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Cityscapes: Real Estate in French Cities
March 15, 2010
For most, the cliché image of a French vacation retreat is a tumbledown barn that, with a bit of tender loving care, can be transformed into a spacious country home surrounded by vineyards and olive trees. Few consider city apartments, which offer excellent value for money and can be ideal investments, doubling up as rental properties. Here's how real estate stacks up in four of France's most attractive cities:
A wonderful city, full of culture, history and stunning architecture, which draws more than 30 million visitors every year. That means you will never be short of things to do while you are in residence, but it also means a thriving rental market—short term rentals for periods when you are not using your pied-à-terre, or longer term if you should ever tire of your Parisian home away from home. Some 63 percent of Paris residents are renters, so finding a long-term tenant should never be a problem.
Currently, however, the short-term rental market is in a state of disarray, following a recent announcement by the City of Paris that has panicked many individual private landlords who rent furnished apartments by the week to tourists and other visitors. According to the Prefecture of Paris, more than 38,000 apartments in the capital are being rented illegally, and steps to prosecute owners have begun.
In fact, in Paris it is illegal for an owner to rent a property not classified as commercial for any period of less than one year. The sole exception is for student rentals, where the term can be no less than nine months. Properties intended for potentially lucrative short-term rentals by the week or month must be classified as commercial. If they are not, owners face a fine of up to €25,000.
The law is not new—it was introduced more than twenty years ago. But it is now being fully enforced in a bid to alleviate the chronic shortage of affordable housing in the city center. Susie Hollands, owner of the Paris-based real estate consulting firm Bonapart Consulting, says "This law potentially affects about 300 of my client-owners, many of them based in France, the UK and the US. What I'm advising is that they either switch to longer term rentals of one year, or go through the legal process to change their apartment's legal status to commercial." While the law has not yet been fully applied, Hollands recommends a preemptive approach to correct what could prove to be a serious situation for owners.
Yolanda McCafferty, a property consultant with Vivre à Paris, has stressed to her clients that if their property is unfurnished, it can still be considered residential rather than commercial, even if it is rented on a private basis. But she adds, "There are implications to this enforcement of the law, which has been around for years. One thing is the tax issue. If you change the status of the property to commercial you will also have to change it back to residential to sell it."
"But an unfurnished flat can still be residential," she insists. "As real estate agents, we don't think we will see an impact in the market unless the City tries to force changing the status of the property." Unfurnished apartments may be legally residential, of course, but they won't rent for the lucrative weekly-rental prices that made investment buying so interesting.
In general, the Paris property market cannot be compared to the average situation in the rest of France, but rather follows the same standards as other major European capitals—London, Rome, Madrid and Berlin. Paris prices also vary enormously depending on the district—nowhere is the old rule of location foremost more absolute.
The city is divided into 20 arrondissements, spiraling out in the shape of an escargot from the 1st, which includes the Louvre and the Tuileries Gardens. These days the most expensive quartier is the Left Bank's 6th arrondissement, the neighborhood of Saint Germain des Prés, where figures for the first quarter this year put prices at €10,040 per square meter (at current exchange rates, approximately $1,400 per square foot). This area was followed closely behind by the 7th arrondissement at €9,760. The cheapest area is the 10th arrondissement—around the Gare du Nord and the Gare de l'Est railroad stations—where prices fall to as low as €4,850 per square meter. The 10th also includes the trendy and sought-after quays of the Canal Saint Martin, more expensive than the rest of the neighborhood but still an attractive place to do some hunting. Or try the 2nd arrondissement for some recently renovated loft conversions, at between €6,000 and €7,000 per square meter.
An overwhelming 95 percent of properties in Paris are apartments, rather than houses, and a large number of them look very much alike. Much of the city was rebuilt in the 19th century under the direction of Georges-Eugène Haussmann, who introduced straight, wide, tree-lined avenues, spacious parks and gardens, and a standard building height. As a rule, Haussmannian buildings tend to follow the same basic design, with the second story étage noble having the largest apartments and the most sumptuous balconies, but even the attic rooms in these classic buildings are very much in demand. Something else to consider, if you hope to rent your Paris apartment, is that authentic properties in central Paris might need a considerable amount of work done before they pass the necessary checks stipulated by rental agents.
The sunny resort on the Mediterranean coast has been popular with visitors since the 19th century, when Queen Victoria came to escape harsh English winters on its balmy, sheltered shores. The fifth largest city in France and the economic center of the Côte d'Azur, Nice may lack some of the glittery sophistication of its smaller but more glamorous neighbors such as Cannes and Saint Tropez, but it has plenty to offer. The city stretches back from the curving coastline of the azure blue Baie des Anges—the aptly named Bay of Angels—to the northern hills that harbor exclusive residential areas such as Mont Boron, where Elton John has a house.
Every year, more than four million tourists arrive at Nice's international airport to savor the city's delights—not only a stunning waterfront but also wonderful museums, a national theater, scores of restaurants and cafés, a sleek new tramway, a busy shopping district, and more than 300 days of sunshine every year.
Nice is divided into eight districts, and property prices vary hugely depending on the neighborhood. Among the most expensive areas is Cimiez, a hilly expanse in the northeast of the city, where prices last year hovered between €3,370 and €4,540 per square meter. Another high-priced district is Vieux Nice, the historic old town, just back from the seafront beneath the hill that was once the site of the city's château-fortress. Properties in the northern section of the central city are among the cheapest, at an average of €2,440 per square meter. Especially when compared with other resorts along the Côte d'Azur, prices in Nice have remained relatively reasonable.
Founded by Greek traders in the 4th century BC, Nice was ruled by the counts of Provence and then the Italian dukes of Savoy until 1860, when it reverted to France. While Vieux Nice has retained some of its Italianate features-including beautiful Baroque churches-much of the city was rebuilt, and its urban planning and architecture were heavily influenced by what Haussmann was doing in Paris at the time. As in Paris, most properties in central Nice are apartments-there are said to be only a dozen or so individual houses in the entire city center.
More recently, the city has undergone considerable renovation, and experts now tout Nice as the place to find some of the best property investments in France. Property prices between 2004 and 2008 increased by an average of 14.4 percent, and although growth has slowed over the last year, real estate agents seem confident that things will pick up again next year.
Nice also enjoys a booming all-year rental market, and rental opportunities will only increase with the local government's major plans for development, which include the creation of a new student district, a luxury marina in what is now a mainly functional port, and the extension of the TGV Méditerranée, which will reduce the travel time from Paris from six hours to just over three and a half. Average rents in Nice are the second highest in France, after the Paris region, and apartments, depending on location and condition, can be rented at peak rates for as many as 35 weeks per year.
Home to just over half a million people on the southwest coast of France, Bordeaux has always been one of the most beautiful cities in the country, and now, after a major program of urban renovation, it is stunning—polished and sparkling, filled with splendid examples of neoclassical architecture, with wide avenues and plenty of open spaces. Like Nice, it has a convenient international airport, a new, state-of-the-art tramway. It's an excellent base from which to travel around the region, from the popular surfing beaches on the Atlantic coast to the famous vineyards of Médoc and Saint Emilion.
A large section of the city center is for pedestrians only and offers a superb range of fashionable shops, notably on Rue Saint Catherine, which claims to be Europe's longest shopping street. There is also a huge student population and a high level of employment, and enough of the city's historic architecture has been preserved to earn a designation as a UNESCO World Heritage site in 2007.
Traditionally, property in the center city has been the domain of the French themselves, while international buyers have preferred to buy in the suburbs. However, there are some wonderful neoclassical properties with spacious rooms and high ceilings right in town that would make ideal vacation homes, whether rented out part-time or not. Best bets here are properties in the Chartrons quarter, overlooking the Garonne River, where you can find one-bedroom apartments for under €200,000 and good buys can also be found near the popular Place Gambetta, in the Grands Hommes quarter.
La Ville Rose—the pink city, so called because of its predominant pink-brick architecture—is France's fourth largest city, and home to the Airbus and the sprawling aerospace industry. The capital of the southwestern Midi-Pyrénées region, midway between the Atlantic and the Mediterranean, the city on the banks of the Garonne River enjoys a mild climate and a bustling, cosmopolitan lifestyle. A renowned university center since the Middle Ages, it has a huge student population, as well as a hefty share of tourist visitors attracted by its superb museums, Renaissance mansions and magnificent Romanesque and Gothic churches. And while it is famous for its aeronautical industry, it is also known for its electronics, information technology and biotechnology sectors. The city's booming industrial success has prompted major infrastructure investment and excellent transport links. And as if all that weren't enough it's also a bastion of great food and wine.
Property prices have risen considerably over recent years, as more businesses and their employees have been drawn to the city. But a current downturn in the aeronautical industry, with extensive job losses expected to continue at Airbus, has led to a fall in prices of about 10 percent over the last year.
But with apartments accounting for almost 80 percent of the city's real estate, and with 64 percent of some 400,000 residents renting, Toulouse is an ideal place to purchase for investment or part-time rental. The areas around Le Capitole, Busca and Les Carmes are very popular for tourist rentals, or—if you hope to attract student tenants—try Saint Cyprien, Saint Michel or Patte d'Oie. Apartments in Toulouse tend to be larger than in other major French cities, and they currently average around €3,304 per square meter.
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