Investing in France

[Piotr Kacki]

Hi everyone, 

My company and I are currently investigating the attractiveness of Paris and France as an investment destination. We would like to make a survey on the feeling of investors like you can have (as not french) on investing in France and more particularly in Paris and around.

Would you (as a foreign investor) be interested in investing in Paris and around? If yes, what are the reasons? 
Would you be more interested in investing in old or modern buildings? What is the most important for you, the annual growth rate of the property value or the cash flows you could receive? Would you consider living in France one day? 

Thank you very much for your participation. I would appreciate any feedback you guys might have.

Piotr

[Alex Gaines]

Hello, I'm an American but have lived in France (southwest near Biarritz and also southeast near Nice) for 4 years.  I've invested in some real estate but I would not call myself an expert on the market by any means.  However, I'll give you my views based on my experience and research.  As far as living in France goes, I absolutely love it. No place is a utopia, but you can enjoy a very good quality of life here in France that can be harder to find in other countries. 

The legend of French bureaucracy is true at times, but honestly, you just need to know how to navigate the system.  Once you know what the rules and regulations are, the red tape is not too bad.  However, this also means that there are some high transaction fees (notaries, stamp tax, transaction fees, etc.) that go along with making a purchase, so you can expect about 9% added to the purchase price of any property. Also, there are some attractive tax advantages for buying new (reduction of fees to about 3-5%, reduction of impots, etc.) with loi penal and other schemes like it. This is only for new builds usually. 

Like anywhere, markets are hyper fragmented and can vary greatly between Paris and the rest of the country.  But on a broader view, it depends on your investing strategy.  Are you looking for forced appreciation with buy-resell or are you looking for buy and hold - long term appreciation?  This will greatly affect which location and strategy you choose.  For example, it will be rather difficult to purchase a modern/clean apartment in Paris and expect to have a nice cash flow from long term rental.  You could possibly cash flow with short term Air BnB, but your hope will be just to cover your debt payment then hope for appreciation in the years to come. On the other hand, certain markets outside of Paris in smaller cities seem to have the possibility of cash flow.  Prices in these areas are very affordable and rents are sufficient to generate positive cash flow.  Most of the really good deals come from purchasing an entire building with 5 or more units for scale, or purchasing an entire large house/building and dividing it up into studios or smaller apartments in copropriété.  However, you can expect minimal appreciation on the value of the property after you stabilize it. 

To sum it all up, the French market in my view it is:

• Lower returns in exchange for a more stable market (generalization but there are exceptions)
• High transaction fees and taxes, but government schemes can greatly reduce these in certain circumstances
• Appreciation markets- Paris, Lyon, coastal areas and Alps
• Long term buy and hold: working-class smaller-medium cities in the center or northwest France
• Also, if you speak French, here is a great site with strategies per city and all the calculators you need! https://www.rendementlocatif.com/calcul/scenarios
• Hope this helps, Alex