France’s new highest tower

After six months of negotiations, the French oil group Total has chosen its new address for its future headquarters, which will come out of the ground in 2021. If Total changes tower, it will remain at La Défense.

This is good news for La Défense, which continues to confirm its position as Europe’s leading business district. In fact, the economic lung of Paris will host a new giant tower in the next four years, in which Total will set up its headquarters. The group wishes to move Michelet and Coupole towers, considered to be ageing, where they have stood for more than thirty years. The management had offered for employees to choose their new place of work, among three possible projects.

Employees were given the choice between the Tower Sisters by architect Christian de Portzamparc, a 125,000 sqm office campus within a large 9-hectare park in Nanterre, and the “Link” tower developed by Groupama Immobilier. This last project was selected. In all, nearly 6,000 employees will be grouped together in this skyscraper of 244 meters in height, which will dominate the sky of Paris by 2021. The First tower, 231 meters high, will thus lose its title of highest tower of France.

The project is to be built in the Michelet district of Puteaux, on the edge of the circular boulevard, on the site of the current Michelet building, which houses part of the Groupama offices. The tower, which along with the First tower, will form a symbolic gateway to the district, will be visible from all over Paris, and will thus constitute a new landmark in the sky of the capital.

Record real estate transactions in France

More than 900,000 transactions have been carried out in the last twelve months in France, according to a note published by the notaries of France. A figure clearly higher than the 880,000 sales anticipated beforehand.

Between May 2016 and May 2017, 907,000 real estate transactions were carried out in France, according to a note of conjuncture of notaries of France published this Thursday. A historic record that exceeds the volume cumulated a year earlier (824,000 in May 2016). This performance is all the more unexpected since the last prospects of notaries, which result from the number of pre-contracts (documents whose signature precedes that of the deed of sale), anticipated a volume of transactions close to the 880,000 sales.

In any case, this surplus of nearly 30,000 sales shows how much the French have rushed to take advantage of the borrowing rates which, despite the slight rise at the beginning of the year, are still favorable. “There is no shortage of goods to sell, but properties are snapped up very quickly by investors, explain notaries. This situation results from sales that are made without negotiation, pulling prices upwards.

Artificial intelligence on the up in our homes

Estimated to be $19 billion by 2022, the artificial intelligence market is beginning to focus on the home. One company has designed the first virtual emergency store.

Will the house of the future be hyperconnected and intelligent? This is the bet that many French companies are making, whose innovations aim to make our life easier in our house. For example, HomeServe, in partnership with the European leader in natural language understanding Recast.AI, has developed a virtual assistant that offers solutions to solve domestic problems in an emergency.

Named “Tom”, this artificial intelligence takes the form of a “chatbot” on the model of messaging applications like Messenger or Whatsapp. The user explains the problem they face by message to artificial intelligence. From this information, Tom identifies the fault and makes a diagnosis. He then offers the right service, with a personalised quote and a fixed price. The client can then plan the intervention of an accredited professional close to home in order to solve their problem.

If you didn’t have hot water anymore, you’d probably know you’d have to call in a plumber, Tom only confirms what you already knew. But this new virtual assistant also finds you one, tells you how much a professional will cost and allows you to schedule an appointment.

Tom’s software, which integrates more than 450 incidents, is able to manage a conversation flow by adapting itself to the language of the user. The skills of chatbot extend today to plumbing and will expand tomorrow to heating and air conditioning.

“Tom is a self-learning bot that improves understanding and efficiency almost in real time,” says Linda Ghodbani, Director of Digital & Innovation. It thus deduces the intentions of the user to establish the final diagnosis and propose the good performance. The integrated payment on Messenger is not yet available in France, the internet user will have to finalize its transaction on the website, to which the software is affiliated.

Paris now intends to reinvent its basements

The Paris City Hall Anne Hidalgo launched on Tuesday a call for “urban and innovative” projects to “build the Paris of tomorrow” within the framework of the “Reinventing Paris” initiative, which this year focuses on the basements of the capital city. “Paris will never be a finished city,” said Anne Hidalgo at the Arsenal Pavilion (4th) at the launch of the second edition of the initiative after the “success” of the first, launched in 2014. 34 sites “to reinvent” by teams of architects, urban planners and artists were unveiled during the presentation.

Mrs. Hidalgo praised a “new method” based on the partnership between various actors to “make a city”. For the second edition of the initiative, the city of Paris has partnered with several companies including RATP, Renault and SNCF, who have suggested several sites to be renovated. For example, RATP suggested “ghost stations”, such as the Champ de Mars metro station in the 7th arrondissement, opened in 1913 and closed to the public since 1939 because of its low frequencies, and the Croix-Rouge station (6th), which already hosted an exhibition in 2007. SNCF has suggested the site of the Esplanade des Invalides, a vestige of the 1900 universal exhibition, which has 18,000 square meters of basement.

Paris’ top floor apartments are 19% more expensive than on the ground floor

We all know that the higher the floor an apartment is located on, the more expensive it is. The sunshine is more important and the view more pleasant. But this comfort has a price. How much? 5%? 10%? Or more? Answer: The difference in price per square meter between the ground floor and the top floor in a building with elevator is 19% in Paris and 15% in the province, according to a study by MeilleursAgents.

For example, for a 50 sqm Parisian apartment located on the ground floor of a building with an elevator, an individual will have to pay, on average, €380,750. For the same apartment, located in the same building but on the 6th and last floor, the price climbs to €452,700. “The ground floor is less in demand because there is more nuisance, but it allows you to afford an extra room for the same budget compared to the top floor,” explains Sébastien de Lafond, president of MeilleursAgents. On the top floor, you will have one room less, but will have better views and more sun”.

Rest assured: if you own a ground floor flat, you can still find a tenant. It’s all about price. To hope to sell it as well as possible, your apartment must have access to a private space. The discount per sqm compared to a top floor flat is lower for a studio than for a large apartment. Small areas are mainly for investors and their tenants are less reluctant to live on a ground floor because they do not generally commit long term.

Record in sight for prices in Paris’ resale buildings

As interest rates continue their slow recovery, prices for resale homes are expected to break all records in the capital next summer, with a price of €8,800 per sqm, with an annual increase of 7%, according to estimates by notaries. It’s enough to crush the hopes of potential buyers, whose purchasing power has already begun to decline, as well as slow the growth of the real estate market.

In the first quarter of 2017, prices for resale apartments in Paris were €8,450 per sqm after rising 5.5% year-on-year (compared with 3% for France), in large transactions – over 10,000, a new record for a first quarter. Thus a new historic record of the price of apartments would be reached next summer, the previous summit dating back to summer 2012, with €8,460 per sqm.

After experiencing “slow erosion for three to four years” and going down to €7,880 per sqm, the prices of apartments in the capital have been rising since the summer of 2015 and have thus recovered in the first quarter of 2017, the highest in less than two years.

Prices already fell in the most affluent neighborhoods: they exceed €10,000 per sqm in seven districts, of which four (1st, 4th, 6th and 7th arrondissements) are more than €11,000 per sqm. In the last quarter of 2016, the capital had only two districts at more than this amount: the 6th and 7th arrondissements. Conversely, only 4 districts remain below €8,000 per sqm: the 13th (€7,740), 18th (€7,580), 19th (€6,910, the cheapest in the capital) and 20th (€7,380).

Paris in the new race for skyscrapers

The Palais de Justice inauguration, construction permit for the Triangle tower, the start of the Duo towers project: skyscraper projects flourish again under the sky of Paris, 44 years after the emblematic and unpopular Montparnasse Tower (210 meters high). A few meters from the construction machinery plowing the ground, in the 13th arrondissement (south of the capital), the aedile Anne Hidalgo savors his victory.

On Thursday, the mayor of Paris recalled the “controversy” and “long and violent debate” during a ceremony regarding the first groundbreaking project of the future Duo towers (180 and 122 meters) designed by architect Jean Nouvel. ” We wondered: Do we have the right to imagine contemporary architecture in Paris?” which was then only adjoined to the urbanism of its predecessor, Bertrand Delanoë. “I am not a huge fan of the towers, but I had to allow the freedom to lift the taboo of tall buildings to create a modern city of the 21st century. We fought this fight and we won it.” Overlooking the peripheral boulevard and railway tracks, the Duo towers, partially leaning “to capture the reflections of cars and trains, day and night”, will house 85,000 sqm of offices and another 30,000 sqm of shops and a hotel-restaurant.

The era of controversy seems to have passed as three 160-180 metre tower projects are now underway in the capital, including Duo, built by Ivanhoe Cambridge, which will be finalised in 2021 and will become the Natixis bank headquarters.

French property sales exceed pre-downturn levels

Higher house prices accelerate across France

With 867,000 annual sales recorded at the end of February, the property market in France is now at it’s busiest ever level, even more so than the previous high of 837,000 in May 2006.

A lot of this is to do with the domestic market, where motivated buyers, backed by zero-rate loans for some and the favourable Pinel tax system, combine with a backdrop of favourable interest rates, has enabled the market to gain much fluidity.

Prices are now responding to this positivity. It’s worth noting that the notaries remain cautious by recalling that “unlike the volume of transactions, prices in the 4th quarter of 2016 have not totally recovered those of the years 2011-2012 nor those of the years 2006-2007.” (+ 1.5% for resale houses and 1.9% for resale apartments) and some cities continue to decline: Saint-Étienne (-5%), Toulouse (-1.5%) and Marseilles (-1.3%) for old apartments and Nancy (-6.9%), Valenciennes (-4.3%) and Béthune (-3.6%) for the houses.

Luxury apartments: Monaco becomes more expensive than Hong Kong

According to a real estate survey, luxury homes in Monaco are the most expensive in the world, surpassing for the first time those in Hong Kong. At €41.400 per square meter, prices have increased by 180% in 10 years.

Parisians are accustomed to complaining about the increase in the price of stone but what should say the Monegasques then. According to a study by international real estate network, Savills, Monaco has become the most expensive place on the planet to afford luxury accommodation. The average resale price of a home was €41,400 per square meter. More than the level of prices is their wild growth which surprises: + 180% in 10 years, a quasi-triples. In this luxurious market, only the city of Shanghai experienced a stronger boom (+ 248% in ten years). Next door, Paris or New York could almost seem reasonable with tariffs having “only” increased by 32% and 45% respectively.

How did this little rock, which has barely 38,400 inhabitants, manage to rise to the rank of such global success? Obviously, the low tax level is not unrelated and when added to the possibility of mixing business with leisure there is, according to the study, “a particularly attractive place for the uber rich to live, work or enjoy”. The document notes that Monaco exceeds, for the third time, the €2bn bar of annual transactions to reach the record level of 2.7 billion. Depending on the size of the apartments, average prices range from €36,300 / sqm for one-bedroom units to €48,500 / sqm for 4 bedrooms and more.

Housing construction at the highest level since the end of 2012

Housing construction and building permits are increasing in France. At the end of March, 393,400 housing units had been started in the past year and 465,100 building permits were granted.

Real estate and building permits in France continued to show steady annual growth in March, reaching its highest level in nearly four and a half years, according to statistics released Friday by the Ministry Of Housing. On a year-to-date basis, at the end of March, a total of 393,400 developments had been started on a gross basis, an increase of 15.5% compared with the previous year and even higher since October 2012.

Construction continues to accelerate overcoming its original estimate of 13.0% for the first period from March 2016 to February 2017 to reach 13.5%. In the first quarter of 2017, compared with the same three months of the previous year, they even jumped 18.5% to 97,100 units. Many building permits are also being grants and rose 15.9% from January to March, to 113,400 units in a year, the ministry said in a statement.

Over the period April 2016-March 2017, cumulative building permits have reached a record high since May 2013, to 465,100 permits, against a total of 456,100 (revised figure of 7,300 units) over twelve months to the end of February. In the first quarter of 2017, housing construction and building permits were also up, but markedly less compared to the previous three months, with respective increases of 5.1% and 1.8% respectively adjusted for seasonal variations and working days.

Standard housing has increased by 17.8 per cent to 90,100 units in the first three months of the year. On the other hand, resident housing (for seniors, students), a more unstable niche segment, jumped 27.9% to 6,900. On average during the first quarter, the rate of cancellation of building permits was 14.2% for individual houses, 0.1 points above its long-term average. Collectively, it more than exceeds its long-term average, at 22.8% against 20.2%.

There was little change in the average start-up time for individual houses, at 4.6 months on average (-0.1 months compared to the end of February) and 8.6 months (unchanged) for collective housing. Signs confirming the increase in construction are on the rise, both in data published in mid April by the Confederation of Crafts and Small Construction Enterprises (Capeb) and in the favorable quarterly results of the INSEE, published Thursday. But the credit insurer Coface has estimated in a note published last week that the recovery of the sector could be bridled next year under the effect of an increase in rates that would erode the purchasing power of households.

Brexit: European salaries won’t necessarily move around

Several British companies are already preparing to relocate outside of the country. A survey was conducted to find out what alternatives were available to bankers and for start-up salaries… the results were surprising.

Yesterday was the big day: the divorce between Great Britain and Europe was made official. Several British companies envisage moving to another city within the European Union. If London is no longer an option, then Paris doesn’t feature as a suitable next best alternative, a study by Movinga shows.

At the basis of it all are 12 diverse and varied criteria including coworking space, rental rates, transport fees, revenue taxes, if the city is English language friendly and even the cost of a pint of beer. Companies ranked cities based on the most advantageous conditions for both the employees within the city, as well as for those who want to crack into Europe’s startup ecosystem.

Within the banking sector, Paris (ranking 9/10 overall) and Frankfurt (6/10 overall) were hypothesised to place within the top three cities as credible alternatives to the City in London for those looking to escape the constraints of Brexit. To our surprise Dublin, Amsterdam and Valetta, Malta’s capital, known for imposing higher taxes on the wealthy, were found to be particularly advantageous. Revenue in Malta is taxable at 35% compared to Paris’ 49%. Another assett assessed was average rent for high end accommodation, calculated from a selection of top-of-the-range two-bedroom apartments located in the city center and listed in the real estate listings. Where the employees of the City will have to pay out €1,975 in Dublin or €2,010 in Amsterdam, they will pay more than €2,100 euros in Frankfurt and an even higher €3,400 euros in Paris.

March 2017 – French Mortgage Transaction of the Month

Whilst the average duration of a French mortgage taken by a non-resident is 20 years, often clients end up choosing to gear their mortgage in France towards a longer term product to ease the process of buying another property in France.

In this month’s French mortgage transaction of the month, the client, a 48 year old buying a €640,000 ski apartment in Courchevel opted for a fixed rate repayment mortgage to be spread over 25 years at a rate of 2.45%. Over a duration of this length the maximum loan-to-value rate is 80%, therefore requiring a 20% deposit.

Most of the time clients utilising French mortgage products with durations longer than 20 years are asked to do so to improve their affordability calculations (increasing the duration spreads out the mortgage repayments, thus reducing them, in turn for a slightly higher rate).

However, with rates being so low across the board, especially compared to those available elsewhere in Europe (particularly in the UK) occasionally clients opt for longer terms regardless of the slightly higher rate. Why? Sometimes it’s in order to maintain a preferred level of disposable income, but mostly it’s with a longer game plan in mind.

By taking a longer term and therefore having lower monthly payments, the affordability profile is better than it would be on a mortgage with a shorter duration, thus substantially increasing the chances of being granted additional lending on another property investment.

In real terms, per €100,000 borrowed, the monthly cost of a 25 year fixed rate repayment mortgage (at 2.45%) is around €446, compared to the 20 year fixe rate repayment mortgage (at 2.15%) monthly cost of €513, a difference of €67 per month per €100,000 borrowed. Using the Courchevel example above, the property of €640,000 had a loan of €512,000 (at 80% LTV), which equated to a monthly payment difference of around €343 between the two products, or just over €4,100 a year.

For further information on French mortgages and how to calculate your affordability for a French mortgage please get in touch with one of the team.

Have property prices reached a record high in your city?

While Paris is approaching the threshold of €9,000 per square meter on average, 6 of the top 10 French cities are at the top according to the figures of MeilleursAgents.

How far and until when? After a very dynamic 2016, the real estate market is literally buzzing with prices continuing to rise strongly at the beginning of the year (+ 5.2% in Paris at the end of March over one year and + 2.3% in Guy Hoquet agency). “This year 2017 does not really look like the others,” says Fabrice Abraham, general manager of the Guy Hoquet network. We have not experienced the traditional winter downturn or the impact of electoral deadlines, which generally lead to a wait-and-see attitude. “The network also notes that this dynamism (+ 15.4% sales in one year) is driven by a return of first-time buyers and, to a lesser extent, investors who had fled the market. But these are “net” buyers who do not resell anything. Result: the imbalance between supply and demand increases and prices with it.

A situation that allows the Century 21 network, the cousin of the previous one (both owned by Nexity) to set an absolute record price in Paris at €8,743 per square meter, up 5.1% from 12 months age, and even to foresee the crossing of the threshold of €9,000. Without specifying the deadline. For its part, Guy Hoquet recorded an annual increase of 5.4% in Lyon, 5% in Bordeaux, 4.3% in Nantes or 2.9% in Reims, and more reasonably 2.1% in Marseille and 2% in Toulouse. This hasn’t prevented some places from falling, such as Valence (-6%) or Perpignan (-2.1%) and Grenoble (-1.7%).

Property stability: the election deadline isn’t slowing down the market … for now

Despite the sharp rise in prices, particularly in Paris, the volume of transactions has remained stable as the presidential election approaches.

Typically, the real estate market in the past has been rather sluggish when approaching an election deadline – this is not the case in 2017. This is the observation made by two of the French real estate networks of the Nexity Group, Century 21 (with 850 real estate agencies in France) and Guy Hoquet (with 450 branches), which recorded, in January and March, over a year, respective increases of 20% and 15.4% of their trading volumes.

This increase in activity in terms of sales was particularly notable in Paris (+ 17%), but also in the provinces (+ 15.5%). The French continue to benefit largely from low credit rates, despite their slight recovery at the beginning of the year. The historically high credit volumes that have been granted to them over the past few months confirm this.

“Contrary to what has been observed in the past, the presidential deadlines have not blocked the French real estate projects, indicating that they expect only the best in terms of real estate taxation in the future,” comments Fabrice Abraham, general manager of the network. It is true that the abolition of the housing tax for 80% of the French, wanted by some candidates in the presidential election, can appear to be good news for the French. Conversely, that of Emmanuel Macron to make the ISF a “real estate tax” does not encourage future owners. An evolution of transfer taxes has also been mentioned but it currently remains unclear.

French property price rises accelerate

The trend of rising French property prices is now real. In the last quarter of 2016 prices rose by 1.8% for the whole of France, after 1.3% in the third quarter and 0.6% in the second, according to INSEE figures.

The reason? Prices have risen again because ‘households’ have started buying again, which means the French property market remained very dynamic throughout the whole of 2016 and that was after a relatively good year for 2015 too.

The slight upturn in French mortgage interest rates towards then end of 2016, as well as the increasing property prices, prompted undecided French domestic buyers to take action, with the uncertainty of the presidential election shifting into the background.

Are sales back to pre-crisis levels?

Last year, sales volumes reached and even surpassed their record levels of May 2006, with nearly 850,000 properties sold. This record can of course be tempered slightly, as that was 10 years ago, with the population also increasing as well as housing stock, which has gone up by 1% per year on average. This means that it would have been necessary for the sales volumes to exceed 900,000 to really exceed the record of 2006. Nevertheless, 2016 was a good year.

Price increases were largely driven by the Ile-de-France region (+ 3.1% over one year), and particularly central Paris (+4.4%). Outside of Ile-de-France, prices rose more moderately, by 1.3% over one year.

In the Paris region the French Notaires recognised “the renewed fluidity of the market and sales growth of 8% in resale properties and 10% in the new homes market.” Over the next few months, the French notaires expect prices to continue to rise at the same rate, reaching 3.7% in April.