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Paris luxury real estate shines as London suffers Brexit blues
BRITISH investor Robert Drake has bought a luxury flat near the Elysee Palace in central Paris for 2 million euros (S$3.02 million), lured by ultra-low borrowing costs, attractive prices and a belief in the growing allure of continental Europe for financiers post-Brexit.
The two-bedroom flat is Mr Drake's first overseas property investment. His purchase is a reflection of how the damage dealt to London's global standing by Britain's tumultuous decision to leave the European Union is contributing to sharp price rises in the French capital's luxury real estate market.
In the ornately corniced living room of his new apartment, Mr Drake, who is managing director of Bury Street Capital, said Britain's relationship with Europe had "fundamentally shifted" since its vote to leave the EU in 2016.
Mr Drake believes international bankers will increasingly seek top-end apartments in Paris, a city where strict planning rules will keep a firm lid on the supply of upmarket properties.
Paris property prices suffered under socialist president Francois Hollande, who was in power from 2012 to 2017. His 75 per cent super-tax on earnings over one million euros reinforced France's reputation abroad for being hostile to wealth. High earners fled, often to London, creating a glut in supply.
The election of investor-friendly Emmanuel Macron in 2017 spurred a turnaround, driven initially by French buyers. As the Brexit negotiations got messier, foreign investors increasingly lost confidence in London and set their sights on Paris.
"Paris today is the number one winner from Brexit when it comes to real estate," said Thibault de Saint Vincent, chairman of leading international realtor Barnes International.
Knight Frank, one of Britain's biggest real estate agents with operations across Europe, expects Paris' prime market - the top 5 per cent - to post further gains of 5 to 7 per cent in 2020.
At 19,000 euros per square metre, prime prices in Paris still compare favourably with other first-tier global cities - the equivalent in London and New York would be closer to 28,000 euros and 27,600 euros respectively.
Prime prices in Paris stand 21 per cent above their low in the fourth quarter of 2015, Knight Frank said.
As well as British investors, Belgian, Scandinavian and Middle Eastern buyers are also turning to Paris.
"They see Paris as the best bet over other safe-havens. It's portfolio diversification," said Roddy Aris, London-based associate partner at Knight Frank.
House prices in London declined at their fastest pace in almost a decade earlier this year and will end the year in negative territory, hurt by the Brexit uncertainty and its impact on the city's attractiveness as a global finance centre. REUTERS