Latest posts by Jean-Luc (see all)
- Investing in French Real Estate for Foreigners - December 27, 2012
- How I got Number 1 in Google - September 12, 2012
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French Real Estate
Foreigners love Paris…
That’s why Paris Real Estate just broke a new historical record.
If there is a real estate depression in United States, but also in European countries like Greece, Spain and Ireland, French real estate market is still trading at high price, for several reasons:
- Building new constructions in France is not easy, it requires a lot of administrative approvals, and for example in Paris you cannot just build high buildings without urban services approval.
- French banks have always been cautious in lending money for buying real estate. Most of buyers had to have a debt income ratio below 33%.
- French law is very protective for buyers, French and Foreigners have the same rights, thats why foreign people like investing in France, where life quality is still great.
Housing Market Overvalued
But with 3-4% yields, from which you have to deduct many costs and taxes, it appears to me that French Housing Real Estate is overvalued now, and that it might start to decline.
Paris is at historical new highs, and price have increased much more quickly than rents.
A decline would be logical, even though with financial crisis, real estate is considered as a safe protection.
Professional Real Estate Market
But if an investor doesn’t want to take the risk to invest in an over valued market, he should consider investing in French professional real estate, which offers much better yields.
Scpi for example, offer
Scpi are private companies that invest in professional real estate, and rent it.
- They collect the rents, and pay it back to their investors.
- The management company takes care of everything:
- buying, selling, renovating, finding tenants, etc…
- Investors buy shares, and receive a net yield every quarter.
The best scpi these year will offer a 6% net yield, with a good yield-security ratio:
- scpi possess tangible assets
- they don’t have debt or very little
- their assets produce cash-flows
- management costs are a fixed percentage that cannot be changed
Foreign Investors
Foreign people are allowed to invest in Scpi, even if they don’t reside in France.
They will only have to make an annual tax declaration, but if their income in France is less than 11 896 euros per year, they won’t pay any taxes.
They’ll have to pay csg-crds though, which represents 15,5% of the income.
The advantages are:
- they won’t have to manage anything, everything is done by the management company
- they can decide how much they want to invest. If one share of scpi costs 1000 euros, they can decide how many shares they want to invest in.
- yield is great
- it’s a good way to diversify your assets and currency
The risks and drawbacks are:
- it’s real estate, so the value depends on real estate value
- income is transferred only on a french bank account
- an annual tax declaration is necessary
As a French financial advisor, I have a few foreign investors who invested in Scpi and are happy with it.
Twitter: googlai
Hi Jean ! Thank you for a excellent post. you have broaden explanation over real state. it’s the time of global real state down turn. This article will help to the fact scenario of global real state. i really appreciate your contribution and knowledge sharing.
Googma Sansar recently posted..Leading Business is Hard Work
Twitter: akhilendra1
Real estate is a tricky investment, if market is good, you can expect to generate great returns but if market is not doing well then it could have significant impact on your capital. It’s great to hear that french real estate market is stable and doing well. You have provided great details on the process of investment in french real estate market. It is really helpful, thanks for sharing this.
akhilendra recently posted..New Residential Projects in Noida
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Good to read this article when it was nothing of my work.
Bit it;ll really help me i ever have to do some real estate work.
Thanks
Salman Ahmad recently posted..6 awesome Android Games For Christmas Holidays
I’m not sure what the rent is like in Paris these days, but a friend who took a couple of courses at the Sorbonne a good decade or so ago (i think it was in 2000) told me about the phenomenally-high rent in Paris! Not sure what’s it like now. Well thanks for this article Jean, should be useful when I decide to buy a few houses in France!
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Twitter: Mazzastick
Great tips for investing in French real-estate Jean-Luc. Foreign people are allowed to invest in Scpi, even if they don’t reside in France. This concept makes it more attractive for many potential buyers to want to invest.
France is a beautiful place and I especially like the Country Side.
Take Care.
Twitter: freedommmc
Interesting topic Jean,
I have to say I am still very nervous from the 2008 crash I’ll never look at real estate investing the same.
If you don’t have enough money to pay cash for the property and repairs, taxes, and insurance then you aren’t investing; you’re speculating aren’t you?
Darnell Jackson recently posted..Want to earn extra money? Join the club – Friday is your last Chance to join HIC
Twitter: primejuicers
Hello Jean-Luc,
Thank you for the article. I was in real estate many years back and have never heard of Scpi. Thank you so much and best wishes!
Rich Donahue recently posted..Amazing Quercetin In Apples
Twitter: fionamaclean
I’m quite interested in this, I’ve got a few friends who have relocated to France from the UK and love it. Seems to be a good way of life!
Fiona Maclean recently posted..5-2 Diet Tips Part One
Nice article. Paris is very popular with tourists, so I guess would be a good place to make French real estate investments.
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Twitter: houseflipmike
Fascinating, I’ve never heard of Scpi in all the years investing in real estate. My wife and I are thinking about traveling to France in June, so your article is very timely. A friend told me that rents in Paris are at an all time high now, have you found this to be true?
Mike recently posted..11 Sure-Fire Strategies To Flip Houses Fast
Twitter: @rommysunnyblog
great big door getting opened for lumsum money same is going on india .indian government has also rewriting its foreign policy for international investors.
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Twitter: PatSkinCare
I lived in Paris for three years. This looks like a nice investment. Will look into it further.
Thanks for sharing some insight on the French real estate market. I think regardless of what real estate market people are investing in, the days of quickly turning properties around and making a quick profit are gone. There are many good opportunities if people are willing to be patient and are able to have their capital tied up for a longer length of time, the rewards can be worth it.
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Twitter: himanshuk18
I have my relatives in abroad and would definitely be telling them about investment.By the way nice post on how to investing in french real estate really beneficial for me.
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Twitter: himanshuk18
I would to ask one thing Andy that is,nt the annual income is 10 thousand euros for tax???
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