In A Shift Away From Suburbs, Townhouses And Boutique Apartment Buildings In High Demand In Cities

Among the biggest real estate stories of 2020 was the outmigration of wealthy buyers from cities to suburbs, motivated to seek out larger homes and more space as the coronavirus raged in major metropolises.

In the New York area for instance, sales boomed in the suburban counties outside the city, with 65% more homes sold in Fairfield County, Connecticut, in the summer months of 2020 than in June and July of 2019. There was a similar exodus from London, with 73,950 homes purchased outside the capital in 2020.

But with the vaccine rollout underway—and as some buyers reconsider whether they want to settle down in the suburbs permanently—there are promising signs of a reawakening of prime markets in major cities, providing an opportunity for sellers to get a better deal than just a few months ago.

And while buyers are still wary of investing in units in large apartment buildings, demand for luxury single-family homes in London has strengthened, with some record-breaking deals made after the lockdown ended in May. In New York, there was a resurgence of interest in properties in Brooklyn, with the outer-borough perceived as a safer place to live than Manhattan.

There are commonalities in the features and amenities of city homes that are still attractive to buyers, one year into the Covid-19 pandemic, real estate analysts say.“Townhouses in central areas are in demand, especially those with gardens, private space, and all those things that have become more important during the pandemic,” said Liam Bailey, Global Head of Knight Frank’s Research Department in London. “Apartments have been weaker in terms of take up.”

In New York, in addition to townhouses, apartments in boutique buildings are increasingly desirable to buyers who, in light of the pandemic, are less interested in larger properties with extensive shared amenities.

“Buyers are looking for smaller, boutique buildings, and at the high end, they want elevators that open directly into their individual units,” said Julie Gans, a broker with Compass in New York. “Renovated apartments with outdoor space are well-positioned for this market.”

Such features have become especially attractive to buyers, who are no longer deterred by the pandemic but face tight inventory and heated competition, so sellers of these types of city homes will get the best deals if they list now.

“We are seeing people who have committed to coming back to the city, and in the first month of the year inventory has lessened and more deals are happening,” said Allison Chiaramonte, an agent with Warburg Realty in New York. “Multiple offers are being made on certain properties.”

Desirable Features of City Homes in 2021

The demand for large, amenity-packed buildings significantly diminished over the course of 2020, as the pandemic made shared fitness, work, and entertainment centres in high-end buildings undesirable and inaccessible.

Now, buyers committed to staying in cities are looking for boutique buildings with larger apartments, where they can work and enjoy leisure time in their own individual spaces, or townhouses where they can have control over the entire property.

“Over the last 10 years, lots of bigger developments have focused on gyms and shared office spaces, all of which have become much less attractive during the pandemic,” Mr Bailey said. “The real focus is now around privacy and staying separate from other households—anything that offers that opportunity, as well as outdoor space, is at a premium at the moment.”

In Los Angeles, some developers are shifting gears and moving amenities to the outdoors, so that residents can still enjoy building perks in a safer way.

“Prior to the pandemic, multifamily developers were trying to provide live, work, and play spaces in the same location,” said Keith McCloskey, principal at KTGY Architecture + Planning in Los Angeles. “During the pandemic, they’re offering outdoor spaces at a variety of scales, so there are opportunities to work in a covered garden space, use rooftop lounges, and get out of small living units.”

Such features are also in demand in Sydney, even as the Australian city is deemed a Covid-19 success story for its comparatively low case numbers. Expats and foreign buyers alike have been flooding the city’s prime real estate market, with properties close to the water, particularly in demand.

“The way Australia has been able to manage the virus so far has people from all over the world looking at this market as a safe haven, and I expect that we’ll be experiencing a property boom in the next five to seven years, driven largely by that desire for safety,” said Steve Grant, Chairman of Capital Corporation, developer of BOND at Bondi Junction, boutique residences close to a number of beaches. “The waterfront will remain a major drawcard for the top end of the market in locations like Watsons Bay in Sydney’s East, where there are still great buys around.

In addition to more square footage that allows for discrete spaces to work and attend school from home, proximity to the office and school is more important than ever, in light of the pandemic.

“Walkability can’t be duplicated in the suburbs, and more and more we’re seeing people who want to move within a 30-block radius of school and the office,” Ms Chiaramonte said. “Before, they didn’t mind hopping on the subway, but now they want to be closer.”

In New York, buildings with their own parking garages or nearness to garages is also a bigger priority now, as more New Yorkers purchase cars to avoid the close quarters of public transportation.

But with the vaccine rollout underway, some real estate experts foresee a return to the expectations buyers had before the pandemic.

“Because now the vaccine is on the horizon, people see the future and they’re optimistic about it,” Ms Gans said. “In certain buildings, they’ve reopened gyms at 25% capacity, and some people are ready to go back. I think November was the bottom and now the market has exploded again.”

Why Sellers Shouldn’t Wait to List Their Homes

Sellers of city homes with these in-demand features should consider listing their properties now. In the U.K., where a stamp duty holiday is set to end by March 31, buyers may be especially motivated to act quickly.

“It’s a positive time to be a vendor,” Mr Bailey said. “Stock is eroding quickly, and if you’re in a good location with a well-presented property you could try to do a sale before the end of March.”

(One potential caveat is the new shutdown. The U.K. housing market remains open for now, but further regional and national shutdowns are possible depending on the spread of a new, particularly contagious strain of the coronavirus.) Also looming is a new foreign buyer tax, which enacts a 2% tax on non-residents purchasing a property in the U.K.

Meanwhile, in New York, the fourth quarter of 2020 saw an uptick in luxury sales in Manhattan, along with fierce competition for high-end homes in Brooklyn.

And in early January, apartments over US$4 million represented the largest number of contracts signed, Ms Gans said.

“After spending 10 months inside, people see the deficiencies in their apartments and want a change,” she said.

Many of these buyers want homes with room separation in a shift away from the open floor plan trends of previous years, along with plentiful storage, and of course, outdoor space.

“If you have a junior four, or a two-bedroom with an office or maid’s room, the value there is a little higher because it allows people to stay in separate spaces,” Ms Chiaramonte said. “Those homes are the ones attracting people the most this year, and those sellers are better positioned.”

PARIS —Paris has long been a byword for luxurious living. The traditional components of the upscale home, from parquet floors to elaborate moldings, have their origins here. Yet settling down in just the right address in this low-rise, high-density city may be the greatest luxury of all.

Tradition reigns supreme in Paris real estate, where certain conditions seem set in stone—the western half of the city, on either side of the Seine, has long been more expensive than the east. But in the fashion world’s capital, parts of the housing market are also subject to shifting fads. In the trendy, hilly northeast, a roving cool factor can send prices in this year’s hip neighborhood rising, while last year’s might seem like a sudden bargain.

This week, with the opening of the Olympic Games and the eyes of the world turned toward Paris, The Wall Street Journal looks at the most expensive and desirable areas in the City of Light.

The Most Expensive Arrondissement: the 6th

Known for historic architecture, elegant apartment houses and bohemian street cred, the 6th Arrondissement is Paris’s answer to Manhattan’s West Village. Like its New York counterpart, the 6th’s starving-artist days are long behind it. But the charm that first wooed notable residents like Gertrude Stein and Jean-Paul Sartre is still largely intact, attracting high-minded tourists and deep-pocketed homeowners who can afford its once-edgy, now serene atmosphere.

Le Breton George V Notaires, a Paris notary with an international clientele, says the 6th consistently holds the title of most expensive arrondissement among Paris’s 20 administrative districts, and 2023 was no exception. Last year, average home prices reached $1,428 a square foot—almost 30% higher than the Paris average of $1,100 a square foot.

According to Meilleurs Agents, the Paris real estate appraisal company, the 6th is also home to three of the city’s five most expensive streets. Rue de Furstemberg, a secluded loop between Boulevard Saint-Germain and the Seine, comes in on top, with average prices of $2,454 a square foot as of March 2024.

For more than two decades, Kyle Branum, a 51-year-old attorney, and Kimberly Branum, a 60-year-old retired CEO, have been regular visitors to Paris, opting for apartment rentals and ultimately an ownership interest in an apartment in the city’s 7th Arrondissement, a sedate Left Bank district known for its discreet atmosphere and plutocratic residents.

“The 7th was the only place we stayed,” says Kimberly, “but we spent most of our time in the 6th.”

In 2022, inspired by the strength of the dollar, the Branums decided to fulfil a longstanding dream of buying in Paris. Working with Paris Property Group, they opted for a 1,465-square-foot, three-bedroom in a building dating to the 17th century on a side street in the 6th Arrondissement. They paid $2.7 million for the unit and then spent just over $1 million on the renovation, working with Franco-American visual artist Monte Laster, who also does interiors.

The couple, who live in Santa Barbara, Calif., plan to spend about three months a year in Paris, hosting children and grandchildren, and cooking after forays to local food markets. Their new kitchen, which includes a French stove from luxury appliance brand Lacanche, is Kimberly’s favourite room, she says.

Another American, investor Ashley Maddox, 49, is also considering relocating.

In 2012, the longtime Paris resident bought a dingy, overstuffed 1,765-square-foot apartment in the 6th and started from scratch. She paid $2.5 million and undertook a gut renovation and building improvements for about $800,000. A centrepiece of the home now is the one-time salon, which was turned into an open-plan kitchen and dining area where Maddox and her three children tend to hang out, American-style. Just outside her door are some of the city’s best-known bakeries and cheesemongers, and she is a short walk from the Jardin du Luxembourg, the Left Bank’s premier green space.

“A lot of the majesty of the city is accessible from here,” she says. “It’s so central, it’s bananas.” Now that two of her children are going away to school, she has listed the four-bedroom apartment with Varenne for $5 million.

The Most Expensive Neighbourhoods: Notre-Dame and Invalides

Garrow Kedigian is moving up in the world of Parisian real estate by heading south of the Seine.

During the pandemic, the Canada-born, New York-based interior designer reassessed his life, he says, and decided “I’m not going to wait any longer to have a pied-à-terre in Paris.”

He originally selected a 1,130-square-foot one-bedroom in the trendy 9th Arrondissement, an up-and-coming Right Bank district just below Montmartre. But he soon realised it was too small for his extended stays, not to mention hosting guests from out of town.

After paying about $1.6 million in 2022 and then investing about $55,000 in new decor, he put the unit up for sale in early 2024 and went house-shopping a second time. He ended up in the Invalides quarter of the 7th Arrondissement in the shadow of one Paris’s signature monuments, the golden-domed Hôtel des Invalides, which dates to the 17th century and is fronted by a grand esplanade.

His new neighbourhood vies for Paris’s most expensive with the Notre-Dame quarter in the 4th Arrondissement, centred on a few islands in the Seine behind its namesake cathedral. According to Le Breton, home prices in the Notre-Dame neighbourhood were $1,818 a square foot in 2023, followed by $1,568 a square foot in Invalides.

After breaking even on his Right Bank one-bedroom, Kedigian paid $2.4 million for his new 1,450-square-foot two-bedroom in a late 19th-century building. It has southern exposures, rounded living-room windows and “gorgeous floors,” he says. Kedigian, who bought the new flat through Junot Fine Properties/Knight Frank, plans to spend up to $435,000 on a renovation that will involve restoring the original 12-foot ceiling height in many of the rooms, as well as rescuing the ceilings’ elaborate stucco detailing. He expects to finish in 2025.

Over in the Notre-Dame neighbourhood, Belles demeures de France/Christie’s recently sold a 2,370-square-foot, four-bedroom home for close to the asking price of about $8.6 million, or about $3,630 a square foot. Listing agent Marie-Hélène Lundgreen says this places the unit near the very top of Paris luxury real estate, where prime homes typically sell between $2,530 and $4,040 a square foot.

The Most Expensive Suburb: Neuilly-sur-Seine

The Boulevard Périphérique, the 22-mile ring road that surrounds Paris and its 20 arrondissements, was once a line in the sand for Parisians, who regarded the French capital’s numerous suburbs as something to drive through on their way to and from vacation. The past few decades have seen waves of gentrification beyond the city’s borders, upgrading humble or industrial districts to the north and east into prime residential areas. And it has turned Neuilly-sur-Seine, just northwest of the city, into a luxury compound of first resort.

In 2023, Neuilly’s average home price of $1,092 a square foot made the leafy, stately community Paris’s most expensive suburb.

Longtime residents, Alain and Michèle Bigio, decided this year is the right time to list their 7,730-square-foot, four-bedroom townhouse on a gated Neuilly street.

The couple, now in their mid 70s, completed the home in 1990, two years after they purchased a small parcel of garden from the owners next door for an undisclosed amount. Having relocated from a white-marble château outside Paris, the couple echoed their previous home by using white- and cream-coloured stone in the new four-story build. The Bigios, who will relocate just back over the border in the 16th Arrondissement, have listed the property with Emile Garcin Propriétés for $14.7 million.

The couple raised two adult children here and undertook upgrades in their empty-nester years—most recently, an indoor pool in the basement and a new elevator.

The cool, pale interiors give way to dark and sardonic images in the former staff’s quarters in the basement where Alain works on his hobby—surreal and satirical paintings, whose risqué content means that his wife prefers they stay downstairs. “I’m not a painter,” he says. “But I paint.”

The Trendiest Arrondissement: the 9th

French interior designer Julie Hamon is theatre royalty. Her grandfather was playwright Jean Anouilh, a giant of 20th-century French literature, and her sister is actress Gwendoline Hamon. The 52-year-old, who divides her time between Paris and the U.K., still remembers when the city’s 9th Arrondissement, where she and her husband bought their 1,885-square-foot duplex in 2017, was a place to have fun rather than put down roots. Now, the 9th is the place to do both.

The 9th, a largely 19th-century district, is Paris at its most urban. But what it lacks in parks and other green spaces, it makes up with nightlife and a bustling street life. Among Paris’s gentrifying districts, which have been transformed since 2000 from near-slums to the brink of luxury, the 9th has emerged as the clear winner. According to Le Breton, average 2023 home prices here were $1,062 a square foot, while its nearest competitors for the cool crown, the 10th and the 11th, have yet to break $1,011 a square foot.

A co-principal in the Bobo Design Studio, Hamon—whose gut renovation includes a dramatic skylight, a home cinema and air conditioning—still seems surprised at how far her arrondissement has come. “The 9th used to be well known for all the theatres, nightclubs and strip clubs,” she says. “But it was never a place where you wanted to live—now it’s the place to be.”

With their youngest child about to go to college, she and her husband, 52-year-old entrepreneur Guillaume Clignet, decided to list their Paris home for $3.45 million and live in London full-time. Propriétés Parisiennes/Sotheby’s is handling the listing, which has just gone into contract after about six months on the market.

The 9th’s music venues were a draw for 44-year-old American musician and piano dealer, Ronen Segev, who divides his time between Miami and a 1,725-square-foot, two-bedroom in the lower reaches of the arrondissement. Aided by Paris Property Group, Segev purchased the apartment at auction during the pandemic, sight unseen, for $1.69 million. He spent $270,000 on a renovation, knocking down a wall to make a larger salon suitable for home concerts.

During the Olympics, Segev is renting out the space for about $22,850 a week to attendees of the Games. Otherwise, he prefers longer-term sublets to visiting musicians for $32,700 a month.

Most Exclusive Address: Avenue Junot

Hidden in the hilly expanses of the 18th Arrondissement lies a legendary street that, for those in the know, is the city’s most exclusive address. Avenue Junot, a bucolic tree-lined lane, is a fairy-tale version of the city, separate from the gritty bustle that surrounds it.

Homes here rarely come up for sale, and, when they do, they tend to be off-market, or sold before they can be listed. Martine Kuperfis—whose Paris-based Junot Group real-estate company is named for the street—says the most expensive units here are penthouses with views over the whole of the city.

In 2021, her agency sold a 3,230-square-foot triplex apartment, with a 1,400-square-foot terrace, for $8.5 million. At about $2,630 a square foot, that is three times the current average price in the whole of the 18th.

Among its current Junot listings is a 1930s 1,220-square-foot townhouse on the avenue’s cobblestone extension, with an asking price of $2.8 million.