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A Tale of Two Cities

What does the future hold for the luxury markets of London and Paris?

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Luxury real estate prices in Paris grew about 60% over the past decade, according to Savills.

mattscutt / Getty Images
Luxury real estate prices in Paris grew about 60% over the past decade, according to Savills.
mattscutt / Getty Images

In terms of luxury real estate, it’s been a decade of divergence for Europe’s foremost neighbors and rivals. New data from Savills, as commissioned by the Financial Times, shows that high-end home prices in England’s capital over the past 10 years have experienced more than double the growth of their Gallic counterpart, 121% to about 60% respectively. Why such different trajectories for these crown jewels of Europe? “The key difference . . . is that London is Europe’s undisputed capital of finance,” says Sébastien de Lafond, chairman of MeilleursAgents.com, a Paris-based real estate portal. “London has become a safe refuge for the world’s wealthiest people when they are looking for a home,” he says. “Paris doesn’t really set out its stall to attract and retain the same people.”

The Times further cites the English language, the U.K.’s “non-dom” tax status as reasons for London’s larger luxury growth and the fall of Dominique Strauss-Kahn, a business-friendly politician widely predicted to be president, as a reason for Paris’s lower profile. . What does the future hold? Given London’s historic market resilience, it’s anyone’s guess but there appears some chance for a bit of role reversal for the capital cities. With today seeing reports of London’s bubble risk, the publication notes that China’s economic struggles, falling oil prices and reform of the “stamp duty” tax all look to take a bite out of the city’s high-end home market as foreign investors scale back their investment in the region. Meanwhile In Paris, luxury real estate is experiencing price growth (“3.66 per cent in the six months to June,” according to Savills), thanks in large part to increased interest due to a weakened euro. However, the city faces new regulations aimed at controlling rental prices which could deeply undermine investor speculation. Read the full article for a complete accounting of the history and potential futures of the prime property markets.