Are sanctions against Russia affecting luxury real estate? - Selexium

The luxury real estate market in France continues to thrive! Despite the war in Ukraine, the energy crisis and rapid inflation, nothing is stopping it. France is still the number one destination for foreign buyers.

Was the French luxury real estate market affected by the war in Ukraine?

A year after Russia's war with Ukraine began - time for an assessment! The war between these two neighboring countries has really impacted the real estate market. Inflation and central bank rate rises have reduced the purchasing power of homeowners. However, no effects can be seen against the backdrop of the luxury market in France. Russian buyers have usually been active in this''buyers in France are declining.

For the past 5 years, each year Russian buyers have purchased between 130 and 140 properties in the Ile-de-France region, including 40 in Paris. This is just 1% of the total number of transactions carried out by foreign buyers in the territory (residents and non-residents). According to a report by notaries in Ile-de-France. France the Russian weight remains very low, over the last 5 years domestic buyers have purchased between 280 and 387 properties of Russian nationality. This is again only 1% of the total number of transactions by foreigners (residents and non-residents). According to the latest report of notaries in France.

The French market is still attractive?

Good news! French''The luxury real estate market is considered the most attractive. 2022 has been a record year! The French luxury real estate market is in great shape, thanks to the activity of the past year, allowing positive results. Despite the difficulties, it is resisting and asserting its position as a haven. The number of transactions in this industry has been huge. Although there is an increase in negotiation time compared to 2021 for the sale of properties worth between one million and one and a half to three million euros, the market is still dynamic.

The luxury real estate market is a sector that knows no crisis in France! While prices are falling in most major French cities, including Paris, where it is expected that soon the price per''square meter will fall below the symbolic mark of 10,000 euros, luxury real estate is unaffected by this drop. On the contrary!

First seizures of villas of Russian capital owners

The luxury real estate market is still at the top of the list, even if in France Russian clients have practically disappeared from this investment segment. On the one hand, the war has slowed down the travel of Russian citizens to Europe, and on the other hand, the transfer of money from them''has become complicated. However, there are some magnificent fortunes among these Russian capitalists, but many of them are now on the register of the French Ministry of Finance. Some can no longer acquire such real estate on our territory, while others have had their assets confiscated.

In October 2022, a wealthy Russian businessman close to Vladimir Putin has had his €23 million villa in Saint-Jean-Cap-Ferrat frozen by a French court. This means he cannot sell it or rent it to third parties. It was a confiscation made by the Authority of the National Court in charge of combating organized crime and at the request of the Paris prosecutor's office. For the first time in this geographical sector! According'French residents and foreigners have invested in the industry. These are often young entrepreneurs, high-ranking personnel and even retirees. Although today the French are actively investing in luxury real estate, among foreigners in the first place are the Germans. They are followed by the Swiss, Scandinavians and, since last summer, Americans. Their budget increases significantly with the strengthening of the dollar. However, since Britain's exit from the European Union, British buyers, including the British, are becoming rarer. Over the past ten years, the luxury real estate sector has grown by 3.3% annually. It is also attracting buyers from the Gulf countries. These buyers invest either in Paris and the suburbs, the Côte d'Azur or the Alps. Since last spring, foreign''Buyers are actively returning to the forefront again, although the French are still investing in exceptional real estate.

The market divided at two speeds.

In conclusion, the French luxury real estate market knows no crisis. 2022 was an exceptional year for prestige real estate; it remains attractive and dynamic. France continues to attract foreign investors; The purchase of luxury real estate is considered an investment that generates returns on a long-term basis; After a year of war in Ukraine, Russians can no longer buy real estate in France. Their purchased properties have been confiscated by the French state; The luxury real estate market has not suffered from the absence of Russian''oligarchs. Other foreign buyers have taken their place and replaced them.

Stéphanie Mosbach Web copywriter specializing in economics, finance and wealth management. With a degree in journalism, a passion for web writing, voice (podcasts) and new means of digital communication, I strive to decode economic, patrimonial or real estate information as accurately as possible so that it helps you in your personal or professional projects.