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Dec 22, 2005

Yields are low at 4.5%


Last Updated: Dec 22, 2005
SAINT-DENIS COST (€) YIELD (p.a.) PRICE/SQ.M. (€)
TO BUY MONTHLY RENT TO BUY MONTHLY RENT
50 sq.m. 110,000 500 5.45% 2,200 10.00
80 sq.m. 180,000 750 5.00% 2,250 9.40
120 sq.m. 240,000 900 4.50% 2,000 7.50
150 sq.m. 300,000 1,000 4.00% 2,000 6.70
180 sq.m. 350,000 1,200 4.11% 1,944 6.70
SAINT-DENIS -
Houses with Grounds
200 sq.m. 380,000 1,400 4.42% 1,900 7.00
300 sq.m. 520,000 1,800 4.15% 1,733 6.00
350 sq.m. 620,000 2,200 4.26% 1,771 6.30
400 sq.m. 700,000 2,500 4.29% 1,750 6.30
Source: Global Property Guide

Real estate prices are quite high, given the general standard of living. A 120 square metre (sq. m.) apartment might cost around €240,000, or €2,000 per sq. m. This could rent for around €900 a month, giving a gross rental yield of 4.5%

One reason for these low rental yields is that French real estate investors draw their profits from the tax breaks on the initial investment, rather than from the rental yields. The DOMs are well-served by these tax breaks, particularly by the Loi Girardin. Foreign buyers can hardly hope to compete with the French, whose cost of capital is considerably lower.

Around 57% of dwellings are owner-occupied, and 40% in rental occupation. Slightly under half those renting property are in social housing.

 





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