Rental investment in Paris allows the investor to choose between high liquidity and attractive rental yield. So long as value is accumulated with regular property renovation work and continue to meet tenants requirements in this market.
Investing in Paris means investing in a vibrant real-estate market with a very high rental demand throughout the year. Cost of Rent is high and you will benefit from a very high property liquidity upon a future resale. These elements are essential for real estate investors, and Paris is always a no-fail choice when looking for a rental investment in Ile de France, or in France.
Investing in Rental property in Paris has become an must-consider choice for the investor who is looking for a high rental yield and a dynamic real estate market.
As you already know, the French capital is one of the most beautiful cities in the world.
Paris is located in the heart of Europe and has a strategic geographical location. It is a city known worldwide thanks to its economic dynamism and its cultural richness.
It is also one of the first student cities in the world. Every year, Paris welcomes thousands of students, tenants, investors.
This capital city has many advantages to obtain the best possible rental investment in France. This is why I personally invest in Paris.
In this article you will find out the key points to consider if you decide to make a rental property investment in Paris. For example, you will discover why Paris is a unique market, whether it be in terms of available properties, local economy and market prices and the specificities of the Parisian real estate market.
I will also answer som of the usual questions of investors: what are the assets of the capital for a rental investment? Where to invest in Paris? Which district to choose? What is the price per square meter of real estate in Paris?
I will give you my personal secrets so that you can make the best possible buy-to-let investment in Paris. Let’s get started!
Buy-to-let investing in Paris in 2022: specificities of the Parisian real estate market
The Parisian real estate market is clearly different from the rest of France. The primary cause of market tension is the lack of available supply compared to rental demand in Paris. It is this deficit that is largely responsible for the very high prices for both rentals and sales.
The question for investors is therefore to know what the causes of this tension are, and above all whether this rental tension (measured by a real estate tension index ITI) will last. The specific characteristics of the capital have an impact on real estate purchase and rental investment projects.
Because of its old appearance and its many historic buildings (Haussmannian, 1900s or medieval type) and its small surface area, the city of Paris offers very little available land (in 2022). This explains why very few new buildings are being constructed in Paris intra-muros.
The few new programs are mostly carried out by the Paris City Council with a social housing destination. The other real estate projects are most often renovation projects or buildings built to replace dilapidated buildings, which does not increase the supply available on the market.
The demand for housing in the capital continues to grow, while the supply is not increasing sufficiently. The deficit is growing and rental tension remains very high. In this context, the interest for buy-to-let investors in old Parisian buildings is high.
Real estate investment in Paris: in 2022, the choice of an economic capital
One of the first elements to consider for the real estate investor is the economic dynamism of the capital and the Paris region, which is one of the strengths of the French capital. And this is even more true in times of crisis (post-Covid), since the French need jobs and these are found primarily in large cities.
Today, the Paris metropolitan area is one of the most dynamic economic centers in the world. It is one of the five largest metropolises in the world and the evolution of its economic fabric, particularly its position in the world of start-ups, gives us great hope for the future. It is an engine for French growth. Paris, in three economic specializations:
Paris is an economic and innovation capital: the city is home to the headquarters of 39 of the world’s 500 most powerful multinationals. The business district of La Défense represents 20% of the GDP of the Île-de-France region, and is the world’s leading business district, with three million square meters of office space and 150,000 employees. There are 1,500 companies, including 14 of the top 20 national companies and 5 of the top 15 worldwide.
In 2022, Paris is the most attractive European capital for start-ups and investors. As a world leader in innovation, the French capital is a territory of innovation that favors the development of projects by offering financial aid, accommodation and support. The city shows itself as a high place of attractiveness for innovative companies, as evidenced by the opening in 2018 of Station F, a giant incubator created in the 13th arrondissement and financed by entrepreneur Xavier Niel.
This solid and dynamic Parisian economy attracts a large number of employees and executives, who have housing needs :
- Intelligence – Paris appears as one of the world’s leading places and it ranks in the division of the world’s great intelligent cities. Paris is one of the three cities in the world to have won Nobel prizes in each of the five disciplines of physics, chemistry, economics, medicine and literature.
- The city of light – Paris is a cultural and tourist attraction, a city rich in culture, being the capital of fashion, luxury and gastronomy, even if it is competing with other world metropolises. It ranks first in the world in terms of cultural facilities with its museums, theaters, operas, cinemas, theaters, parks and gardens etc…
The image of the Parisian capital remains that of a “romantic” city, of a museum-city with its downtown area, which makes it the first tourist destination in the world, with more than 47 million visitors per year.
The city of Paris is also said to be the world champion for public transportation, according to a study by the Institute for Transportation and Development Policy “l’Institute for Transportation and Development Policy (ITDP)”. It is the best served capital city, with three international airports, seven TGV stations, fourteen metro lines and five RER lines. This means that 100% of Parisians live less than one kilometer from a train station, which makes life in Paris easy.
These economic elements are very encouraging if you wish to invest in Paris.
Paris is one of the world’s best university cities
This economic capital is also the leading student city in France and offers young people between the ages of 16 and 25 many opportunities to study or work.
Paris is above all the second best student city in the world according to the 2018 “QS Best Student Cities” ranking, carried out for the past five years by the specialized firm QuacquarelliSymonds.
The French capital has many assets: First of all its attractiveness, with a living environment that it offers to students, in all areas whether art, culture and leisure. Also the professional opportunities with jobs adapted for young graduates, thanks to the diversity of companies established in Paris and the strong concentration of prestigious universities and international establishments that we will discover.
In Paris, Polytechnique, HEC and ENA are ranked 4th, 5th and 6th respectively in the list of the best international institutions that train the leaders of the largest companies.
The number of students in Paris continues to grow, increasing by 25% between 1999 and 2016. 338,000 students at the start of the 2015-2016 academic year, and today 500,000 young people are studying in Greater Paris, of which two-thirds (64%) are enrolling or continuing their studies in a Parisian institution.
In addition, more students are now studying for longer periods of time, which impacts rental investment projects, as rental demand remains tight and rental vacancy is very limited.
Paris: strong rental demand pushes prices up
Paris, the city of light that makes people dream, is one of the world’s most beautiful cities. It attracts buy-to-let investors who do not like takings risks, it is a safe bet and it allows them to secure their investment assets.
These investors compete in the Parisian real estate market with French people who are looking for housing close to their place of work. As we discovered earlier, Paris is one of the best student cities (2nd best student city in the world in the QS Best Student Cities ranking of February 2018), and also the French economic capital, which attracts many companies.
Thus, in 10 years, Parisian real estate prices have increased by 52%! The forecast for 2022 is an increase of +2% to +2.5% in the price per square meter in Paris, for purchases in the former (source notaires).
The tenant/owner ratio is favorable to real estate investors: 64% of Parisians are renters, which is significantly higher than the national average of 43% of renting households (source: INSEE). This figure should be studied closely regardless of the city… since tenants are your immediate customers. The demand therefore depends in part on this ratio.
It is the shortage of housing supply, which is far lower than demand, that explains the high real estate prices in Paris compared to the rest of the French market. Thus, in 2022, the average price per square meter in the capital was over €10,200 per square meter for an apartment. It varies between 9,000 € / hem² and 14,000 € / m² depending on the district and the neighborhood. It is therefore essential to study the market carefully in order to know where to invest in Paris, depending on the approach you wish to give to your rental investment project.
The impact of short-term rentals in Paris and the tourism economy
The attractiveness of the most beautiful city in the world remains very strong, despite a slight drop in the last two years due to tragic events. In this context, and with the arrival of short-term rental websites, many individuals have chosen to offer their properties for seasonal rental in Paris. Thus, 90,000 properties are offered on the Airbnb platform alone in the Ile de France. That many properties are obviously not offered for long-term rental.
Each property that is marketed to tourists is not offered to a Parisian resident, or a would-be Parisian resident. These recent new uses (the explosion of this type of rental dates back to 2014) contribute to the decrease in the supply of long-term rentals.
Another aggravating factor, therefore, for the deficit of rental offers on the Parisian market. As for the question you are asking yourself, namely whether you should invest in short-term rentals, we advise you against it as it has become complicated, but this will be the subject of a dedicated article.
Property rental yields in Paris: from 3 to 5% gross depending on the area
As a real estate investor, you should keep in mind that the amount to invest to become a property owner in Paris, which we also call the entry ticket, is higher than in the provinces. For an apartment of about 15 m2, you will have to spend about 210,000 € all included (with notary fees, furniture and renovation) and about 250,000 € for a T2. This is an element to be taken into account.
Thus, the rental yield in Paris can reach 5.50% gross if you choose to invest in an old property, to renovate it and to furnish your property.
Except in exceptional cases, we advise our clients against investing in Paris under the Pinel program, which does not offer sufficiently high returns, even with the tax advantage.
What type of apartment should I choose to invest in Paris?
Now that you know the economic situation and the real estate market in Paris, you need to choose the right product for your investment…
Demand is strong but it also depends on the type of apartment to rent. Let’s find out which types of property offer the highest rental yield in Paris, while having excellent liquidity on resale.
Investing in a studio apartment in Paris is a very good option. Small surfaces are often synonymous with high profitability. In concrete terms, the amount of rent per square meter is higher for a small area than for a large apartment, with the same services.
We advise you to choose, according to your budget, for a small surface of type studio in Paris or T2 which will allow a better rental return. Larger areas should be used for shared accommodation to give you the highest rental return. The type of property you choose should always correspond to your target tenants.
Where to invest in Paris? Which district to choose? Which district to avoid?
Where to invest in Paris ? Which district of Paris to choose for my real estate investment? If you have ever seriously thought about investing in the capital, then you have asked yourself these questions. This is the case for all the investors I accompany.
And the question of the best district has several answers…
As in all real estate markets (Marseille, Lille, Lyon, etc.), there are areas to be favored for an interesting rental yield and other areas for investors who favor the patrimonial aspect. It depends on the expectations of each investor, his financial situation, his objective and the investment horizon.
Our property hunters in Paris have excellent knowledge of the Paris market. Imagine having dedicated research tools and spending 50 hours a week looking for the best opportunities… that’s what we offer with our unique service for investing in Paris.
Depending on the objective of your rental investment in Paris, you can choose to invest in an up-and-coming district, or in a more bourgeois district. Each arrondissement has its own living environment, with a more or less active neighborhood life and public transportation, and most are well equipped with shops.
The 1st, 2nd, 3rd, 4th, 5th, 6th, 7th, 8th, 9th, 15th and 16th arrondissements are the most sought after. The old Haussmannian buildings, or those from the 1900s, represent properties with an undeniable cachet. This is also the case for art deco buildings. They are sure values on the market. But the price per square meter in these districts is very high. They are reserved for investors who prefer a patrimonial logic, which means a lower return in return for a very strong demand which will facilitate the resale.
To obtain a higher rental return in Paris, you will have to turn to the more popular districts. You can choose to invest in the 18th, 19th or 20th arrondissements, for example. These are up-and-coming neighborhoods that are not yet as attractive as the single-digit arrondissements. This type of district will allow you, thanks to our services, to obtain high returns between 5.00% and 6.00% gross.
Whatever the district, the method for obtaining a high rental yield is always the same: buy a property to renovate, therefore with a discount compared to the market. Then turn it into a high quality property. A property that is a favorite, thanks to a careful renovation and professional decoration.
Keep in mind that in each district, some neighborhoods are better valued than others. Everything can change from one street to another. Always take into account the following aspects: proximity to shops, transportation, schools and universities…
Real estate investment in Paris: concrete examples
Here are some examples of rental investments made in 2022 in Paris. These operations were carried out by our customers within the framework of our services of council in rental investment. They have delegated us the entire process, from the search to the rental, through the monitoring of the renovation and decoration.
Studio in Paris 14th
Here is a studio renovated in a rising district of the 14th district of Paris.
After a complete optimization realized by our team, this property delivers to our client a yield of 4,7% gross since 2018. The real LMNP tax system will allow him to pay no tax on rental income for about 10 years. So a net yield of nearly 5% for a property in the 11th district of Paris, in 2020. Not bad, right? 🙂
- image here –
2 bedroom apartment in the 15th district
For this apartment, we change district. Our client contacted us as part of our real estate investment consulting service in Paris, with a desire to invest in an intermediate district. His wish was to invest in a one-bedroom apartment while benefiting from a rental yield higher than the market. Our team carried out this project in the 15th arrondissement, and the apartment delivers more than 5% return.
- image here investing in the 15th
What is the budget for a real estate investment in Paris?
The minimum entry ticket for a studio in Paris, with an average agency in Paris, is about 210,000 €, all included. With this budget you will have a fully renovated, optimized and furnished studio. This includes the purchase, notary fees, complete renovation and furniture / decoration. This budget will allow you to have about 10.000€ of annual rental income.
Of course, some investors with smaller budgets will choose to rent a maid’s room. These apartments can be rented from 9m² minimum or 20m3.
Investing in Paris becomes more flexible for larger budgets of course. Thus we propose apartments of type T2 starting from 250.000 € approximately, of the co-ops and cuttings starting from 350.000€ approximately. For luxury properties, the entry ticket is high in Paris, starting at a minimum of €3 million, which generally excludes individual investors.
Prices per square meter in Paris
To make a real estate investment, you must first know the market well. You need to find out the prices per square meter in Paris. And they depend on the arrondissements and neighborhoods.
There are 20 arrondissements in Paris, divided in a snail’s pace on both sides of the Seine: the Right Bank and the Left Bank. The 1st to 7th arrondissements are the most expensive in Paris, with an average price between €12,000 and €17,000 per square meter in January 2022.
The 18th, 19th and 20th arrondissements offer average prices below €10,000 per square meter, which is more reasonable and the least expensive in the capital.
The average price per square meter of apartments in the other districts is between 10,500€ and 14,000€.
It should also be noted that in the same arrondissement, the average price per square meter can vary considerably from one neighborhood to another, from one street to another, but also according to the type of building and the property.
Prices in Paris are constantly on the rise, as you can see from this graph showing the evolution of property prices in Paris between 1980 and 2019.
The impact of governement rent control thresholds in Paris
In order to allow Parisians to live in good conditions, the former Minister of Housing Cécile Duflot passed a rent control law, called the Alur law. This law came into force in 2015.
The Alur law regulates rents according to the districts of Paris, divided into 80 zones. For each zone, depending on the type of property, a reference rent and an increased reference rent indicate to the lessor the maximum amount of rent to be applied. A rent supplement may be added to this amount. This additional amount, which is very vague, must be justified by the location or comfort characteristics of the property. It must be mentioned on the lease.
To date, there is no legal list of characteristics or rates that can be applied, and good practice consists in renting a property at a fair price. This means that a property that has an additional rent must be worth its price, which is what I advise my clients to do.
Paris real estate market: 2022 outlook
The Parisian real estate market has risen sharply in 10 years (+ 21.6%). After a strong rise in 2019 (+9.80%), 2020 started off very well, before a sharp halt during the containment period. The post-confinement recovery shows prices holding steady even if volumes are logically down. The notaries anticipate a continuation of the rise in the capital for 2022. Prices per square meter in Paris should continue to rise.
As for rentals, there is nothing new under the Parisian sun. Rental demand remains strong even though rental prices seem to have stabilized. The number of students, especially international students, continues to grow and the economy is booming with an increase in the number of businesses being created in Paris.
Thus, the economic fabric of Paris, its growing demographics and its increasing rental demand will continue to mobilize the interest of rental investors in the coming years.
Questions Frequents
Is Paris a good place to invest in real estate?
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Is buy-to-let still worth it 2022?
Can foreigners own property in Paris?
Can you buy-to-let in France?
Is buy-to-let still worth it 2022?
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