Real estate: “Towards normalization of the prestige market”

Despite the current context marked by the war in Ukraine, the presidential elections, the high inflation or the rise in borrowing rates, luxury real estate is doing wonderfully, as can be seen form the results of Sotheby's International Realty France-Monaco. Between January and the end of August 2022, the house achieved a sales volume of more than 900 million euros, almost identical to the same period of 2021 which had already broken all records. More than 600 sales have been concluded, at an average price of 1.53 million euros. Last year at this time, the average price was slightly lower, at 1.37 million euros. 2022 therefore promises to be a very strong year, especially since: “200 million euros in transactions in the pipeline (under promise and/or under compromise) should materialize by the end of the year. It is therefore possible that we are approaching our results for 2020 and 2021, which were record years for the sector,” Alexander Kraft, president of Sotheby’s International Realty France-Monaco notes.

And this despite a leveling off in activity, which seems to indicate a normalization of the market and a potential drop in prices. Buyers take more time to finalize their transactions and buyer/seller negotiations become longer. The prices of products without defect but without outer space are stable but at a high level. For those with default, the marketing period is extended and prices are revised downwards.

Regarding buyers, following the end of quarantine, French customers are less present even if their interest in luxury real estate is very real. But this loss is partially compensated by the return of foreign buyers, in particular Americans who are returning in force to the capital. The lifting of health rules allows them to travel without restriction, and the weakness of the euro against a strong dollar considerably increases their purchasing power. Their second home projects abroad put on hold by the Covid can now materialize. Buyers from the Middle East are not to be outdone and remain "always as attracted by the French market, wishing to transform their dollar funds into investment in French stone", Alexander Kraft observes. By geographic sector, Paris proved to be “a very active market. Our eight Parisian agencies worked well. They achieved very good sales, with high budgets. Overall, a property displayed at the right price sells easily,” Alexander Kraft adds.

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