This is not the crisis for everyone! Certainly, real estate is going through a difficult period, with the number of sales in 2024 estimated between 750,000 and 800,000, compared to more than a million in 2022. At the same time, prices have fallen, recording drops of more than 10% in certain areas, under the effect of more restrictive credit conditions and an uncertain economic climate. Despite this, luxury real estate is holding up, driven by the relative stability of the most luxurious properties and an easing of interest rates.
The rise in rates, which makes borrowing more expensive, has greatly reduced the attractiveness of real estate compared to other investments, such as bonds. Between December 2021 and December 2023, the average loan rate over twenty years increased from 1% to 4.35%, before falling to 3.5%, according to the real estate brokerage specialist Empruntis.
Signs of recovery for goods over a million
This development has directly affected certain segments of the market, including that of goods between 1 and 3 million euros. After falling 20% in 2023 and another 4% in early 2024, it has been showing signs of recovery since last fall, according to luxury real estate specialist Barnes. “This segment, which often concerns people in their forties with children and a high standard of living, is particularly sensitive to interest rates and price adjustments,” explains Richard Tzipine, general manager of Barnes.
On the other hand, very high-end goods, above 5 million euros, remained dynamic, and continue to be worn by an international clientele little affected by economic variations. “The most active buyers today are those who do not need financing, which gives them strong negotiating power,” explains Alexander Kraft, CEO of Sotheby’s Realty France.
A trend has emerged: the search for properties located in historic places and quality buildings, well served by shops and close to good schools. Above all, wealthy buyers favor properties that have already been renovated and decorated with care.
Prestige, a safe haven
Therefore, in terms of location, it is districts like the Marais, the VIᵉ, VIIᵉ, and XVIᵉ arrondissements of Paris that attract. Outside the capital, destinations such as Saint-Tropez, the Arcachon basin, or the Basque coast are attractive with their living environment. Alpine resorts like Val d’Isère, Courchevel and Chamonix continue to shine, to the detriment of less snowy sites. Furthermore, Dinard, Saint-Malo and Île de Ré are gaining popularity, thanks to their authenticity and a more family atmosphere.
Internationally, competition between luxury markets is intensifying. Miami and Austin (United States) and Dubai (United Arab Emirates) attract a cosmopolitan clientele with their modern infrastructure and favorable taxation, while European cities such as Lisbon (Portugal), Madrid (Spain) and Istanbul (Turkey) stand out by their dynamism. Others like Verbier (Switzerland) and Aspen (United States) benefit from their exclusive and luxurious character. More broadly, Costa Rica and Mauritius are leveraging their climate, security and tax advantages.
Prestigious real estate remains a safe haven in the eyes of experts. In Paris, certain properties are traded at prices per square meter that can reach two to four times the Parisian average. Depending on the location, fully renovated housing allows you to obtain very comfortable rental income, generating gross returns of 15 to 25%, according to the Magrey & Sons group.
In addition, “real estate is one of the rare investments offering significant leverage thanks to credit,” notes Sébastien Kuperfis, president of Junot. With inflation, monthly payments are becoming more accessible, reinforcing its interest in a wealth strategy. .” For 2025, sector experts are “cautiously optimistic”, counting on a continued fall in interest rates and greater flexibility for sellers in negotiations. These conditions could provide opportunities for investors ready to make a long-term investment.