Residential Real Estate News
Despite COVID Challenges, France's Luxury Markets Remain Resilient in 2021
According to international property consultant Knight Frank, despite three national lockdowns, a delayed vaccine program, closed borders and with residential sales halted for several weeks in the second quarter of 2020, France's prime residential markets saw prices increase 1.3% on average in 2020 and cumulative sales increased 5% in the six months to February 2021.
Stimulus measures - €604 billion in additional spending coupled with 50-year low mortgage rates, allowed homeowners to relocate or purchase a second home during the pandemic at relatively affordable cost.
Kate Everett-Allen, partner, residential research at Knight Frank commented, "French buyers dominated sales in 2020 as international travel bans curbed overseas demand. Indeed, in 2020, 60% of prime sales agreed in France by Knight Frank were to French buyers or overseas nationals based in France, this is the highest on record. However, once borders reopen, we project a surge in overseas demand."
Despite Paris being hit hard by the pandemic, prime prices across the capital dipped only 2.3% in 2020, and official data suggests there was only a small increase in households relocating from central Paris to the suburbs. Supply constraints, along with large infrastructure projects including the Grand Paris Project, Europe's largest transport initiative over the next decade, and the 2024 Paris Olympics will support future price growth in the capital.
On the Côte d'Azur, although French buyers and Monegasques filled the gap left by Covid-restricted international buyers, most markets saw prime prices hold steady. The pandemic-induced demand for outdoor space saw demand for villas strengthen at the expense of apartments and 're-pats' emerged as a key component of prime property demand; French nationals previously resident abroad now opting to settle in the south of France due to the lifestyle on offer.
The French Alps benefitted from the 'call of the great outdoors,' during the pandemic. Some 26% of European wealth advisors responding to Knight Frank's Attitudes Survey in The Wealth Report 2021 said their clients were more likely to buy a ski home as a result of the pandemic. Prime prices increased 2.5% on average in 2020 in the Alps, with the resorts of Megève (4.5%) and Chamonix (3.5%) registering the strongest increases.
Provence has been the busiest of all Knight Frank's European markets since the start of the pandemic, both in terms of property enquiries and sales. Prime price growth has accelerated in 2021, rising 5% in the first five months of the year as a shortage of supply and strengthening demand puts upward pressure on prices. The region's green space, views and wellness, explain its popularity in the current climate.
Unbuffered by the pandemic, the Dordogne region and neighboring Gers saw sales increase by 3% in the year to February 2021. Following a 30% decline in prime prices in peak-to-through terms in the wake of the global financial crisis, prices have tracked higher but at a slower rate than neighboring regions. Work is due to start on a high-speed TGV train line in 2024 which will connect Paris and Toulouse with a stop at Bordeaux, cutting journey times from Paris and making the region more accessible.
Mark Harvey, partner, Head of International Sales at Knight Frank said, "It will be a sellers' market in France until early 2022 as more pent-up demand is released, we will then see the usual seasonality return to the market and the exuberance of recent months die down in the run up to the Presidential Election in May 2022."
