Manhattan v Paris France

We recently had a client who was purchasing a property we'd hunted down for more than one year and finally got exactly what he wanted, a top floor apartment (with elevator, biensûr!) in a classic Haussmanian building and view across THE square he'd fallen in love with when I introduced him to the neighborhood.

This is the one we'd been patiently waiting for and constantly checking and re-checking when it was going to be put on the market, (beating a purchaser who lived inside the building and had been hounding the owner for years!).

In the price evaluation we did a comparison for our client who has a similar sized property in New York City and the results make interesting reading.

"My personal point of reference, price-wise, is my NYC apt in West Chelsea's London Terrace, which is easily the equivalent of Sq Trousseau (it's a doorman building with celebrities and an Olympic indoor pool. And it's in the HOT art-gallery district. The size is about the same (510 sq ft)... but there's no view. The current price is around $550,000 (400,000E)."

I haven't seen any Celebs at Square Trousseau but here goes... In our definition this means (present value) purchase price, cost per square foot, and the closing costs - (coop closing costs) transfer taxes, attorney/notaire fees, lien search, etc.

I have not figured in any mortgage costs nor agent commissions as these can be variable. With regard to the pool + the doorman, yes, these are great offerings, but you will simply not find them in a Parisian apartment complex.

As for the foreign exchange problem, buying in Paris also serves to move your money from the dollar zone which is forecast to continue to fall and into a euro zone investment which is forecasted to appreciate (both eurofx & real estate values).

Square Trousseau
Hausmannian building, top floor, elevator, 51m², wainscotting, parquet, mouldings, double sitting room overlooking square with small balcony, no renovation to do
51m2 = 548.96 or 549 square feet
€530,000
€965/square foot (€10,392/square meter)
Closing costs (7-8% for transfer taxes, lien search, etc.): €42,500
Monthly carrying costs (Tax Fonciere is 500/yr, the Habitation- likely around 400ish/yr and the monthly charges are €116): €191
10 years of closing costs and monthly charges at present value (these will of course increase): €65,420
30 years of closing costs and monthly charges at present value: €111,260

Chelsea 's London Terrace
Doorman building, celebrities and an Olympic indoor pool... but there's no view.
510 square feet
$550,000
$1078/square foot
Closing costs (1.85% Transfer Taxes, Attorney $2000+, Lien Search $350ish, Managing Agent Application Fee + Credit Report $850ish): $13, 375
Monthly carrying costs: About $1000/month
10 years of closing costs and monthly charges at present value (these will of course increase): : $133,375
30 years of closing costs and monthly charges at present value: $386,750

If you look at the price per foot not taking into consideration the currency exchange, the Paris apartment is cheaper at 965/square foot. However, buying using dollars makes it more expensive due to the dollar exchange.

As the long-term outlook for the dollar is not good, it's a good investment to move money into a euro zone investment and the chance to get a mortgage for around 2 points less than you could get in the US.

Long-term (closing & carrying costs) Paris is substantially cheaper.

Comments

[Bini]

I know London Terrace...the common charges at over $1,000 for that size apartment are about 40% higher than they should be. The average common charges per square foot in NYC is $1.00 to $1.25. If he owned a condo instead of a co-op, it would be even less.

Taking your dollars out of a 401(k) or other US based investment at today's horrid exchange rate...if the investor is holding on to the asset forever, great. If it's less than 10 years, this might NOT be such a great investment, compared to what the American investor would earn here.

The US tax implications have not been considered in the analysis either.

My feeling is, if you want it, and can afford it, buy it. The comparison of Manhattan and Paris really does not hold water.

[Ingrid]

The pool is half Olympic, not Olympic.