What factors influence the demand for luxury real estate
The French housing market managed to survive the pandemic despite the negative processes in the economy. Prices with the introduction of quarantine restrictions sagged slightly, but after their abolition the activity has increased. At the same time the demand for luxury real estate has remained at a high level and continues to hold the bar. According to statistics, the cost of housing rose by more than 6%, with 6.4% for properties on the secondary market and 2.8% for newly built properties.
France experienced several outbreaks of disease that forced the country to close three times for quarantine. Lockdown implied a ban on travel to different regions, but there were exceptions for some categories of people. Luxury home buyers, both individuals and companies that operate professionally in the premium real estate market, were also affected.
According to data from Home Hunts, sales were down 20 percent in 2020 compared to 2019, when demand for properties was steadily rising. That said, the number of buyers in the market has increased significantly since quarantine restrictions were lifted.
As for preferences, wealthy citizens of France, Monaco and other European countries were interested in large villas with spacious landscaped areas, where you can spend a lot of time in comfort. Demand in this segment was so great that the objects were sold at the asking price, and often even before the house was put up for sale. In addition, buyers were even actively purchasing even those villas that needed renovation.
It was difficult for foreigners to travel to view properties, but this gap was filled by locals. After an active vaccination program unfolded around the world, the number of foreign buyers in the French market has increased significantly.
The price of luxury housing in the south of France is growing steadily. A striking example – Occitania, where the cost of a small house starts at 450 thousand euros, and for the luxury villa should be set at 2 million euros. Accommodation in Provence with 2 or 3 bedrooms and a cozy garden will cost from 650,000 to 1 million euros. Prices for mansions with pools and gardens start from 1.5 million euros.
According to experts, before the pandemic, the proportion of foreign buyers in the market in the south of France was 60%, among which were the British, Americans and Swedish citizens. Now 60% of all sales are made by locals, and of interest from other countries are active customers from Belgium, the Netherlands, Germany and Luxembourg. In this case, the proportion of non-residents in the total volume of transactions is only 2%, but in the luxury real estate sector this figure is higher. In this case, foreigners account for 40% of transactions amounting to more than 4 million euros.