(Bloomberg) Paris real estate broker Kerstin Bachmann warned clients two years ago that the global financial crisis would trigger a slump in the city's home prices. Last year they rose at their fastest pace in at least two decades.
Residential values in the French capital climbed almost 18 percent in 2010 following a 4 percent decline a year earlier, according to Paris Chamber of Notaries data based on prices per square meter. By the same measure, London had a 1 percent increase and Manhattan was almost flat. Since 2005, Paris prices are up 40 percent, while values across France are little changed, according to the brokers' lobby, FNAIM. "Paris proved itself even more as a safe and sustainable investment option," says Bachmann, a partner at Paris Property Group, which last year handled 25 deals worth €40 million ($56 million).
It's the locals—not American or English couples looking for a pied-à-terre—who are driving up prices. The French are shunning stock and bond markets and putting money into Paris real estate at a time when fewer owners are selling properties and little new stock is coming into the market. Transactions last year were 9 percent below the average for the past decade, Chamber of Notaries research shows. Says Roger Abecassis, president of Consultants Immobilier Group, a chain of 10 brokerages: "It's a French market."
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