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Paris property bolstered by Middle East strife

After several years in the doldrums, demand for upscale Paris properties is starting to pick up with an unlikely helping hand from upheaval in the Middle East.

Paris property bolstered by Middle East strife
Middle East turmoil boosts prices of apartments in Paris. Photo: Thomas Coex/AFP

With the bloody Syrian civil war generating fears of instability across the region and Egypt teetering on the brink of chaos, well-heeled Arab investors are looking for boltholes and Paris is a perennial favourite destination for their funds, according to real estate professionals.

Typifying the trend was the recent sale of a 2,600-square-metre (28,000-square-feet) townhouse in the plush 16th district of the French capital. Specialist agents Daniel Feau revealed that the 19th-century building had been snapped up by a well-connected family from the Gulf at a downturn-defying €44 million ($58.5 million).

Upbeat players in the Parisian real estate business say the deal reflects a noticeable bounce in the market for residences starting at one million euros.

Over the last year, such assets have fallen in price by around eight percent, Feau estimates, and that slide has helped to tempt buyers out of their shells.

Emile Garcin, another agency specialising in the top end of the market, says there has been a correction of some 15 percent over an 18-month period in which the French economy has been, at best, stagnating.

"Many buyers, particularly Lebanese, are very concerned by the situation in Syria and they are following friends and family who have already moved to Paris, where there is already a large Lebanese expat community," Charles Marie Jottras, the chairman of Daniel Feau, told AFP.

A number of wealthy Syrians have also sought refuge in France from a conflict that has steadily intensified since March 2011.

"Paris, like London, has a long tradition of welcoming people from the Middle East," Jottras added. "The younger generation from the oil kingdoms may have preferred to go and study in the United States but that generation are coming back here now."

The trend has also been noted by Emile Garcin's Nathalie Garcin.

"We have had a lot of Lebanese clients registering with us this week," she said. "It's mainly families who are worried, they don't want to leave everything in their country and they are also investing in London.

"It's a taboo subject, they don't really want to talk about it, but the anxiety is palpable.

"We've also had a lot of buyers from Qatar."

While the interest from the Middle East appears to be influenced by a particular context, American and other international investors are also waking up to the fact that Paris is suddenly looking attractively priced.

"There is a feeling that it is a good time to secure a bargain," Jottras said, adding that concern over the fiscal plans of the Socialist government that took power in 2012 had receded.

"The idea of France becoming a tax hell is fading: the Americans have realised that the vast majority of the new tax measures will not apply to them."

Russian and Chinese investors have also been active in the Paris market, but the buoyancy of the capital is not reflected in other desirable parts of France.

Even in sought-after locations such as the Riviera or the Luberon region famously celebrated in Peter Mayle's "A Year in Provence", prices for characterful properties continue to stagnate or decline as many current owners decide to cut back on second homes.

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PROPERTY

Property taxes: How much will it cost to extend your French home?

Installing a swimming pool, building a garden shed, or adding a conservatory to your French home has become more expensive in 2023.

Property taxes: How much will it cost to extend your French home?

If you are planning a renovation project in 2023 you’re likely looking at rising cost for materials and labour due to inflation – but there is one other cost to consider; taxes. 

In France there is a one-off tax that has to be paid on certain building works, and the government has raised the rate for this.

The taxe d’aménagement, sometimes referred to as the garden shed tax, applies to all property development – construction, reconstruction and extension – of buildings that require planning permission or a building permit.

Garden sheds, swimming pools or extensions with a surface area of more than 5 square metres are subject to the development tax – although a 50 percent reduction is applied to the flat-rate values of certain buildings, particularly the first 100 square metres of main residences.

READ ALSO Everything you need to know about installing a swimming pool at your French property

The tax is collected by local councils, who set their own percentage rates for the tax, working off the base rate set by the government.

A decree published in the Journal Officiel set the base figures for 2023 at the following rates: 

  • €1,004 per square metre in Île-de-France (up from €929 per square metre in 2022);
  • €886 per square metre outside Île-de-France (€820 per square metre in 2022).

The flat-rate values per square metre of building space, which constitute the basis for the development tax, are revised on January 1st of each year according to the latest construction cost index published by national statistics body Insee. 

Additionally, specific rates are set for:

  • €250 per square metre  for a swimming pool (up from €200 in 2022);
  • €12 per square metre of ground-fixed solar panels (up from €10 in 2022);
  • €3,000 per wind turbine more than 12 metres high;
  • €3,000 per pitch for tents, caravans and mobile leisure homes;
  • €10,000 per pitch for a holiday chalet or bungalow.

The amount of the tax is calculated according to the following formula: 

(Taxable area multiplied by the government-set base figure) multiplied by the percentage tax rate set by the local authorities. This gives the total to be paid in cents. Bills are rounded down.

So, the tax for a 30 square metre extension in an area where the combined local and departmental tax rates total 6.25 percent would be calculated like this:

30 (the size of the development) x 886 (the base tax rate outside Ile-de-France) = 26,580

6.25 (local and departmental tax) x 26,580 = 166,125 cents, more usually expressed as €1,661. 

If the total payable is less than €1,500, you will receive a bill in the six months after planning permission was granted, with details of how to pay.

Otherwise, it is paid in two instalments, 12 months and 24 months after authorisation, with a 10 percent surcharge applied in cases of late payments.

READ ALSO The hidden costs of owning property in France

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