Café de Flore

Selling his three-bedroom Paris apartment in the 9th arrondissement has been difficult for Jérémie Faivre. The 43-year-old has had the property on the market since October, but with no outside space and located on the busy Rue La Fayette, it languished. Initially listed at €1.2m, he has dropped the price and recently accepted an offer for €1.05m. “People have been reluctant. Even now the market is awfully calm,” he says.

Paris’s property market is slowing. Prime prices in the three months to March fell 3.7 per cent, compared with the year before, the largest fall since 2016, according to Knight Frank. In Ile-de-France, the greater Paris region, total home sales fell 12 per cent in the year to February, compared with -2.3 per cent in France as a whole, according to Notaires de France.

Since restrictions imposed by the city’s third lockdown — which started in March — began to ease in May, the strong demand from local buyers of the past year or so has not returned, says Frédéric Kieffer, a Paris agent with French company Sextant Properties. “Before we had 20 people to view an apartment, now it is four or five,” he says. Where most homes typically sold within days at the start of the year, now most take one or two weeks; for studios it is typically three or more.

With France’s health minister recently warning a fourth wave could arrive at the end of July, Kieffer says buyers are sitting on their hands. “They tell me they are not sure if they are staying in Paris or moving out, or even whether their businesses will survive.”

At the higher end of the market, travel restrictions continue to limit buying by UK and US buyers. Christine Tung of the Paris office of Home Hunts, a top-end French agency specialising in sales to international buyers, sold one in five homes to US buyers before the start of the pandemic. Excepting homes that were viewed before Paris’s first lockdown in March, US buyers have bought none since then, with German, Italians and Scandinavians the main buyers.

Charlotte, 59, who has just had her offer accepted on a three-bedroom apartment in the city’s prestigious 6th arrondissement for about €5m, braved the UK quarantine requirements to carry out her search. With logistics such as Covid tests required, organising trips took longer and, on two occasions, promising apartments sold before she had a chance to visit, says Charlotte, who did not want to give her real name.

Line chart of Annual change in average property price (%)  showing Price growth in Paris slowed at the end of last year

Ultimately, however, she thinks the restrictions scared off less committed buyers, giving her more of a chance. “[The restrictions] cut out those that wouldn’t physically go to visit.”

Flaws are hard to find in Charlotte’s home, which is fully renovated and has views of the Sacré-Coeur basilica, the Louvre and the Eiffel Tower. The vogue for fully refurbished high-spec apartments aimed at international buyers dates from about six years ago, according to Tung.

“You started to see developers buy flats in the best neighbourhoods and bring them up to those international standards to satisfy [these buyers’] very specific demands — en-suite bathrooms, walk-in closets, air conditioning, guest toilets, apartments fully furnished.”

Space constraints limit what can be achieved in the 6th arrondissement, long popular with international buyers for its Left Bank location, leafy boulevards, high-end boutiques and famous restaurants.

“Surface or interior design, yes, but if it’s a big project — smashing walls and creating bedrooms — you won’t find much in the sixth,” says Roddy Aris, head of Knight Frank’s Paris business. He says that larger refurbs are more common in the 7th and 8th, where the Champs-Elysées is a big draw for many international buyers, and the posh 16th.

At €19,600 per sq m, the average price of Paris’s prime homes remain well below New York’s, at €24,480, and London’s, at €27,990, according to Knight Frank. The number of high-spec apartments in Paris has lagged that of other global cities in part because restrictive planning laws prevent developers from upgrading properties to exacting international standards.

“All of Paris is basically a historical monument: there are so many different levels of historical classification,” says Tung. She says the scarcity of air conditioning owes partly to restrictions on attaching unsightly units to the front or sides of historical facades; protected staircases mean that many buildings will never have elevators.

Getting permission from other residents for large-scale improvements to buildings is hard, says Aris. “Generally speaking, the common parts [of apartment buildings] are a bit shabby: the French are not too fussed about them, preferring to focus on their apartments.”

Agents suggest that the pandemic saw many affluent Parisians move outside the city centre in search of space, a garden and safety. But the number who chose the suburbs was comparable with previous years. According to Knight Frank, 34 per cent of those who left central Paris in the second half of 2020 chose inner suburbs such as Neuilly-sur-Seine, compared with the 10-year average of 30 per cent.

For the outer suburbs, including Le Vésinet or Croissy-sur-Seine, the equivalent figures were 11 per cent in 2020 and 8 per cent in 2019.

Kate Everett-Allen, head of international research at Knight Frank, reckons the exodus was at best temporary. “My assumption is a lot of the movement was to second homes and a short-term relocation.”

With a larger budget, Faivre found the extra space he needed around the corner in the 10th arrondissement, where in May he had an offer accepted on a three-bedroom flat near the Canal Saint-Martin for slightly below €2m. Built in the 1990s, the home is not the archetypal Paris style — “It lacks elaborate cornicing or parquet floors.” But it is larger and has two balconies.

After spending the first lockdown in the country, returning to the confines of their small Paris flat proved a real test for Faivre and his girlfriend and with the threat of another lockdown, Faivre is taking no chances. He has applied for a bridging loan to ensure the sale completes even if the buyer of his current home pulls out.

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