Prices for luxury homes in Paris are on the rise. Thomas Coex / AFP
Prices for luxury homes in Paris are on the rise. Thomas Coex / AFP

Housing market aglow in City of Light



Better buy that quaint pied-a-terre on the Left Bank while you can still afford it.

Q&A: Paris charm or US bargains

Last Updated: June 10, 2011

Why are Paris prices going crazy? International buyers are tired of the roller coaster ride. They are looking for safe, stable places to stash their money and that means the old European capitals. London is popular as a financial centre, but Paris has its own charms.

Can Paris sustain these prices? Analysts think so. There is little new development in the city's most desirable neighbourhoods. And that means the finest apartments are attracting multiple offers, driving up prices.

Any other cities still seeing price increases? St Petersburg prices actually jumped 8.2 per cent in the first quarter of this year, after showing little movement in the first half of last year, according to Knight Frank. And Hong Kong prices are still going up, although not at the same rate. The city's prices rose only 6.4 per cent in the first quarter, even though they're up 15 per cent from a year ago.

Some analysts believe the best deals are found in the US, where prices are still dropping in many markets. Popular international cities such as Miami and Los Angeles have seen huge falls in recent years. But nobody knows if these markets have hit a bottom.

Are there any bargains in the world? XXX

Prices for luxury homes in Paris jumped 22 per cent in the 12 months to March this year, the biggest gain among the 15 cities tracked by the Knight Frank Prime Global Cities Index.

The City of Light has never been a bargain hunter's paradise, but "supply constraints" and growing interest from overseas buyers is driving up prices even more than normal, the property firm reports.

"Investors from Brazil, Russia, India and China are increasingly looking to Paris as a safe haven to invest funds in a mature and high-performing market," said Liam Bailey, the residential research director for Knight Frank.

In other words, it's starting to attract the type of activity already fuelling London's high-end neighbourhoods. London and Paris are starting to operate in their own rarified air, catering to wealthy buyers who are unconcerned by "affordability and macro-economics", the firm reports.

"These cities compete at a different level in attracting the world's wealthy elite," Mr Bailey said.

The price spurt in the European capitals is in sharp contrast to recent years when cities in Asia attracted headlines for gaudy price increases.

But government-enforced cooling measures are having an impact on Asia's markets, Knight Frank concludes.

Hong Kong, Shanghai, Beijing and Singapore posted an average annual price growth of 54.6 per cent in the first quarter last year, from 2009, compared with a more pedestrian 11.1 per cent in the first quarter of this year.

Other cities around the world are also struggling to find buyers, according to the Knight Frank index, which tracks high-end housing globally. Moscow was at the bottom of the list, posting an 8 per cent decline in the year to March.

New York, another city bolstered by international buyers, saw a scant 1 per cent increase.

But Knight Frank expects prices in Paris to continue to escalate.

Top 5: Hot cities

1 Paris, up 22%

1 Hong Kong, up 15%

1 Helsinki, up 12.2%

1 Shanghai, up 11%

1 Beijing, up 10%

Y-to-y price gain. Source: Knight Frank

An elite tier of global city markets is forming, "where the top addresses will become increasingly fought over by wealthy buyers" looking for long-term investments, Knight Frank reports.

The Quote: "An artist has no home in Europe - except in Paris." Friedrich Nietzsche

COMPANY PROFILE
Name: Almnssa
Started: August 2020
Founder: Areej Selmi
Based: Gaza
Sectors: Internet, e-commerce
Investments: Grants/private funding
Formula Middle East Calendar (Formula Regional and Formula 4)
Round 1: January 17-19, Yas Marina Circuit – Abu Dhabi
 
Round 2: January 22-23, Yas Marina Circuit – Abu Dhabi
 
Round 3: February 7-9, Dubai Autodrome – Dubai
 
Round 4: February 14-16, Yas Marina Circuit – Abu Dhabi
 
Round 5: February 25-27, Jeddah Corniche Circuit – Saudi Arabia
Emergency

Director: Kangana Ranaut

Stars: Kangana Ranaut, Anupam Kher, Shreyas Talpade, Milind Soman, Mahima Chaudhry 

Rating: 2/5

Other workplace saving schemes
  • The UAE government announced a retirement savings plan for private and free zone sector employees in 2023.
  • Dubai’s savings retirement scheme for foreign employees working in the emirate’s government and public sector came into effect in 2022.
  • National Bonds unveiled a Golden Pension Scheme in 2022 to help private-sector foreign employees with their financial planning.
  • In April 2021, Hayah Insurance unveiled a workplace savings plan to help UAE employees save for their retirement.
  • Lunate, an Abu Dhabi-based investment manager, has launched a fund that will allow UAE private companies to offer employees investment returns on end-of-service benefits.
COMPANY PROFILE

Name: Qyubic
Started: October 2023
Founder: Namrata Raina
Based: Dubai
Sector: E-commerce
Current number of staff: 10
Investment stage: Pre-seed
Initial investment: Undisclosed 

Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

MATCH INFO

Asian Champions League, last 16, first leg:

Al Jazira 3 Persepolis 2

Second leg:

Monday, Azizi Stadium, Tehran. Kick off 7pm