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My husband Philippe and I have been investing in Paris real estate for almost 25 years. We love Paris and are lucky enough to have realized our dream of living here for part of the year and have a business where we can share our passion with others. We have bought and sold a number of apartments over the past 25 years. And we have made money and also lost money.
Several guests of our guests at www.parisperfect.com feel the same way we do about Paris and have decided to buy a Pied a Terre in Paris, spending part of each year savoring life and this beautiful City. We recently our services to help locate, purchase and manage apartments for two guests who have become friends – and they were thrilled with the results. We located two stunning apartments, negotiated an excellent purchase price, oversaw their complete remodeling and furnishing, on time and on budget. In this issue and the following ones, we offer some of the tips we live by when making a search for clients and investing for ourselves.
Our Most Important Rule: Buy Defensively:
When the real estate market is buoyant and interest rates are low, it’s easy to buy and sell apartments, any apartment. There is plenty of choice in Paris, lots of new ‘emerging areas’ and many agents who are eager to help you buy your Pied a Terre. But, as anywhere, there are very few extraordinary apartments which will sell in any market. Before you buy, ask yourself if, in a bad real estate market, will this apartment will ‘fly off the shelves’ or sit there with dozens of other ‘nice, but …’ properties.
- The right neighborhood
The first step is to identify the neighborhoods that you want to live in. There are lots of beautiful neighborhoods in Paris and each one has unique characteristics and charm. A number of arrondissements are ‘colorful and emerging’ as described by real estate agents --and apartment prices tend to be cheaper as a result. Some neighborhoods such as the 4th, 6th and 7th are more expensive, unquestionably the most sought after and highest priced.
It’s hard to find a balance, but we advise clients to think long and hard about the price/defensiveness of the purchase. Our advice is to think defensively; in a weak market what arrondissements will still be sought after by Parisians themselves and by other foreigners? As in any city, the best neighborhoods tend to hold their values in bad markets. When actual transactions numbers shrink you want to be in the neighborhood that is seeing buying activity.
We read an interesting article about the 17th arrondissement last summer; the prices/square meter are more affordable than some of the Left Bank Neighborhoods and there is alot of choice. We enjoy the 17th and the area around the Park Monceau. But we know it is not the first choice for a foreigner when searching for that special Pied a Terre in Paris. Additionally the arrondissement was built up by Insurance Companies at the turn of the Century who built so many apartment buildings that it is difficult to differentiate one apartment from another.
Emerging neighborhoods offer a lot of charm and prices can be much lower than elsewhere. For pioneers, it can be an excellent long term investment; but we stress long term. We ask our clients to consider the unexpected: if they need to sell, are they in the neighborhood that still attracts conservative foreigners and Parisisans?
For ‘color and emerging’ neighborhoods, there is a safety factor which remains an important consideration: Our quick check is to ask: ‘Would we let our adolescent children walk around here at night?’ If the answer is no, we say no.
- Tip
If this apartment is for sale in a City you know well, would you choose this location? You can generally make this handy comparison if you have spent any time in Paris. Picture the apartment relative to where it would be located in a City you know, such as San Francisco, New York, Boston or London. Is the Paris location comparable to Pacific Heights or Russian Hill in San Francisco -- neighborhoods which have held their value in good markets and bad, or an untested area such as South of Market where values have exploded but are currently declining the most? Our advice is to go for the best area you can afford, because they tend to hold their value in bad markets.
Friends of ours in San Francisco bought an apartment with bay views in the emerging South of Market area 10 years ago. They recently decided that they would prefer being on one of the San Francisco Hills and they put their condo on the market 5 months ago. It would have sold within a week last year, they have not had a single bite. In a good market, everything sells – but not in a bad one.
So think hard about whether your apartment is in an ‘unquestionably sought-after’ neighborhood, one that has not stood the test of time. We love several ‘emerging’ neighborhoods in Paris, but we want to be sure that this is a high demand location should we decide to sell.
How much has the neighborhood appreciated in the past 5 years? These numbers are readily available from any real estate agent – ask to see them. Our logic may be the reverse of what you think: if the area’s prices have exploded in the past few years, there is usually some air in the numbers. If interest rates rise the economy weakens, you may have been the last buyer in to pay the top dollar.
Will Parisians buy in your neighborhood if the market weakens?
An obvious question; if the market is weak, what are the neighborhoods that Parisian ‘bargain hunters’ will migrate to? This is important to consider – there are some neighborhoods they won’t touch and others they would love to buy in at the right price.
- Remodeling Costs Are The Same
This is Philippe’s motto and an all-important tip. Our experience of completing almost 30 projects on time and on budget in the past few years is that to remodel a 70m2 apartment, the remodeling cost ranges between € 80,000 to € 110,000. This is for a high quality project, includes all electricity, plumbing, new bathrooms, new kitchen, restoration of features, carpentry, architect supervised, using quality materials and workmanship. The apartments were delivered on time and on budget and there were no significant surprises regarding workmanship or mistakes. There is no point in trading down on the apartment and location if you have to spend the same amount to bring it up to your standards.
Yes, we have seen apartments that have been remodeled for less (and some for much more), some acceptable and many disasters – we offer our tips and suggestions about remodeling in a future article.
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