2021-10-02-莱坊-Prime_France_Report_2021_7页_4mb

PRIME FRANCE REPORT 2021 Summary

Core Content

The PRIME FRANCE REPORT 2021 provides an overview of the performance and outlook of prime residential markets across France, with a focus on Paris, the Côte d'Azur, the French Alps, and Provence. It highlights how the pandemic affected demand, supply, and price trends, as well as the long-term growth prospects fueled by infrastructure projects and lifestyle preferences.

Key Findings

• Overall Market Resilience: France's prime residential markets remained resilient in 2020 despite the pandemic's challenges.
• Price and Sales Trends:
  • Prime markets saw an average price increase of 1.3% in 2020.
  • Cumulative sales increased by 5% in the six months to February 2021.
• Pent-up Demand: A surge in overseas demand is expected once borders reopen, with 40% of French citizens vaccinated by June 2021 and the EU easing travel restrictions.
• UHNW Growth: The number of ultra-high-net-worth individuals (UHNWIs) in France is projected to rise by 53% to nearly 23,700 by 2025.
• Infrastructure Boost: Major projects like the Grand Paris Project and the 2024 Olympics are set to drive future growth.

Impact of the Pandemic

• Supply Constraints: Lockdowns and delays in construction have reduced new-build opportunities.
• Shift in Demand: Buyers sought more space and privacy, especially in rural and mountainous areas.
• French Buyers Dominance: International buyers were restricted, leading to a 60% share of prime sales in France in 2020.
• Price Softening: Prime prices in Paris dipped by 2% in 2020, but super-prime sales remained stable.

Paris

• Resilience: Paris' prime market remained largely resilient in 2020 due to low interest rates, investment, and lifestyle reassessment.
• Residential Sales: Annual sales volumes increased by 5% between August 2020 and February 2021.
• Pent-up Demand: Paris saw a 34% increase in households moving from the city center to the suburbs in 2020.
• Prime Price Band: The €2m-€4m price band was most active, with average prices at €19,600 per sq m in Q1 2021.
• Cash Buyers: 87% of prime purchasers opted for cash, indicating confidence in property as a store of value.
• Infrastructure Impact: The Grand Paris Project and 2024 Olympics are expected to boost economic activity and property values.

Côte d'Azur

• Market Performance: Prime price growth was largely static in 2020, but demand for villas increased at the expense of apartments.
• Key Areas: Strong demand was seen in areas like St Jean Cap Ferrat, St Tropez, and Cannes.
• UHNW Influence: Monaco residents were a strong component of demand in 2020.
• Future Outlook: The 2024 Cannes Film Festival and MIPIM are expected to signal recovery in tourism.

French Alps

• Ski Home Interest: 26% of European UHNWs are more interested in buying ski homes post-pandemic.
• Prime Price Growth: Average prime prices increased by 2.5% in 2020, with Megève and Chamonix seeing the strongest gains.
• Rental Boost: The region saw a rental boost in summer 2020 as buyers switched from hotels to chalets.
• Tax Incentives: A 20% VAT rebate is available for new-build properties rented for 20 years.
• Seasonality: Alpine resorts are transitioning to year-round operations, reducing exposure to climate change.

Provence

• Market Activity: Provence was the busiest of all Knight Frank's European markets during the pandemic.
• Sales Increase: Over 51,000 sales were agreed in the year to February 2021, up from 48,000 in the prior year.
• Price Trends: Prime prices increased by 1.3% in 2020 and 5% in the first five months of 2021.
• Demand Shift: Buyers retreated to established core markets for amenities and community.
• Rental Demand: Popular rental destinations include St Rémy, Eygalières, Bonnieux, Gordes, and Ménerbes.

Key Prime Neighborhoods

Outlook

• Sellers' Market: Prime France will remain a sellers' market until Q1 2022 as pent-up demand is released.
• Activity Slowdown: Activity will slow ahead of the May 2022 Presidential Election.
• Economic Factors: The large financial services sector, high productivity, and infrastructure improvements will support growth.
• Tourism Recovery: It may take until 2023 for tourist numbers in Paris to return to 2019 levels.
• Brexit Impact: The 90/180 day rule affects British buyers, but the overlap with the pandemic has made it difficult to assess its full impact.

Financial and Policy Context

• Mortgage Rates: At 1.11%, mortgage rates are at a 50-year low.
• Government Support: France deployed €604 billion in liquidity support, including a furlough scheme covering 84% of net wages.
• Debt Threshold: The household debt threshold was raised from 33% to 35% to support lending.
• Tax Regime: France's established wealth tax model provides reassurance to potential buyers.

Summary of Trends

• Shift to Space: Demand for larger properties with outdoor space increased significantly.
• Re-pats and UHNW Buyers: French nationals returning from abroad and European UHNWIs are driving demand.
• Infrastructure Projects: Major developments are set to boost property values and economic activity.
• Rental Market Growth: The private rented sector (PRS) is expanding due to increased demand and favorable investment conditions.

Key Statistics

• French UHNWIs: Expected to increase by 53% to 23,700 by 2025.
• Prime Price Index:
  • Paris: €19,600 per sq m in Q1 2021.
  • Côte d'Azur: €19,600 per sq m in Cannes, €25,500 in Cap d'Antibes.
  • French Alps: €14,300 in Megève, €26,100 in Courchevel 1850.
  • Provence: €6,200 in St Rémy, €8,500 in Eygalières.

Conclusion

France's prime residential markets showed resilience during the pandemic, with a notable shift in buyer preferences towards properties offering more space, privacy, and access to nature. Infrastructure projects and favorable financial conditions are expected to drive future growth, making France an attractive destination for both domestic and international buyers. The market is projected to remain strong until Q1 2022, after which it will likely return to normal seasonality.