The dollar has never been weaker versus the Euro than it is right now. In other words, it takes about $1.36 to buy one Euro. I remember the first time I visited Europe after the introduction of the Euro (2002) when one Euro cost only about $.86! Ahhh, those were the days.
In spite of this monetary nose-dive (if you’re an American), the Maison de la France (French Government Tourist Office) states that France is still the world’s #1 tourist destination. Seventy-eight million foreign travelers visited France in 2006, an increase of 2.7% over 2005. Most tourists are European—first the Brits and then the Germans; even more Chinese visited in 2006 (600,000). Americans are slowly coming back; France remains the second most popular destination for Americans boarding flights headed to the European Union. Statistics cite 3.1 million American tourists visiting France in 2006. Not bad considering how the cost of airline tickets has shot up along with the cost of the Euro.
The tourism business in France employs some two million people; 846,000 workers work in restaurants, cafes, and hotels. This is an annual increase of 2.5% compared with the 1% rise in other sectors. This means that 19,200 jobs were created in 2006, the highest number in five years.
Total revenues from foreign tourists rose by almost as much (2.7%). A major slice of this income is attributed to the accommodation industry; tourists, obviously, always need a place to stay. With France’s ongoing popularity with high-spending travelers, the rental market is as lucrative as ever.
You can purchase French property at an average price of 176,000 euros compared with Britain (284,000), Ireland (240,024), Netherlands (224,000), and Spain (220,000). According to a report published by Urban Land Institute (based in Washington DC) and Pricewaterhouse Coopers, Paris still has good prospects for the next two years. The capital city rates high for both total return and low risk, and thus its risk-adjusted total return prospects are judged the best in Europe. Survey respondents, 400 of the industry’s leading authorities to identify Europe’s top cities for real estate, pointed to the city’s economic stability and sustainability, in addition to its status as a global getaway. Ample urban regeneration and redevelopment opportunities also attract investors.
Earlier this month, the Chambre de Notaires showed that 8.1% of Paris apartments put on the market between June 2005 and June 2006 were sold to non-resident foreigners compared with 5.7% ten years ago. One apartment out of 12 was sold to non-residents last year compared to one out of 17 during the ‘90s. The influx of foreign money is pushing out local citizens, which is not very popular. It’s known as “museification”; i.e., Paris becoming a museum rather than a vibrant city—like Venice, which emptied of permanent residents in lieu of occasional visitors and is now strictly a haven for tourists.
Prices for real estate vary, obviously, depending upon the arrondissement in which property is located. Ile Saint-Louis (the island behind Notre-Dame) is particularly affected and prices there are reaching as high as 20,000 euros ($27,200) per square meter. And even after purchasing a Parisian apartment, the average renovation costs (upgrading the kitchen, installation of an American bathroom, etc.) are 1,000 euros per square meter ($1,360). Still a very expensive proposition. (By the way, the average size of a Paris apartment is slightly less than 50 square meters or 538 square feet.) However, if the apartment is rented to tourists—and that market is very active--, many baby boomers and retirees feel the investment is well worth it. Plus, they gain a place to stay when they vacation in Europe. A win-win if you can afford the prices!
PS – The Ile Saint-Louis was originally two smaller islands: the Ile aux Vaches (Island of the Cows), originally nothing but pasture, and the Ile Notre-Dame, the site of judicial duels during the Middle Ages. In the 17th century, the two islands were united. Lords and financiers then built their homes here, still standing today as one of Paris’ most beautiful (and expensive!) residential areas.
