For the first time since records began, this year has seen Paris attract more capital into property investments in the French capital than has been drawn to London. The data showing the impact a combination of factors from Brexit uncertainty to increases in stamp duty for investment properties than are not a primary residence have had on London’s attractiveness as a property investment location for overseas nationals, was recently published by international real estate group CBRE.
The report also highlights that it is not only UK-centric factors that have influenced the shift in the sentiment of international property investors. France’s healthy economy, benefiting from several recent changes made by President Macron as he attempts to make his country more ‘business friendly’ have also helped boost the attractiveness of Paris.
The annual CBRE report compares property investments made across leading international cities and this year placed Paris in the number one spot. Central London was knocked into second spot, followed by New York, Singapore and Shanghai. CBRE France’s executive director Nicolas Verdillon commented:
“It’s the first time since records began that we have found more investment in Paris than in London.”
French news website Atlantico seemed particularly enthused by the development, referencing a dream of Emperor Napoleon Bonaparte’s nephew, Emperor Napoleon III, who ruled France between 1848 and 1870. The Emperor had insisted that one day “France would catch up with Great Britain”.
The CBRE study showed that not only has Paris attracted more money into property investment this year but that it had doubled the tally of its competitor to the north. So far this year investors have poured €14 billion in Paris real estate compared to €7 billion spent on properties in central London. Over the third quarter, Paris attracted investment of €4.5 billion and London €2.5 billion.
Overall, central London has seen overseas investment in property fall 33% on 2018’s inflows. Paris has moved in the opposite direction with 16% higher investment this year and a huge 44% increase over the third quarter. That is changing the face of the Paris property market, which traditionally attracts less than 50% of total property investment from foreign buyers compared to 70% in central London. However, this year more than 50% of the total property investment has come from overseas. In London it has slumped to 45%.
Mr Verdillon believes Paris has directly benefited from a loss of enthusiasm for London from particularly Asian investors, who he says have been put off by Brexit uncertainty. He thinks many of them have chosen to buy in Paris instead. However, he cautioned that once Brexit is complete and the new reality clearer, property investors could return to London.