FRANCE: Debt worries and fears of recession may be hitting most markets, but French property prospers with prices up sharply since 2008

Record ID: 602192

  • Title: FRANCE: Debt worries and fears of recession may be hitting most markets, but French property prospers with prices up sharply since 2008
  • Date: 8th September 2011
  • Summary: PARIS, FRANCE (SEPTEMBER 7, 2011) (REUTERS) VARIOUS OF PORTFOLIO MANAGER, LUDOVIC EYT-DESSUS WORKING (SOUNDBITE) (French) PORTFOLIO MANAGER, LUDOVIC EYT-DESSUS SAYING: "I believe that people still want to buy property, still want to buy gold and the products we call sound investments, strong currencies. Unfortunately, they won't be able to do so for long and we can see
  • Embargoed: 23rd September 2011 13:00
  • Keywords:
  • Location: France, France
  • Country: France
  • Topics: Business,Finance
  • Reuters ID: LVABTS27PRGQMJECHFU5P6AX3OCU
  • Story Text: Sovereign debt crises and worries about the future of the euro might be bringing financial markets to their knees around the world, but they haven't stopped one sector from doing well: the French property market.
    As housing prices have stagnated or even fallen in many industrialised countries since the financial crisis in 2008, prices in Paris and many big French cities have stormed higher, boosted by strong demand by overseas investors, low supply and beneficial interest rates.
    After shooting up by more than one quarter in 2010, according to French estate agents' federation FNAIM, prices could edge up a further six percent this year -- more in sought-after areas.
    This apartment is an example of some of the very best that money can buy.
    On the market for a cool 15 million euros ($21.07 million) it is the heart of Paris' plush seventh quarter. It boasts nearly 600 square metres of living space, two bars, an indoor projection room and even an extra one bedroom apartment in a nearby building for guests.
    Properties this big are rare in Paris but besides the grand proportions and double stairway which ornate the lobby, the property's modern design and luxurious finish also breaks with Parisian convention, where luxury is normally rooted in classicism and Haussmanian tradition.
    Elaborate lighting systems, air conditioning and air humidifiers all come as standard. A wander to the house's basement and one can find four separate rooms, the house's main core, which contain the various generators and boilers needed to make it function.
    For Ines Fonteneau, an estate agent specialising in luxury apartments and houses in the capital, exceptional properties will continue to rise, even if prices in the rest of the capital are now beginning to level out.
    "We are seeing countries arrive on the market as clients. There is obviously Brazil, where certain people have made massive fortunes and choose to invest in Paris. There is obviously India, with big fortunes in India. There are the Americans, individuals from the Middle East, and certain French clients," she said.
    "It's true that we can have more cases of love at first sight amongst this group of non-residents. That means people who will buy a property very quickly because they will fall in love with it. And I would say even if the price is extremely high," she added.
    Underpinned by particularly strong growth in the Paris market, French property prices rose by 8.7 percent year-on-year in the first quarter of 2011 -- more than any other OECD country for which figures were available.
    However, with recent market insecurity crippling markets and concerns arising over sovereign debt in the euro zone, the meteoric rise of property markets might now be coming to an end.
    "I believe that people still want to buy property, still want to buy gold and the products we call sound investments, strong currencies. Unfortunately, they won't be able to do so for long and we can see today prices in the centre of town which are completely out of sync with the value of the goods," said Parisian Portfolio Manager, Ludovic Eyt-Dessus.
    "In times of crisis, even if property is a sound investment, there is a moment when we can no longer buy. So there is a risk, of seeing prices collapse maybe not, but of being strongly revised downwards in the centre of town, where prices had increased the most," he added.
    The French central bank warned in July that financial stability could be at risk should the market suddenly tank, but also said high prices were contributing to middle-class misery and distorting the economy.
    For Parisians living in desirable areas, the knock-on effect has already made its mark.
    "It's not in proportion to the quality of the buildings. I'm in an area where it's not very pretty but it's trendy. So it works because it looks good to live there. So automatically, prices go up. It's like the stock market. At the moment, everyone is selling so prices are going down. But where we are, everyone is buying," said Parisian Josette.
    And as some are driven out of their area, others are locked out of the city altogether.
    "It's annoying because it's increasing quicker than the purchasing power and it's becoming more and more complicated for everyone to find a place to live. And even, in regard to a potential purchase because prices are going up and the purchase price of an apartment or a house is still just as high," said Ile-de-France resident Michel.
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