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Why London’s bankers cannot resist Paris property

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Via Financial Times

Michel has lived in London for two decades. This spring, the French banker and consultant bought a flat on the Left Bank of the Seine. While he has no immediate plans to move, Michel says his British wife pushed him to move their finances away from the UK, fearing the fallout from a no-deal Brexit.

So far, the total number of job moves out of London has been a fraction of that predicted. According to a report from EY last month, banks have moved only about 1,000 positions from London to other parts of the EU since the 2016 referendum — in stark contrast to the tens of thousands of losses that some had forecast.

Still, Michel is one of a growing number of London-based bankers eyeing up Parisian property, agents report. Most are “looking for extra security as a medium-term measure”, says Hugues de La Morandière, chief executive of Agence Varenne.

His buyers are looking for a pied-à-terre in the French capital in anticipation of a larger purchase further down the line. David Scheffler, chief executive of Engel & Völkers in France, says his agency has seen interest in Paris from London-based buyers jump 20 per cent in a year.

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The number of ultra high net worth individuals living in the French capital has increased sharply, according to Wealth-X, a research company that tracks the activities of the super-rich. Wealthy buyers have been attracted by President Emmanuel Macron’s policies — his administration has cut the country’s wealth tax on everything apart from property assets and introduced a flat capital gains tax of 30 per cent.

“London has long been the number one destination for international business people looking to buy a property in Europe, but that seems to be changing,” says François-Xavier de Vial, director of Home Hunts, a buying agency. He claims to have seen increased interest in Paris from Middle Eastern, Russian and Chinese buyers.

In the year to June, the value of Paris’s prime properties — the top 5-10 per cent of homes by value — had increased by nearly 8 per cent, according to Savills research. Over the same period, the average property price in Paris grew by more than 6 per cent.

In contrast, London’s property market has been falling: prime homes are down 11 per cent since the 2016 referendum, according to Savills; with the average price dropping 3 per cent over the same period, according to Nationwide. The state of the market — coupled with the fall in sterling — has held some London-based buyers back from buying in Paris, agents say. “Leaving a slowing market and entering a more expensive one is not easy,” says de La Morandière.

The wealthiest buyers tend to look in the sixth and seventh arrondissements, says de Vial. The price per sq metre of property in the sixth is €13,880, up 10.2 per cent since last year, according to research by Knight Frank. The average price per sq m across Paris broke through €10,000 this year. In Saint-Thomas-d’Aquin on the Left Bank, E&V is selling a four-bedroom flat for €3.2m. Emile Garcin is advertising a four-bedroom flat overlooking a 17th-century courtyard for €4.45m.

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A five-bedroom apartment in the seventh arrondissement, €3.2m
A five-bedroom apartment in the seventh arrondissement, €3.2m

In the five years leading up to 2016, Paris was losing about 12,000 residents annually, according to the Insee, France’s national statistical body. Kelly Simon, co-founder of Paris Je Te Quitte, a website advising Parisians on moving out of the capital, says many first come to Paris as students or young professionals but, when they want to have a family, they find the financial pressures are too high.

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To help stem the flow of Parisians outside the Périphérique, Paris brought in new rent controls in July — the first French city to do so. Rents cannot now exceed a reference rate — calculated according to a building’s location, type and date of construction — by more than 20 per cent.

Like many of those buying a pied-à-terre, Michel rents out his Left Bank flat on a short-term basis — under French law it can quickly be reclaimed if he decides to relocate to Paris.

Politics will dictate if he does make the move across the Channel, but one thing is sure: “Traditionally, the UK has been the place of exile for French liberals,” he says mournfully. “No longer.”

Buying guide

  • The fastest-growing arrondissement last year was the gentrifying 19th, where prices rose 13.8 per cent in a year
  • Parisian property is still a third cheaper than central London, according to Engel & Völkers
  • The population of the French capital fell 2.6 per cent in the five years to 2016
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What you can buy for . . .

€900,000 A two-bedroom 1930s flat in the 16th arrondissement
€1.4m A three-bedroom flat in the fashionable Marais
€2.8m A two-bedroom flat in the triangle d’or, close to Avenue Montaigne

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