Rental tension amplified by the Olympic Games
In a rental market marked by a shortage of properties, Junot is seeing an 8% drop in rentals in 2023, but a clear move upmarket in its portfolio. The shortage of rental properties in Paris and the inner suburbs is intensifying at the start of the year. This can be explained, on the one hand, by a low turnover.
A market under pressure
The Olympic Games approach and the prospect of benefiting from additional income are accentuating the phenomenon of property shortages. "At Junot, we note that more than 50% of new properties offered for rental come from owners of primary residences who wish to transform their homes into rental investments, allowing them to acquire a larger primary residence or even one outside Paris. The latter tend to postpone their project in order to turn to Airbnb rentals, during the Olympic Games. Added to this are the tenants who also stay in place in order to sublet their apartments during this period, even if it means not be in compliance with the legislation," emphasizes Sylvie Bachelier, director of Junot Location & Gestion.
The drop in rental income on the market can also be explained by the legislation that requires landlords who wish to continue renting to carry out major energy renovation work. On average, at Junot, energy renovation work costs around €750/m². "Some of our owners are therefore taking their properties off the market while the work is being carried out. And for those who do not wish to carry out the work, due to lack of means or feasibility, their properties end up vacant or for sale" underlines Sylvie Bachelier, director of Junot Location & Management.
The boomerang effect of the Olympic Games
Post-Olympic Games, the shortage of rental properties should decelerate and lead to an increasing supply for the benefit of candidate tenants, leading to a potential drop in prices. At Junot, we expect to receive notice from the partners of the Olympic Games who have settled in Paris for the event for long-term rental since the end of 2022, which will help to increase the rental offer on the market.
Furthermore, properties which suffered from a high turnover during the Olympic Games risk suffering significant deterioration which will require restoration work before their re-marketing for long-term rental. Indeed, the operation for owner-lessors who hope to profit from the Olympic Games could turn out to be a null operation between the costs of restoration and the marketing times which risk lengthening with the sudden increase in property on the market.
Junot's advice for seasonal rental
It is important to emphasize that it is strictly prohibited to rent short-term when the property is not the main residence, in particular without authorization from the Paris town hall (authorization difficult to obtain, it is generally necessary to "purchase commerciality"). Civil fines of up to €50,000 can be imposed for violations of this rule.
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