How is the Paris residential market performing?

The second lockdown and the strengthening of health measures had a moderate impact on sales to individuals in the fourth quarter, without, however, managing to make up the ground lost in the first half of the year. As for prices, they were still up by more than 6% year-on-year in the second-hand sector at the end of 2020, even though they have started to fall in inner Paris according to data from notaries' pre-contracts. Specifically within the luxury market, 2020 has been quite exceptional despite the pandemic, and 2021 seems likely to continue in this way. 

In the rest of the Greater Paris Region, prices should continue to increase, even if at a slower rate compared to the rates seen before the crisis. The structural factors that encourage people to buy remain in place: supply is still not sufficient to meet the needs of the Greater Paris Region population and households are benefiting from good borrowing conditions. In addition, the French government has recently relaxed the conditions for granting bank loans. Lifestyle changes related to the Covid-19 pandemic will also remain one of the driving forces of the residential property market, in particular in connection with the rise in remote working. Finally, the progress of the Grand Paris Express project – the largest transport project in Europe with 68 new stations and 200 kilometres of additional tracks – will continue to support price rises in some of the towns best connected to the new and future transport lines.

Residential property will also continue to whet the appetite of institutional investors who are seeking to diversify their allocations and taking advantage of an environment that is still favourable to property as an asset class. In 2020, residential investment volumes increased by 30% year-on-year, with over €5.2 billion invested in France, and could continue to grow in 2021 although the scale is likely to be limited by a lack of assets for sale. Major French players will continue to play a decisive role. Foreign investors are for the moment less present, but they are increasingly active. They also have great ambitions in the French market for serviced residences, such as Hines in the co-living and multi-family sectors, and similar to the platform launched by Ivanhoe Cambridge and Greystar for student residences. Finally, the market for senior housing is also whetting the appetite of major international funds, whether they be long-standing players in the French property market, such as the recent agreement between Aberdeen and Icade, or new players such as the off-plan acquisitions by the Danish pension fund PFA.