THE IMPACT OF LOCKDOWNON LUXURY REALTY
PARIS AND PARISIAN EXCLUSIVE WESTERN SUBURBS
Analysis carried out by Daniel Féau and Belles demeures de France between
the 8th and 15th of May 2020, questioning 902 potential buyers who were,
prior to lockdown, actively seeking to acquire an asset in Paris or the nearby
western suburbs.
DANIEL FÉAU & BELLES DEMEURES DE FRANCE IN A FEW WORDS:
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• A network compris ing some twenty estate agencies, founded over 70 years
ago and special is ing in luxury realty.
• Areas covered: Par is and the nearby western suburbs, Provence
• Market share:
Our Daniel Féau and Belles demeures de France agencies notably achieved 27
% of Parisian sales at prices between 2 and 4 mil l ion euros (total ing 1.526 bi l l ion
euros*) and 42,9 % of Parisian sales at prices in excess of 4 mil l ion euros in
2019 (total ing 515 mil l ion euros*). Each year, our agencies also sel l between 600
and 700 apartments and private houses priced from 500,000 to 2 mil l ion euro.
*Source: Chambre des Notaires de Paris
THE STATE OF THE MARKET AS IT STOOD ON THE 17TH OF MARCH 2020 :
Demand signi f icant ly exceeding supply, whatever the pr ice range and/or type of asset.
In concrete terms:
• A record number of purchasers,
• A record number of assets under offer or with a sales agreement,
• A very low stock of apartments, houses and pr ivate mansions immediately
avai lable, as a result of the delay between the market ing of an asset
and i ts sale being at at al l t ime low.
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THE AIM OF THE SURVEY:
• The aim was, as lockdown was l i f ted, to obtain a precise indicat ion regarding i f
and to what extent potent ia l buyers’ projects had been affected by this
unprecedented situat ion, and to envisage any possible repercussions on
demand and supply result ing from the cr is is.
• To measure to what extent the Covid-19 cr is is may have inf luenced the type
of asset that buyers were planning to acquire.
THE RESULTS, IN A FEW WORDS:
• 82.20% of buyers are sti l l active.
• In 7 out of 10 cases they shall maintain or increase the budget for
their acquisit ion.
• Although 3 out of 4 of those questioned foresee a drop in
property prices in France in general over the next 24 months,
over 6 out of 10 (61.50%) foresee stabil ity or an increase in price for
the type of asset they are seeking in Paris or in the nearby western suburbs.
• 75.10% of those questioned think that demand for 3/4 bed family
apartments shall continue to exceed supply, as a result of the
rarity of such assets and notably in Paris.
70.80% think that demand for assets with good rental potential
shall also continue to exceed supply as long as interest rates
remain attractive.
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THE PRINCIPAL RESULTS OF THE STUDY:
1. THE PERCENTAGE OF BUYERS INTENDING TO PURSUE THEIR PROJECT IS HIGHER THAN WE ANTICIPATED:
Only 10.40% of those quest ioned have put their project on standby, and 7.40% have
not yet come to a decis ion.
82.20% of those questioned intend to pursue their project : without delay for
64.20%, within the next few weeks for 22.90% and within the next few months for
12.90%.
2. BUYERS ARE MORE CONFIDENT - AND MORE ACTIVE - THAN WE EXPECTED:
About 82.10% of buyers quest ioned are seeking to acquire a main residence. Taking
into account the market segment in which Daniel Féau and Bel les demeures de France
operate, the immense major i ty of cl ients already own their main residence, and the
sale of the latter is often part of the project.
Over 70% of cl ients in this s i tuat ion, that is to say at the same t ime buyers and
sel lers, would prefer to f ind their future main residence before sell ing the one
they currently occupy – possibly taking on a br idge loan – rather than f ind themselves
in the contrary posit ion.
This seems to us the most s igni f icant indicator that confidence remains solid : in a si tuat ion in which conf idence has been lost ( for example in the autumn of 2008), the sale of the exist ing main residence is a deciding factor before
moving on to the acquisi t ion stage.
This conf idence is also ref lected in how those quest ioned expect pr ices to evolve.
Although a l i t t le over 75% think that property pr ices shal l drop over the next 24
months across France in general, over half (52.70%) foresee stabil ity or even an
increase in prices in Paris and in the nearby western suburbs , with over 6 out of
10 (61.50%) envisaging a simi lar s i tuat ion for the type of asset that they are current ly
seeking.
The planned budget for the acquisi t ion would also appear to ref lect conf idence, with
over 70% of those quest ioned conf irming that they shal l maintain or even increase
funds for their project.
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Taking into account the results of our survey, this conf idence which seems to be
ref lected in the act iv i ty that our agencies have witnessed may be explained by the
fol lowing:
• 64.40% of those quest ioned agree that instabi l i ty in the stock exchange
shal l probably lead to an increased demand for tangible assets, and notably realty.
• 75.10% think that the demand for 3/4 bed family apartments shal l cont inue
to exceed supply, owing to the rar i ty of such assets and part icular ly in Par is.
• 70.80% think that the demand for realty assets with strong rental potent ia l
shal l cont inue to exceed supply as long as interest rates remain attract ive.
• 74.30% of those quest ioned agree that, as a result of the signi f icant debt that
western states have incurred and wi l l have to repay, inflation is foreseeable in
the years ahead which, once again, shal l encourage the acquisi t ion of realty
by means of credit .
• 55.70% envisage that wealthy foreign buyers shal l once more invest in
upmarket realty as soon as they can come back to France.
• 78.70% of those quest ioned foresee an increase in interest rates over the
coming months.
3. ALTHOUGH SOME BUYERS HAVE, IN CERTAIN CASES, CHANGED THEIR SEARCH CRITERIA AS A RESULT OF THE COVID-19 CRISIS:
About 70% of those quest ioned conf irm that the cr is is has not altered the character ist ics
of the property that they were, and are st i l l seeking. This r ises to 81.30% for buyers
with a budget exceeding 2.5M€. No signi f icant change is therefore to be ant ic ipated
as far as this aspect is concerned.
The results show however that:
• 76,1% of those quest ioned think that the development of working from home
shal l have an effect on demand.
• 68% of those quest ioned think that over the next few months demand for
secondary residences shal l intensi fy.
This would seem to be upheld by the strong demand we have witnessed notably:
• In our Saint-Cloud and Versai l les agencies for propert ies in the western suburbs,
• In our Provence agency for propert ies located around Aix-en- Provence.
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CONCLUSION:
Fol lowing two months of lockdown, the market appears nonetheless to be dynamic ,
and signi f icant ly more so than we imagined a few weeks ago.
During the week fol lowing the reopening of our agencies, we have been in contact
with a signi f icant proport ion of buyers who we were accompanying up to the 17th of
March. Offers have been submitted and, in a certain number of cases, have already
been accepted. We would imagine, taking into account v is i ts to our websites and the
results of this survey, that the other potent ia l buyers shal l short ly also be contact ing
us in order to pursue their project.
As far as vendors are concerned, surprisingly, l i tt le seems to have changed
regarding their project .
Once again, realty seems to conf irm i ts value as a tangible asset . Lockdown may
to some extent have reinforced the not ion that comfort in a house or apartment is
absolutely essent ia l for, not only do owners obviously possess a residence, but above
al l they l ive in it .
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