Paris is famous worldwide for its classic limestone Haussmann buildings, built in the second half of the XIX century. Baron Haussmann, who was a minister of Napoleon III, Empereur of France, had the ambition to renovate the capital, extending it, making it cleaner (sewing system) and greener.

Some villages around the city were annexed (Auteuil and Passy became the XVI arrondissement, Batignolles and Monceau became the XVII arrondissement). Wide avenues planted with trees were laid out making the traffic easier and opening deep perspectives. 80.000 acres of parks were created, including the Bois de Boulogne and the Bois de Vincennes.

A new style of architecture was designed by talentuous architects, such as E. Belgrand and J.C. Alphand, among others, still a reference for their modern colleagues. The specifications related to :

  • height : 5 or 6 storeys + 1 (attic) with 45° inclined roof
  • style : facades lined up with the next buildings featuring domes, outside balconies on the 2nd and 5th floor
  • building materials : limestone for the facade and zinc for the roof
  • ornements : cornices, caryatides

Those buildings were aimed at the “Bourgeoisie” class, who was enriched by the effects of the industrial revolution (railways network, metallurgical, textile and chemical industries, banking system). 30.000 new buildings were erected, partly financed by the Pereire family of bankers, then rivals to the Rotschild’s.



1st reason : VALUE

Prices of Paris apartments have increased again in 2011. Over the last 3 years, the rise is over 33% (see official index below).

In the very residential XVI arrondissement, located on the west side of the City, between Eiffel Tower and Bois de Boulogne, the average cost of an apartment per-square-foot in 2011 was around US$ 1.200. Those prices are still competitive against the top cities of the world.

Furthermore, the experts believe the value of quality real estate in the “City of Lights” will significantly grow in the future due to several objective factors :

  • high demand and limited supply
  • international equity capital searching for quality assets
  • demographic growth
  • timelessness of historic limestone Haussmann buildings that will never be built again
  • legendary quality of life in Paris

Paris Apartments Prices (€ per sqm) 2001-2011

2nd reason : YIELD

Once you have acquired a charming “pied-a-terre” facing a colorful garden or overlooking the zinc Parisian roofs with a view of the Eiffel Tower or even the river Seine, you immediately realize this makes a big change from staying in a hotel. And if you chose to share it with your best friends you can save on expenses too. Another option could be to rent your apartment as a furnished flat, maybe to some executive sent to Paris by its company for one year and usually the corporation will directly pay you rent.

Now, here comes the yield, since a furnished 1BR (approx. 450 sqft) apartment located in a residential neighborood which currently sells for about 500.000 € (US$ 650.000) and a monthly rent of 2.000 € (US$ 2.600 as per today) yields 4.8%. Not bad for an investment which value grows 10% a year !


The French system for real estate transactions is ruled by the C.C.H. (Code de la Construction et de l’Habitation) which is probably one of the most protective in the world. One key person in the transaction is the French Public Notary, a public officer appointed by the French Government and personally responsible for the due diligence of the legal procedures. The “copropriété” legal status is similar to the condominium in the U.S., granting full ownership for the privately used parts of the property (the apartment itself) and the ownership of a share (“quote-part”) of the parts of the building in common use.

The French Public Notary is in charge of firstly preparing the Preliminary Contract for Sale and then the Deed of Sale. As examples, he will make sure that the property is free of inscriptions, that all the legal obligations like the Home Condition Report are duly fulfilled (absence of hazardous substances, lead, asbestos, etc…) and will proceed to the land notification.

All payments received by the French “Notaire” are by law transferred to a specific account at the French state owned “Caisse des Dépôts et Consignations” before the sale is completed.


At the beginning of 2012, the home buying loans are at their lowest for the last 10 years in France. This due to the policy of the European Central Bank. The largest commercial banks in Paris, such as BNP, Credit Agricole, Societe Generale, LCL and HSBC currently grant 15 year fixed loans at a rate less than 4%. This allows for a very interesting leverage effect : with a 50% down payment on a 15 year fixed loan an investor can have the monthly installments totally paid by rental income.


1- Rental Income Tax

a) If the gross rental income exceeds 32.600 € annually (like for a furnished 2BR aprtment) one could legally deduct from that revenue the following costs :

  • closing fees and commissions
  • renovating and furnishing expenses
  • loan interest
  • property management costs and insurance

In the end, there is the possibility no tax will be paid at all on rental revenue.

b) If the gross rental income is less than 32.600 € annually (like for a studio or a small 1 BR apartment) no cost deduction will apply. But the French IRS will only tax 50% of the rental income received, as personal income, and at a limited rate of 5 to 10%.

2- Capital Gains Tax

If an investor decides to resell its French property before 30 years after he has acquired it, he would have to pay a maximum 33.33% tax on capital gains. But, if the resale happens say 12 years, for instance, after the acquisition of the property, the taxable amount will be then reduced by 24%. Let’s take an example :

  • cost of property acquisition in 2 000 :              400.000 €
  • reselling price in 2012 :                                  1.000.000 €
  • added value :                                                     600.000 €
  • taxable capital gains base 600.000 € x 0.76 :   456.000 €
  • capital gains tax 456.000 € x 33.33% :             152.000 €

In that example, the net profit after taxes is :

600.000 € – 152.000 € = 448.000 € over 12 years, or about a 7.4% annual yield with inflation.