Chinese buyers pile into French luxury property, unhindered by ownership restrictions
- In the first quarter of the year, Chinese supplanted Italians as the biggest group of foreign buyers of homes in Paris
Unencumbered by any property curbs or the kind of foreign owner restrictions seen in other markets, Chinese buyers are snapping up luxury properties in France’s prime residential and holiday districts.
In the first quarter of the year, Chinese supplanted Italians as the biggest group of foreign buyers of homes in the French capital, data from the Notaries of Grand Paris showed.
In terms of average transaction value in 2018, Chinese nationals bought homes worth €453,000 (US$502,000), the fourth highest after Norwegians on €612,000, Swedes on €501,000, and Danes on €479,000, according to an annual French property buyers’ report issued by Paris-headquartered lender BNP Paribas in June.
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“Demand for French property from China and Hong Kong has been rising since 2014. The ending of the euro-zone crisis and the return of economic growth in France spurred investors who were able to see a growth opportunity in a market that was relatively undervalued compared to many global investment markets,” said Liam Bailey, global head of research at consultancy Knight Frank. “We have seen a number of buyers from Hong Kong and China targeting vineyard and other lifestyle-led investments.”
There are plenty of reasons for the demand, both practical and sentimental. Unlike London in the UK, Toronto and Vancouver in Canada, and other traditional markets preferred by foreign investors, Paris has not rolled out foreign buying restrictions.
Mortgage rates are also at a “historic low”.
“It’s possible to get a loan for 15 and even up to 25 years and find rates lower than 1 per cent for a 15-year loan, and around 1.2 per cent and 1.3 per cent for loans of over 25 years,” said Hervé Guinebert, managing director at the Hong Kong representative office of Banque Transatlantique.
Values of homes in Paris rose 7.6 per cent in the year to June 2019. That was the second-highest growth among 23 prime residential markets tracked by Savills. Rents in the French capital grew 1 per cent in the same period.
Prices are likely to be boosted by the Grand Paris Project, Europe’s largest infrastructure project over the next decade, and the 2024 Summer Olympics.
Rental income for second-home owners is reliable as France remains the most visited country in the world, with over 89 million arrivals in 2018.
“Owning property in France is a status symbol that goes a long way in terms of social standing and aspiration,” said Alex Balkin, executive director, Savills French Riviera.
For some wealthy buyers French vineyards are the perfect investment, generating good returns while allowing them to indulge their passion for wine.
“Investment is always a strong consideration for [these buyers] but the motivations are often quite personal,” said Michael Baynes of Vineyards Bordeaux, an affiliate of luxury property agency Christie’s International Real Estate.
“For example, they might be looking for euro-backed assets at a time that they are seeking to diversify into Europe, or they may have a child at school or university in Europe, or they may have a particular passion such as wine that they may wish to explore.”
In March, Vineyards Bordeaux helped in the sale of Château de Cadillac-en-Fronsadais estate in Bordeaux, to a Chinese businessman. The asking price for the estate, which originally included three hectares of vines, was €9 million to €10 million.
