The real estate market in Paris has developed an interesting trend: the wealthy Frenchmen are eager to sell the property and leave the country, which has become too uncomfortable after raising taxes on excess profit. In their place come foreign investors, attracted by the extremely low prices in comparison to other capitals .
After a townhouse in Paris near the Champs Elysees was swept away from the market for €44 million, just six weeks after the placement Charles-Marie Jottras, director of brokerage Daniel Feau, realized that the luxury real estate market recovers in Paris.
Jottras says that he was easily able to sell XIX century mansion with a dozen bedrooms, three floors and a terrace with panoramic views of Paris, a swimming pool and the garden on 1000 sqm to the buyer from Qatar.
The revival of interest of buyers from the Middle East, the U.S. and Russia to luxury real estate in Paris coincided with a ten percent decrease in prices and an increase in taxes on luxuries, which caused many wealthy Frenchmen, such as actor Gerard Depardieu, to escape from the French capital.
"We have naturally been horrendous for 12 months from April 2012 to April 2013. Then the market came out of hibernation due to lower prices. Foreigners took a fresh look at France, realizing that the tax hell is for the French, and not for them,"  Jottras said.
The current evidence of Parisian notaries show that the number of sales of apartments in the capital in the first half of 2013 is by 22% below the average number of sales over the last 10 years, but up 5% in the second quarter of this year compared to last year. Foreigners made 7.7% of transactions in the Paris market in the first half of 2013, which is close to a record 8% in 2003 and more than 7.3% in the past year.

The proportion of foreigners in the Spanish market

2003
2012
First Q of 2013
8.0%
7.3%
7.7%

The escape of Depardieu

Hollande plans to collect €30 billion from companies and households, with help of 75% tax on wages in excess of €1 million in attempt to reduce the budget deficit to 4.8% of GDP.
At the end of 2012 Depardieu, who won a Golden Globe in 1991 for taking part in the film "Green Card", became the most famous fugitive from higher taxes. First, the actor fled to Belgium, and then received Russian citizenship.
He is selling his mansion hotel Chambon XIX century building, which became not the first object of this kind on the Paris market.
In addition to Depardieu, France was left by the head of LVMH, Bernard Arnault, actors Vincent Cassel and Monica Bellucci, as well as former President Nicolas Sarkozy, who decided to "escape" from the major taxes in London.
The total value of the objects dealt with by Daniel Feau is €5.4 billion, which is 42% more than year before. The agency Barnes, who is also engaged in sales of luxury properties, has 1,250 objects exhibited in Paris and suburbs, costing more than one million euros. This is twice more than one and a half years ago.

Quality product

"We in Paris has never been exposed to so many objects of such a high quality," - says one of the agents during the inspection of the duplex area of 425 sq.m in the western Paris.
At one time it was the home of designer Pierre Balmain. Especially for him gold walls in the dining room and bathrooms made of Indian and Brazilian marble were fabricated. The apartment can be purchased for €12.9 million.
People are leaving the city and country for several reasons: taxes, economy, family circumstances. No one can be sure that tax policy will not become even more intense. This leads to the situation when prices are reducing faster in prestigious areas of Paris.
In the chic Saint-Germain-des-Pres and the famous Champs-Elysees average apartment prices fell by 18% in the second quarter of this year. Square meter in these areas is now estimated at an average of €12,000. In the area near the Ecole Militaire not far from the Eiffel Tower, prices fell by 11% to €10,510.

Prices in prestigious areas of Paris in Q2 2013

District
Price dynamics
Cost per square meter
Saint-Germain-des-Prés, Champs Elysees
-18%
€12,000
Ecole Militaire
-11%
€10,510

Better than London

Reduced prices attracted buyers in the City of Light, not only from China and Russia, but also the Middle Eastern investors fleeing the war-torn Syria, Egypt and Libya.
According to Alexander Kraft, director in Sotheby's International Realty for France & Monaco, foreigners are buying luxury properties in western Paris, where prices are cheaper than in cities such as London, New York and Hong Kong.
Prices in prime areas of London such as Knightsbridge and South Kensington, are at the level of €20,000 per square meter, and in New York on Lexington Avenue prices start at €15,000 per sqm For comparison, in the 16th arrondissement of Paris, the price per square meter is about €10,000.
The American showbiz stars and directors of IT companies return to Paris after they massively fled the city during the fall of the dollar in the beginning of 2000. Usually customers come from America with a budget of 30, 40 or even 50 million.

The cost of real estate in prime locations of major cities

City
The cost of housing (sq.m)
London
€20,000
New-York
€15,000
Paris
€10,000

Economic nuances

Meanwhile, the cheaper Paris real estate is under the strong negative impact of increased capital gains tax on buying a second home. The decision to raise taxes has increased the number of vacant sites, making the procedure more difficult to reduce taxes when buying a home for rent. Moreover, a law that limits the rent is going to be introduced.
French buyers are attracted by record low mortgage rates and declining prices for items that need repair. So, for example, a requiring reconstruction apartment of 260 square meters in area Trocadero overlooking the Eiffel Tower was sold for €8,450 per sq.m, with the original price of €11,000. Lower prices for similar apartments in the whole city is 15-20%.