Rental real estate: Investor demand soars in Paris
After a difficult period, Parisian real estate is picking up. And rental real estate is no exception. Robin Soulier, associate director at Immo City, took stock of this new desire of the French to afford a small area to rent in the capital.
Mysweet’immo: What explains this renewed appeal for Parisian rental investment?
Robin Soulier: Rental investment is no longer reserved for a few insiders. It has become democratized. It interests everyone. Everyone wants to own a property in addition to their main residence. This is a new phenomenon that dates back ten years. 25 years ago, buying your main residence was already very good. Few went longer. But with the awareness of the problem of pensions, access to information, the development of loan brokerage… things have changed.
Since the health crisis, the trend has accelerated. The stone plays more than ever a role of safe haven. Real estate is a tangible asset. By investing, the French secure themselves. They build up assets, prepare for their retirement… At the moment, returns on passbook accounts are low, which does not encourage individuals to keep savings, and rates are still very low. Many investors therefore seek to activate the leverage effect of the loan and capitalize.
Another phenomenon: in large cities, given the surge in prices, families who do not have the means to acquire their main residence relate to rental investment to build up a contribution or a cash reserve. In Paris, buying a family apartment is almost impossible for a young couple with children unless they have a very profitable job. Or everyone knows that Parisian prices “never” drop in the long term. Investing in a small area allows you to buy a property that will be valued in the future. Many couples make this calculation: in 20 years they will own a property that will be worth more than what they bought it. They will be winners. And this, regardless of the amount of the starting rent! The goal of the game is to try to cover your monthly loan payment as much as possible with the rent collected.
Mysweet’immo: Has France become a country of investors?
Robin Soulier: Without going that far, the market is doing well. And the explosion in demand proves it. At Immo City, we have had 17% more requests for surfaces under 40 m² since 1uh confinement. In the past, demand was stable. And it should be noted that this increase in demand is occurring in a market where there are far fewer foreign investors. In the past, foreign customers constituted a large part of the buyers.
In Paris and the Paris region, many young people get into real estate early. They don’t wait until they’re 40. From their first salary, they buy a small studio, a studio… What we rarely see before. For them, building up a heritage, getting rich with real estate is no longer taboo. It has become commonplace. It’s a kind of American logic. People in their fifties, who already own their main residence, buy for their retirement and supplement their income.
Mysweet’immo: Which districts are of interest to investors?
Robin Soulier: All boroughs are of interest to investors provided they are well placed and with easy access to the metro. The center of the capital remains very popular, unfortunately it is not the arrondissements that offer the best return since rent control. On the other hand, neighboring municipalities are good investments. With Grand Paris, they have gained in attractiveness and prices are a little lower there than in the capital. In Paris, the average investment is 150,000 to 500,000 euros. The expected returns are 3 to 5% gross.
Mysweet’immo: Are there any products for sale?
Robin Soulier: The Climate and Resilience law will soon prohibit the rental of “G” housing from 2025, “F” from 2028 and “E” from 2034. Many owners want to get rid of their poorly rated housing, so we have seen many new goods on the market. And investors in profit. They negotiate taking into account the cost of upgrading the work. The supply is present and the demand is sustained, to be sure!