2011 and 2012, and a double-digit drop of 13% between 2012 and 2013, in 2014, there was finally an upswing with a 1.5% increase in the number of transactions. The trend has therefore been reversed for the first time in three years.
This upward trend that began in 2014 was confirmed in the early months of 2015, explains François Laforie, director of BNP Paribas International Buyers: « For the first five months of the year, we recorded a 53% increase year on year, with a very large majority of British buyers (75%). Given the very sustained rate of applications, the rest of the year looks very promising. »
At the same time, buyers paid €315,000 on average for their properties, a 10% drop on the previous year. There is a large difference between Paris and the regions with an average amount of €582,000 paid in Paris and €287,000 outside Paris.
With the exception of the Provence-Alpes-Côte d’Azur region, Paris is the region with the highest property prices in France. In 2014, British buyers paid an average of €710,000 to buy real estate property in the capital and €589,000 for property on the French Riviera. Although French property prices have dropped, they have not slumped like in the other European countries.
Brits remain in the lead
British buyers are by far, the leading foreign buyers in France. Between 2013 and 2014, the number of transactions rose 33% although the total volume rose by only 1.5% for all nationalities. According to François Laforie, Director of BNP Paribas International Buyers, this strong demand by British buyers is driven by the excellent economic recovery in the UK, low interest rates, a weak euro and a slight drop in property prices. « The average amount of transactions dropped by 6% over 2013. However, this drop is still less than the average amount of transactions for all non-residents (-10%).
There is another increase worth mentioning in 2014, that of sales of Dutch buyers, up 10% compared with 2013. The average amount spent on buying property however dropped 3% between 2013 and 2014, although this continues to be less than for all non-resident foreigners. The Dutch thus rank sixth among non-resident foreigners and represent 4% of all transactions.
The increases differ by nationality. There were 12% more acquisitions by the Americans. Acquisitions by Swiss and Italian buyers dropped, representing 7.4 and 7.3% respectively of all transactions compared with more than 10% in 2012.
A market in a positive momentum*
Source: Cegma Top (see methodology)
After a difficult year in 2013, the recovery noted in 2014 on the non-resident property market has been confirmed in 2015. The market is primarily focused on secondary residences, and rather positioned on the higher end of the market. It is marked by specific local characteristics and is affected by seasonal events. English-speaking buyers, in particular British buyers are the main non-resident profiles. Buyers are demanding, do not know all the workings and processes of the French market and need to be reassured because they know very little about the legal and tax constraints in France. They are usually looking for property in perfect condition or with a lot of character or even recent functional properties. Lastly, although it is a market that is stigmatised by the tax instability, it is considered to be attractive because of the quality of life, personal safety and the relative stability of the value of property with an outlook of capital gain in the event of a resale.