Discover the evolution of luxury real estate agencies

4 May 2017

The transactions will return to "Luxury real estate in France" and specialized agencies are already rubbing their hands, according to Xerfi's study devoted to this market. The departure of the wealthy social classes towards Brussels, London or Switzerland in fact led in 2013 an influx of goods on the market, especially in the beautiful districts of Paris. The stock of goods for sale has therefore increased, contributing to price erosion. Result: the prestige real estate, especially in the capital, will regain a certain attractiveness in 2014 and 2015. This is all the more true as one can expect relative fiscal stability in the coming years. Initially, the return of growth will be through transactions. Then, after a slower recovery in 2014, prices for high-end goods will return to growth by 2015, according to our forecasts. By segment of activity, secondary residences and pied-à-terre will return faster with the return of foreign customers. On the other hand, the dynamics will be longer for the family apartments. As a result, down by 4.6% in 2013, the activity of luxury agencies will re-start in 2014 and even more in 2015, according to our barometer. And, as a result of stronger growth in turnover, the gross operating surplus rate for the players specialized in luxury goods will exceed that of all real estate agencies.

The good operating performance of the players can also be explained by a favorable competitive context. The profession benefits in fact from a balance of forces to its advantage against buyers. Between the nature of the goods and the price levels practiced, the intermediary is unavoidable. The specialized agencies are in fact the only ones, from a certain price level, to be able to conclude the transaction. Their strengths? First, they can rely on objective criteria: technical, legal, and communication expertise. Then they were able to make themselves indispensable with their networks, their address books and their credibility. As such, the employees of the agencies, with their knowledge of the codes of luxury, are by far the main strategic resource. Finally, the threat of new entrants remains limited. Given the barriers to entry, the place of general real estate networks in the luxury segment is therefore marginal. The proof ? Only Orpi, Laforêt and Solvimo have an offer in this area.

The Xerfi experts also deciphered in this study the axes of development of the real estate players of prestige. Among these, we should mention the pursuit of a highly targeted territorial network through openings of agencies, notably franchising, such as "Sotheby's International Realty France-Monaco" and Barnes. The other main axis of development is expertise in vineyard sales such as Emile Garcin, Barnes, Groupe Immobilier Mercure and more recently John Taylor. All these networks have their own specialized services and experts in wine fields. Credibility is, in fact, paramount for these complex transactions that encompass real estate, agricultural, economic, legal or oenological dimensions.

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