The pros and cons of rental property investment
The property market in Paris and the surrounding area follows a stable pattern that allows it to ride the ups and downs of the economy with less impact on the variation in prices compared to other areas in the country. La Chambre des Notaires de Paris has reported a 23.7% appreciation in the average price per square meter for the greater Paris and Île de France over the past five years. While the number of transactions vary according to the buying climate, prices are less sensitive to the fluctuations in demand.
If you’re looking at the Paris property market as an investment rather than for personal use there are three main choices:
•Long term rental: according to Susie Hollands, French Entrée estate partner in Paris, yields can be expected to range in the 5% to 6% bracket. While location is a main concern as with any rental investment, there are also other factors that improve the appeal of the property such as proximity to a landmark or park, transportation and the surrounding restaurants, shops and attractions.
•Short-term rental: Paris is the number one tourist spot in the world counting over 81 million visitors last year. Short-term rentals are closely regulated by the respective Mairie (town hall) for each area. It is a crowded market with rental yields and occupancy rates varying significantly according to the location. A competent property management company is essential.
•Leaseback: properties offering this program for private investors (LMNP:loueur en meublé non professionnel) tend to be new-builds located in the surrounding areas (proche banlieue) rather than central historical Paris therefore attracting a higher proportion of business clients and students. There are tax advantages available with a recovery of the VAT tax spread out over time under certain conditions. Leaseback developers advertise a return on investment of around 3% to 3,5%.
For further information about any of the above opportunities or for help with your property search, please call our consultant at +44 (0)1225 463 752 or email [email protected].