Paris still offers value on a global stage

The prime residential market in Paris has experienced strong growth in recent years. Limited supply and growing international demand saw prime prices in the French capital undergo a period of catch-up with other world cities, rising by 25% in the last six years, at a time when London’s fell by 17%. Prime values in Paris now stand just 8% below those of prime London as of December 2020, compared with around 40% below six years earlier.

Resilience continued into 2020, despite the impact of Covid-19. Work and lifestyle habits have had to adapt because of the pandemic, but the prime residential markets have so far proven one of the more resilient real estate sectors. Savills World Cities Prime Residential Index recorded average annual growth of 0.5% in 2020. Prime values in Paris increased by 2% over the same period, outperforming the index average (see chart, below).

Despite this growth, prime residential property in Paris still offers value in a global context. Average prime values stand at €15,600 per sq m as of December 2020, 60% below Hong Kong – the most expensive city in the world for prime residential property.

Investor appeal

Supported by low interest rates, prime Paris property is an attractive asset for wealth preservation. This is a factor not limited to the prime residential market. For institutional investors, the French capital’s commercial real estate market (comprising the office, retail, industrial, multifamily and senior housing sectors) has remained appealing.

Paris was the largest European metro market for commercial real estate investment in 2020 for the second year running, ahead of London.

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