If previously it was better to invest in very large cities, today the dynamic has changed, benefiting medium-sized cities like Grenoble, Saint-Étienne or Nancy.
By Caroline CHALOIN – 8:30 p.m. | updated at 3:18 p.m.
Investing in large cities like Paris, Lyon, Bordeaux has today become less interesting than turning to smaller cities, according to Bevouac, specializing in turnkey rental investment in old properties. But which ones to bet on and direct your strategy? Response elements.
The 10 largest French cities in decline
The cities in which prices have increased most sharply over the last 10 years (on average + 39.41% according to Bevouac) are those where prices are falling the most today (- 1.77%).
Among them, Bordeaux where they recorded a drop of 8.6% (after + 46.10% over 10 years), Lyon with – 8.1% over one year (+ 40.40% over 10 years), Nantes with – 5.2% (after +42%) or even Montpellier with -3.1% (+28.6%). In Strasbourg, in one year, prices have held steady (-0.30% over one year), but they had increased by 40.8% over 10 years.
Large French cities are losing momentum. In Lyon, prices recorded a drop of 8.1% over one year. Photo Adobe Stock
A sharp drop in real estate purchasing power
Added to this is a sharp drop in household purchasing power despite the price reductions displayed, as illustrated by Martin Menez, president of Bevouac: “For a household wishing to buy in Paris, with a net salary of €120,000 per year and a maximum monthly credit payment of €3,500, the borrowing capacity increased from €731,000 in January 2022 to €552,000 today, and the purchasable surface area from 70 to 56 m²…” This does not encourage hardly at the acquisition.
Not surprising considering that the 20-year borrowing rate has literally quadrupled in the space of 18 months. “If over the last five, or even 10 years, we recommended investing in very large cities, today the dynamic has completely changed,” he confirms.
A trend that benefits medium-sized cities
This decline in the attractiveness of large cities signals the victory of medium-sized cities with a shift in demand to cities that are usually less popular such as Angers, Saint-Étienne, Villeurbanne and Le Havre.
The purchasing power per m² is still interesting here thanks to the resistance of the evolution of real estate prices. The m² is even increasing in value in certain cities, such as Reims (where the price per m² has increased by + 28.70% in the space of 10 years and by + 0.90% over the past year), Toulon (+ 25.80% in 10 years and + 8.90% over one year) and Grenoble (+ 29.90% in 10 years and + 5.30% over one year).
In Nancy, the average rental yield is 6.75%. Photo Adobe Stock
Saint Etienne, Nancy, Grenoble… great rental profitability
According to Bevouac, it is still possible to obtain an average rental yield of 5.92% gross in certain medium-sized towns (compared to 4.60% on average in the 10 large French cities), or even more as in Saint-Étienne where it reaches 9.28%. In Nancy, it amounts to 6.75% for a 23 m² studio purchased for €106,058 and rented for €455 per month.
And the gross rental yield remains interesting in Nîmes (6.08%), Grenoble (5.38%), Dijon (5.36%) and Villeurbanne (4.70%).
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