Why Paris is on the up: tourism, transport and Brexit
We track a whole range of factors when compiling the Schroders Global Cities index. Strong tourism and improving transport links are among the essential ingredients for improving a city’s prospects and therefore its attraction to property investors.
Paris, ranked 16th in the index, is worthy of focus with its fortunes improving on both aspects.
Tourism recovers after terror attacks
The Paris region registered 16.4m arrivals in the first half of 2017. That was the most in any first half of the year since records began in 2008, confirming a strong recovery from a lull that followed terror attacks in November 2015.
Following strong summer bookings, the region could see 32-34m tourist arrivals this year compared with 30m in 2016. Tourism generates over 7% of France’s national income. While in the Ile de France region, which includes Paris, around half a million people have jobs linked to tourism.
Macron's reforms aimed at unlocking spending potential
Recently appointed French President Emmanuel Macron is trying to promote a more business friendly image of France.
For example, the recently approved Loi Macron, sweeping reforms designed to “unlock the French economy”, has led to more flexible opening times for retailers.
This has benefited tourist designated areas such as large parts of central Paris. The city’s grands magasins such as Galeries Lafayette and Printemps are now open to Sunday shoppers and can cater to the many tourists and will help grow the €20bn annual tourist spend in the region.1
The French capital is set to benefit from a massive infrastructure spending programme. In addition to the public transit Grand Paris plan (€26bn over 15yrs to develop over 200km of transport network), the 2024 Olympic Games are estimated to require an additional €6.6bn in spending, of which €3.2bn will be spent on upgrading existing infrastructure. A study commissioned by the city estimated the games could generate up to €10.7bn for the region and 247,000 jobs.2
- Why Miami, the US gateway to Latin America, is on the the up
- See the Schroders Global Cities index:top 30
The Brexit effect
Brexit may be an opportunity for Paris to attract London based financial services and support its fast-growing fintech sector, which is still in its infancy. The government has pledged to reduce the cost of employing financial services staff in France and also committed to keeping the regulatory burden on finance companies competitive.
In addition, it has committed to cutting France’s corporate tax rate to 25% from 33% over time and aims to overhaul its labour rules.
The fact that Paris is now open to business will, in our view, benefit the commercial property market. In particular, demand for quality office space is expected to grow.
Schroders Global Cities index rank: 16
- Financial and political capital of the eurozone’s second largest economy
- Paris is one of the most visited cities in the world
- Global transportation hub with 101m airline passengers in 2016
- Bureaucracy and red tape. Rigid labour market
- High taxes
Important Information: The views and opinions contained herein are those of Schroders' Global Cities Team, and may not necessarily represent views expressed or reflected in other Schroders communications, strategies or funds. This material is intended to be for information purposes only and is not intended as promotional material in any respect. The material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The material is not intended to provide and should not be relied on for accounting, legal or tax advice, or investment recommendations. Reliance should not be placed on the views and information in this document when taking individual investment and/or strategic decisions. Past performance is not a guide to future performance and may not be repeated. The value of investments and the income from them may go down as well as up and investors may not get back the amounts originally invested. All investments involve risks including the risk of possible loss of principal. Information herein is believed to be reliable but Schroders does not warrant its completeness or accuracy. Reliance should not be placed on the views and information in this document when taking individual investment and/or strategic decisions. Some information quoted was obtained from external sources we consider to be reliable. No responsibility can be accepted for errors of fact obtained from third parties, and this data may change with market conditions. This does not exclude any duty or liability that Schroders has to its customers under any regulatory system. The data provider and issuer of the document shall have no liability in connection with the third party data. The Prospectus and/or schroders.com contains additional disclaimers which apply to third party data. Regions/sectors shown for illustrative purposes only and should not be viewed as a recommendation to buy/sell. The opinions in this document include some forecasted views. We believe we are basing our expectations and beliefs on reasonable assumptions within the bounds of what we currently know. However, there is no guarantee than any forecasts or opinions will be realised. These views and opinions may change. To the extent that you are in North America, this content is issued by Schroder Investment Management North America Inc., an indirect wholly owned subsidiary of Schroders plc and SEC registered adviser providing asset management products and services to clients in the US and Canada. For all other users, this content is issued by Schroder Investment Management Limited, 1 London Wall Place, London, EC2Y 5AU. Registered No. 1893220 England. Authorised and regulated by the Financial Conduct Authority.