The number of British buyers of luxury property in France has dropped by 40% in less than five years due to Brexit and the weakening of the pound sterling.
UK money now accounts for one in five prime purchases in France, down from three in five in 2014–data from Knight Frank reveals.
Yet the number of total sales since 2015 has increased and annual resale transactions across France are expected to exceed 1 million sales by the end of 2019 for the first time ever.
According to the estate agency’s latest Prime France Report, Belgian, Scandinavian and Middle Eastern buyers – as well as the French themselves – have filled the gap left by British investors in the luxury sector.
In 2018, enquiries for French homes grown by 33% and sales jumped by 63% on the previous year.
Paris remains France’s most popular destination, followed by Provence, the French Riviera, Gascony and the French Alps.
Prices in the French capital are also expected to be boosted by the Grand Paris, which will be the largest infrastructure project in Europe in a decade, and by the 2024 Summer Olympics.
“For the world’s wealthy, France remains the ultimate home away from home,” said Kate Everett-Allen, head of residential international research at Knight Frank.
“There are clear signs that France’s expanding wealth population, along with improving market sentiment, is translating into stronger demand for luxury property.”
Middle Eastern home-buyers, Everett-Allen added, prefer the South of France while Paris has seen a rise in US and South East Asian buyers.
Since September 2017, France’s wealth tax only applies to real estate and with record low interest rates on offer, Knight Frank’s analysis shows, many buyers are opting to take out finance in order to reduce their tax liability.
On newly-built or off-plan properties, TVA (Value Added Tax) of 20% is refundable while transfer tax for resale properties is limited to 2% instead of 7%.
Knight Frank defines ‘prime property’ as the top 5% of the residential market.