Perspectives
Buying into the dream in a changing Paris is becoming more and more expensive, year after year.
As many young Americans in the 1950s and 1960s, Amerloque was attracted to Paris in part by stories and legends of the 1920s Lost Generation luminaries such as Ernest Hemingway and Sylvia Beach. Given the economic conditions in the 1960s, it turned out that maintaining a purely hedonistic Sylvia FitzHemingway fantasy literary-artsy existence was not in the cards, since the currency exchange rates were far from being as favorable to the dollar as they were in the 1920s, when France was recovering from the gigantic economic dislocations caused by World War I. Even living in a garret chambre de bonne, Amerloque found it necessary all the same to take on authentic jobs with genuine paychecks. During such encounters with real life, he relegated some of his more artistic pursuits to evenings and weekends, returning to them when his bank account showed sufficient dimension.
In addition, back then no matter what the economic circumstances, Parisian life for the American expatriate presented a wide and continual range of novel social and economic activities, to be investigated, experienced, questioned – and sometimes adopted. Amerloque embraced Paris with a passion. Time passed … and one day he woke up and realized that his "stay" in Paris had become permanent. It was then that he knew that he was of Paris, as well as being in Paris. He had become a parisien, and has been happy here.
Year after year, Amerloque has watched waves of Americans come to Paris: students, teachers, researchers, artists, writers, singers, athletes, senior and junior executives ... What he has also observed are the skyrocketing prices of Paris real estate. Gone are the times when one could purchase and furnish a rudimentary pied-à-terre in the Latin Quarter or in Montmartre for a mere pittance. Nowadays, the market is hot, hot, hot. Many foreigners have purchased - or plan to purchase - in Paris, where real estate values were until relatively recently considered "undervalued" compared to major cities such as New York, San Francisco, London, and Rome.
Is there a real estate bubble here ? "To a certain extent, yes," is Amerloque's view. How much of a bubble is there, anyway ? An attentive reading of recent newspapers can furnish a response.
Paris proper is actually very small: its area of 105 square kilometers (about 40 square miles) contains a population of 2,163,535. It is divided into 20 arrondissements, i.e., administrative districts. The most expensive one used to be the 16th, a bastion of the bourgeoisie, with large apartments, small houses, gardens, and small shops. It is a residential area and borders the Bois de Boulogne. The Latin Quarter is in the 5th; "American Paris", with its ties to the Lost Generation, can be considered to be in the 6th and 7th; the Montparnasse area is in the 14th. The Marais is in the 4th, while the Montmartre district is in the 18th. Up and coming districts are the 11th, 19th and 20th, and, to a lesser extent, the 17th.
The Chambre des Notaires is the professional organization for the solicitors who by law take care of real estate transactions: titles, deeds, escrow, tax collection. At intervals they issue detailed information concerning prices paid for apartments and other properties. Recently the newspapers here heralded the fact that in two Paris districts the average price for a flat now exceeds 8,000 euros per square meter (say 10.7 square feet).
In the list below, the first figure is the arrondissement and the second figure is the average price in euros per square meter; the figure in parentheses is the increase since 1996.
1st 6,879 (+243%); 2nd 5,910 (+241%); 3rd 6,324 (+242%); 4th 7,569 (+236%); 5th 7,294 (+219%); 6th 8,099 (+219%); 7th 8,162 (226%); 8th 6,665 (+209%); 9th 5,549 (+247%); 10th 4,943 (+274%); 11th 5,153 (+244%); 12th 5,266 (+227%); 13th 5,271 (+217%); 14th 5,663 (+212%); 15th 5,857 (+220%); 16th 6,240 (+201%); 17th 5,366 (+222%); 18th 4,760 (+237%); 19th 4,456 (+245%); 20th 4,675 (+237%)
For those hoping to throw it all over in Podunk and set up shop in Paris to live their dreams, prudence might be the word of the day, in Amerloque's view. A quick look at one of the larger French real estate sites shows that a 28 square meter two-roomer in the Latin Quarter can be had for 175,000 euros, plus the 8% or so mandatory "taxes" on top of the purchase price. That's a sixth floor walkup, no elevator, and needs work. A third floor walkup studio in a 17th century building up the street from the first is going for 190,000 euros plus. That's quite a bit of money for places with no views and no lifts, that need renovations – perhaps substantial ones, at that. Due diligence is a must, and, as always, caveat emptor is the watchword.
Will the bubble burst and will property values come crashing down, as they did in the last French real estate bust in the early 1990s ? . "Perhaps, but probably not," is Amerloque's response. There is only one, unique Paris in the whole wide world, after all, so prices won't plunge to abyssal depths any time soon, in Amerloque's view. Ce qui est rare, est cher, as the French have it.
Of course, one can purchase a place in Paris, live in it a few months of the year, and rent it out furnished the remainder of the time. Many foreign real estate purveyors, Americans among them, have developed attractive sales and financing pitches built around this theme: one has only to look at a freebie publication such as Fusac to see numerous ads for rentals, all though the year, and especially during the summer, touristy months. Property financing in France has changed during the past decade, too. Mortgages used to be underwritten by banks for eight or ten years, tops. Nowadays, fifteen- or twenty-year loans are more and more common; the system has become more "American", although French banks are still far more conservative than their American counterparts. Currency exchange risks should be factored into any purchases, too: is one paying off a Paris mortgage in US dollars, for example ? Amerloque has heard both good and bad stories about buying and renting out, but as the old British saying has it, "location, location, location" appears to be the byword !
While there may only be one Paris, it is changing quite rapidly and, in Amerloque's view, not necessarily for the better. These changes might affect property values in the medium and long term. At intervals the French press reports the significant shifts in population: people are moving out of Paris and the Paris region (the Ile de France). The two major groups reported as leaving are retired individuals and families with children. This augurs ill for the Parisian economy overall since the former usually are in higher tax brackets and the latter are what makes cities vibrant, living, evolving entities. In addition, Paris is losing many of its distinctive small shops and restaurants: there seem to be fewer every year. There are more traffic jams, and there is more casual crime in some parts of town. Paris is being emptied of its working and middle classes – it is becoming a paradise for BoBos ... and tourists, of course ! Amerloque shudders to think that it might become another Venice !
If one has the money to purchase a place in Paris – or has already purchased ! – one should definitely pay close attention to what is happening in municipal government, which is responsible in part for setting local taxation rates. For the past several years, the city has been run by the Socialists and their ecoayatollah green allies, les verts. The clearest indication of the latter's presence, by the way, is the incessant war on the automobile. One has only to observe the massive traffic jams resulting from the roadworks - both for the tramway on the southern edge of the city and the huge, overwide buslanes on many central boulevards - to realize that the green political agenda is killing Paris and the Parisian quality of life. When delivery vans can't even make deliveries within a reasonable amount of time, a businessman or businesswoman can hardly see any benefit in setting up shop in Paris for a dwindling population – or a population composed of the bobos and the poor living off of city and state government entitlements !
The City of Paris, well before the tenure of the previous Mayors, M Jacques Chirac and M Jean Tiberi (whatever the alleged or real frauds committed during their administrations), owned and maintained many apartments in town, as well as quite a bit of real estate throughout France – tracts of land, forests, buildings and other properties left to the City in wills and testaments down through the decades after the establishment of the Third Republic in 1870. Since taking office in March, 2001, the Socialist administration has been selling off what some call "the inheritance of all Parisians": the real estate. At intervals the press reports on suchandsuch apartments being sold, soandso lands in the countryside being auctioned off … and it is sad indeed to see that such irremediable harm is being done to Paris and its heritage, with few voices raised in protest.
At equally regular intervals, too, rumors published in the press insist that the city finances are in catastrophic shape, compared to the healthy finances that the current administration found upon taking office in 2001. Amerloque was reminded of this when he was informed that over the weekend (on October 20th and 21st, actually) the Socialist administration is auctioning off many of the fine wines in the City cellars, vintage bottles that were patiently collected over the years (some bottles of which are even pre-Chirac). The Socialists would have the people believe that – ready for this ? – the wines in the cellar were in danger because "a sudden flood of the Seine river could destroy the wines forever". (une crue soudaine de la Seine pourrait détruire à jamais ces trésors). The Socialists and their ecoayatollah allies would also have the naive and gullible taxpayers believe that officials and underlings used to knock back vintage bottles every lunch- and dinnertime and that middle rank factotums were swigging Margaux and Romanée-Conti while feasting together in the basements of the city hall.
Hardly. The wines were served at diplomatic get-togethers, where important guests were invited to official City Hall luncheons and dinners. The entire world knows that French culture puts heavy emphasis on fashion, food and drink: what could be more natural than to serve the finest French vintages to distinguished foreign guests ? Until 2001, the City Hall practiced what it preached: that Paris was a special place in the world, one that represented fashion and cuisine, one that could – and did - offer the best of French wines to its guests. A visit to Paris was a memorable journey; the standing of Paris – and France – was enhanced. Now, of course, under the Socialists Paris is slipping rapidly downmarket: it is becoming quelconque, as the French expression goes, and France is the poorer for it.
According to the well informed daily Le Parisien, the two-day auction of a portion of the City Hall wines (4960 bottles in all) brought in almost one million euros before buyers' commissions, thus demonstrating that the individuals choosing the wines over the years made very, very shrewd investments indeed: they obviously knew what they were doing ! The most expensive bottles were a 1986 Romanée-Conti at 5,000 euros, a 1989 Château-Pétrus at 4,900 euros, a 1990 Château-Pétrus at 3,900 euros, a 1982 Château Haut-Brion at 3, 000 euros, and a 1988 Château-Pétrus at 2,500 euros. Foreigners – Japanese, Chinese, British, Americans – turned out in droves and kept the prices high, to the chagrin of French men and women who had hoped to take home a bottle or two. One of the major bidders – and purchasers – interviewed in the press was one Mr Stephen Williams, a wine merchant and founder of the London-based Antique Wine Company, who in many cases paid the top prices. He pointed out that the price of a great wine is composed of its quality, its year and … its history. He went on to state that "these bottles, marked Mairie de Paris, were stored in the City Hall in the capital city of the country of wine … it'll be a plus for my customers".
It certainly will, Amerloque feels. Mr Williams is to be congratulated (ah, sacrés anglais !). The monies raised from the sale will go to fund the Paris City Hall's demagogic entitlement policies, to the bitter disappointment and disillusionment of those, such as Amerloque, who have a far different idea of Paris, and of what it represents in the world.
L'Amerloque
Disclaimer: Amerloque is not involved in real estate in any way whatsoever, nor is he involved in the wine trade. This post should not be considered as an encouragement or recommendation to purchase or to sell real estate (or wine !) in Paris or anywhere else. Readers are advised to seek independent and competent professional advice before acting on anything concerning real estate or wine contained herein. Caveat emptor.
As many young Americans in the 1950s and 1960s, Amerloque was attracted to Paris in part by stories and legends of the 1920s Lost Generation luminaries such as Ernest Hemingway and Sylvia Beach. Given the economic conditions in the 1960s, it turned out that maintaining a purely hedonistic Sylvia FitzHemingway fantasy literary-artsy existence was not in the cards, since the currency exchange rates were far from being as favorable to the dollar as they were in the 1920s, when France was recovering from the gigantic economic dislocations caused by World War I. Even living in a garret chambre de bonne, Amerloque found it necessary all the same to take on authentic jobs with genuine paychecks. During such encounters with real life, he relegated some of his more artistic pursuits to evenings and weekends, returning to them when his bank account showed sufficient dimension.
In addition, back then no matter what the economic circumstances, Parisian life for the American expatriate presented a wide and continual range of novel social and economic activities, to be investigated, experienced, questioned – and sometimes adopted. Amerloque embraced Paris with a passion. Time passed … and one day he woke up and realized that his "stay" in Paris had become permanent. It was then that he knew that he was of Paris, as well as being in Paris. He had become a parisien, and has been happy here.
Year after year, Amerloque has watched waves of Americans come to Paris: students, teachers, researchers, artists, writers, singers, athletes, senior and junior executives ... What he has also observed are the skyrocketing prices of Paris real estate. Gone are the times when one could purchase and furnish a rudimentary pied-à-terre in the Latin Quarter or in Montmartre for a mere pittance. Nowadays, the market is hot, hot, hot. Many foreigners have purchased - or plan to purchase - in Paris, where real estate values were until relatively recently considered "undervalued" compared to major cities such as New York, San Francisco, London, and Rome.
Is there a real estate bubble here ? "To a certain extent, yes," is Amerloque's view. How much of a bubble is there, anyway ? An attentive reading of recent newspapers can furnish a response.
Paris proper is actually very small: its area of 105 square kilometers (about 40 square miles) contains a population of 2,163,535. It is divided into 20 arrondissements, i.e., administrative districts. The most expensive one used to be the 16th, a bastion of the bourgeoisie, with large apartments, small houses, gardens, and small shops. It is a residential area and borders the Bois de Boulogne. The Latin Quarter is in the 5th; "American Paris", with its ties to the Lost Generation, can be considered to be in the 6th and 7th; the Montparnasse area is in the 14th. The Marais is in the 4th, while the Montmartre district is in the 18th. Up and coming districts are the 11th, 19th and 20th, and, to a lesser extent, the 17th.
The Chambre des Notaires is the professional organization for the solicitors who by law take care of real estate transactions: titles, deeds, escrow, tax collection. At intervals they issue detailed information concerning prices paid for apartments and other properties. Recently the newspapers here heralded the fact that in two Paris districts the average price for a flat now exceeds 8,000 euros per square meter (say 10.7 square feet).
In the list below, the first figure is the arrondissement and the second figure is the average price in euros per square meter; the figure in parentheses is the increase since 1996.
1st 6,879 (+243%); 2nd 5,910 (+241%); 3rd 6,324 (+242%); 4th 7,569 (+236%); 5th 7,294 (+219%); 6th 8,099 (+219%); 7th 8,162 (226%); 8th 6,665 (+209%); 9th 5,549 (+247%); 10th 4,943 (+274%); 11th 5,153 (+244%); 12th 5,266 (+227%); 13th 5,271 (+217%); 14th 5,663 (+212%); 15th 5,857 (+220%); 16th 6,240 (+201%); 17th 5,366 (+222%); 18th 4,760 (+237%); 19th 4,456 (+245%); 20th 4,675 (+237%)
For those hoping to throw it all over in Podunk and set up shop in Paris to live their dreams, prudence might be the word of the day, in Amerloque's view. A quick look at one of the larger French real estate sites shows that a 28 square meter two-roomer in the Latin Quarter can be had for 175,000 euros, plus the 8% or so mandatory "taxes" on top of the purchase price. That's a sixth floor walkup, no elevator, and needs work. A third floor walkup studio in a 17th century building up the street from the first is going for 190,000 euros plus. That's quite a bit of money for places with no views and no lifts, that need renovations – perhaps substantial ones, at that. Due diligence is a must, and, as always, caveat emptor is the watchword.
Will the bubble burst and will property values come crashing down, as they did in the last French real estate bust in the early 1990s ? . "Perhaps, but probably not," is Amerloque's response. There is only one, unique Paris in the whole wide world, after all, so prices won't plunge to abyssal depths any time soon, in Amerloque's view. Ce qui est rare, est cher, as the French have it.
Of course, one can purchase a place in Paris, live in it a few months of the year, and rent it out furnished the remainder of the time. Many foreign real estate purveyors, Americans among them, have developed attractive sales and financing pitches built around this theme: one has only to look at a freebie publication such as Fusac to see numerous ads for rentals, all though the year, and especially during the summer, touristy months. Property financing in France has changed during the past decade, too. Mortgages used to be underwritten by banks for eight or ten years, tops. Nowadays, fifteen- or twenty-year loans are more and more common; the system has become more "American", although French banks are still far more conservative than their American counterparts. Currency exchange risks should be factored into any purchases, too: is one paying off a Paris mortgage in US dollars, for example ? Amerloque has heard both good and bad stories about buying and renting out, but as the old British saying has it, "location, location, location" appears to be the byword !
While there may only be one Paris, it is changing quite rapidly and, in Amerloque's view, not necessarily for the better. These changes might affect property values in the medium and long term. At intervals the French press reports the significant shifts in population: people are moving out of Paris and the Paris region (the Ile de France). The two major groups reported as leaving are retired individuals and families with children. This augurs ill for the Parisian economy overall since the former usually are in higher tax brackets and the latter are what makes cities vibrant, living, evolving entities. In addition, Paris is losing many of its distinctive small shops and restaurants: there seem to be fewer every year. There are more traffic jams, and there is more casual crime in some parts of town. Paris is being emptied of its working and middle classes – it is becoming a paradise for BoBos ... and tourists, of course ! Amerloque shudders to think that it might become another Venice !
If one has the money to purchase a place in Paris – or has already purchased ! – one should definitely pay close attention to what is happening in municipal government, which is responsible in part for setting local taxation rates. For the past several years, the city has been run by the Socialists and their ecoayatollah green allies, les verts. The clearest indication of the latter's presence, by the way, is the incessant war on the automobile. One has only to observe the massive traffic jams resulting from the roadworks - both for the tramway on the southern edge of the city and the huge, overwide buslanes on many central boulevards - to realize that the green political agenda is killing Paris and the Parisian quality of life. When delivery vans can't even make deliveries within a reasonable amount of time, a businessman or businesswoman can hardly see any benefit in setting up shop in Paris for a dwindling population – or a population composed of the bobos and the poor living off of city and state government entitlements !
The City of Paris, well before the tenure of the previous Mayors, M Jacques Chirac and M Jean Tiberi (whatever the alleged or real frauds committed during their administrations), owned and maintained many apartments in town, as well as quite a bit of real estate throughout France – tracts of land, forests, buildings and other properties left to the City in wills and testaments down through the decades after the establishment of the Third Republic in 1870. Since taking office in March, 2001, the Socialist administration has been selling off what some call "the inheritance of all Parisians": the real estate. At intervals the press reports on suchandsuch apartments being sold, soandso lands in the countryside being auctioned off … and it is sad indeed to see that such irremediable harm is being done to Paris and its heritage, with few voices raised in protest.
At equally regular intervals, too, rumors published in the press insist that the city finances are in catastrophic shape, compared to the healthy finances that the current administration found upon taking office in 2001. Amerloque was reminded of this when he was informed that over the weekend (on October 20th and 21st, actually) the Socialist administration is auctioning off many of the fine wines in the City cellars, vintage bottles that were patiently collected over the years (some bottles of which are even pre-Chirac). The Socialists would have the people believe that – ready for this ? – the wines in the cellar were in danger because "a sudden flood of the Seine river could destroy the wines forever". (une crue soudaine de la Seine pourrait détruire à jamais ces trésors). The Socialists and their ecoayatollah allies would also have the naive and gullible taxpayers believe that officials and underlings used to knock back vintage bottles every lunch- and dinnertime and that middle rank factotums were swigging Margaux and Romanée-Conti while feasting together in the basements of the city hall.
Hardly. The wines were served at diplomatic get-togethers, where important guests were invited to official City Hall luncheons and dinners. The entire world knows that French culture puts heavy emphasis on fashion, food and drink: what could be more natural than to serve the finest French vintages to distinguished foreign guests ? Until 2001, the City Hall practiced what it preached: that Paris was a special place in the world, one that represented fashion and cuisine, one that could – and did - offer the best of French wines to its guests. A visit to Paris was a memorable journey; the standing of Paris – and France – was enhanced. Now, of course, under the Socialists Paris is slipping rapidly downmarket: it is becoming quelconque, as the French expression goes, and France is the poorer for it.
According to the well informed daily Le Parisien, the two-day auction of a portion of the City Hall wines (4960 bottles in all) brought in almost one million euros before buyers' commissions, thus demonstrating that the individuals choosing the wines over the years made very, very shrewd investments indeed: they obviously knew what they were doing ! The most expensive bottles were a 1986 Romanée-Conti at 5,000 euros, a 1989 Château-Pétrus at 4,900 euros, a 1990 Château-Pétrus at 3,900 euros, a 1982 Château Haut-Brion at 3, 000 euros, and a 1988 Château-Pétrus at 2,500 euros. Foreigners – Japanese, Chinese, British, Americans – turned out in droves and kept the prices high, to the chagrin of French men and women who had hoped to take home a bottle or two. One of the major bidders – and purchasers – interviewed in the press was one Mr Stephen Williams, a wine merchant and founder of the London-based Antique Wine Company, who in many cases paid the top prices. He pointed out that the price of a great wine is composed of its quality, its year and … its history. He went on to state that "these bottles, marked Mairie de Paris, were stored in the City Hall in the capital city of the country of wine … it'll be a plus for my customers".
It certainly will, Amerloque feels. Mr Williams is to be congratulated (ah, sacrés anglais !). The monies raised from the sale will go to fund the Paris City Hall's demagogic entitlement policies, to the bitter disappointment and disillusionment of those, such as Amerloque, who have a far different idea of Paris, and of what it represents in the world.
L'Amerloque
Disclaimer: Amerloque is not involved in real estate in any way whatsoever, nor is he involved in the wine trade. This post should not be considered as an encouragement or recommendation to purchase or to sell real estate (or wine !) in Paris or anywhere else. Readers are advised to seek independent and competent professional advice before acting on anything concerning real estate or wine contained herein. Caveat emptor.
Text © Copyright 2006 by L'Amerloque
Images © Copyrights reserved to copyright holders
posted by L'Amerloque at 1:11 AM
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