After years of stagnation, property price growth in Paris is finally being followed by rental growth.
Economic growth forecasts for France and particularly Paris are being revised up and sentiment is positive. A growing economy is leading to more jobs being created, which is a clear positive for both the office and residential property markets.
‘Employment growth will push up demand for offices and will lead to rental growth,’ said Guy-Young Lame´, director of European research at Invesco Real Estate. ‘We are already seeing real rental growth in the Western Crescent in Paris. It also helps that vacancy rates are very low in the capital and development activity remains subdued.’
The advent of Brexit has also helped boost demand in the French capital. Paris was surprisingly chosen over Frankfurt for the new headquarters of the European Banking Authority, which has to relocate from London after the UK leaves the European Union.
This in turn has led to Goldman Sachs planning to split their European operations between Frankfurt and Paris. Bank of America has already taken 10,000 m2 in Rue Boissy, and HSBC is actively looking for offices in Paris.
However, Paris does not need to just rely on Brexit, according to Paul Raingold, President, Ge´ne´rale Continentale Investissements.
He said: ‘It is just the cherry on the cake. The fact is that Paris is a real capital city again, and in the last few weeks you could feel the momentum building. I see significant rental growth ahead.’
Partner at Dentons, Alexandre Poupard agreed, saying: ”We hear from our clients that Macron has changed the perception of the country. The impression is that he knows how important it is to boost the image of Paris as a financial centre. The era of France-bashing is over.’
With many large companies now attracted to Paris, bringing a new influx of well paid workers, demand for rental property in the capital is leading to rental growth again in both the commercial and residential property sectors.
Overseas property investors might want to jump on board, before the investment ship sails off down the Seine.