Many people are forecasting a property breakdown in France in the next years.
It would appear that american, spanish, irish, british real estate markets dropped down between 30 and 60 percents, but in the mean time, French market just broke new highs...
Is there a French exception, or merely a delay before French market crashes down too?
First off you've got to distinguish 2 main markets:
Home market and Pro Market.
In the residential market you have Paris, Large Province Towns like Lyon or Marseille, small towns and agricultural areas, and touristic areas.
In Paris and Big cities and touristic places, prices are according to me way too high. Yield is around 3%, so when you take away taxes it's giving a mere 2% net yield, which shows that market is overbought.
Why is that?
Well French is an engaging place for living and for foreign stockholders.
It's probably safer for a Greek to take a position in Paris than in Athens.
That charm should last in the following years, but at some specific point, with the business crisis and a coming war in Iran, French economy might face a robust depression, that would result in a breakdown of its property market.
In the pro market you have the office market, the commercial market, and the economic market.
At this time prices are reasonable, after they dropped during 2008 crisis.
Scpi (the French Word for Reit) are providing in 2012 5,30% net yield, which is equivalent to 7-8% gross yield, which is rather good, particularly matched against bonds.
If we have a major depression and a war crisis, it will also affect Reit price and yield, but doubtless less than home market, because the pro market is at a fair price now.
So what must you decide?
Well first off you ought to be privy to the risk, market will probably go down.
But from an alternative perspective, central banking organizations released so much cash that it's going to create inflation, or maybe hyperinflation. Right now the economic depression makes a deflation that balances inflation measures, but at some specific point inflation will come back and it is going to be propitious for commodities like gold and property.
Renting its home is a smart decision when real estate goes down, debt leverage runs in both ways:
up and back down.
Being leveraged in a down market is the sure way to lose cash and be in financial trouble.
It would appear that american, spanish, irish, british real estate markets dropped down between 30 and 60 percents, but in the mean time, French market just broke new highs...
Is there a French exception, or merely a delay before French market crashes down too?
First off you've got to distinguish 2 main markets:
Home market and Pro Market.
In the residential market you have Paris, Large Province Towns like Lyon or Marseille, small towns and agricultural areas, and touristic areas.
In Paris and Big cities and touristic places, prices are according to me way too high. Yield is around 3%, so when you take away taxes it's giving a mere 2% net yield, which shows that market is overbought.
Why is that?
Well French is an engaging place for living and for foreign stockholders.
It's probably safer for a Greek to take a position in Paris than in Athens.
That charm should last in the following years, but at some specific point, with the business crisis and a coming war in Iran, French economy might face a robust depression, that would result in a breakdown of its property market.
In the pro market you have the office market, the commercial market, and the economic market.
At this time prices are reasonable, after they dropped during 2008 crisis.
Scpi (the French Word for Reit) are providing in 2012 5,30% net yield, which is equivalent to 7-8% gross yield, which is rather good, particularly matched against bonds.
If we have a major depression and a war crisis, it will also affect Reit price and yield, but doubtless less than home market, because the pro market is at a fair price now.
So what must you decide?
Well first off you ought to be privy to the risk, market will probably go down.
But from an alternative perspective, central banking organizations released so much cash that it's going to create inflation, or maybe hyperinflation. Right now the economic depression makes a deflation that balances inflation measures, but at some specific point inflation will come back and it is going to be propitious for commodities like gold and property.
Renting its home is a smart decision when real estate goes down, debt leverage runs in both ways:
up and back down.
Being leveraged in a down market is the sure way to lose cash and be in financial trouble.
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