Forget the Paris end, go to Paris

It’s almost a dream of foreign real estate investment: buy property in Paris and make a living out of it. That’s the world of John Brincat and a few other Australians.

Brincat owns three apartments in Paris, manages two others and is on the lookout for more. The operation is all run from his home in Fitzroy.

A former pharmacist, he was on the lookout for a lifestyle change a few years ago.

“When you’re the only pharmacist in a shop, you can’t even get the time to go and have a coffee,” he told BusinessDay.

Brincat was searching on the internet to hire an apartment in Paris for someone, became intrigued, and followed up with a visit to the city. While there, he checked out an apartment for sale in the Bastille area.

“I loved it as soon as I walked in. It was built in 1600 and had all the classic French things we love — a window overlooking the street, a window jutting out of the roof, a bedroom in the slope of the roof.

“It was great,” he said. “I bought that and went back and did the renovation.”

Brincat said the Parisian real estate market was different to Australia’s. “There is not a lot of capital growth, it’s quite difficult to get finance, and they have quite elaborate rules regarding ability to pay,” he said.

“Your total repayments in France can’t exceed one-third of net income. That restricts a lot of people being able to borrow.

“On long-term rental, the returns are quite reasonable. They always have been, compared to here.

In Paris, they sell real estate by the square metre. Bastille might be €7000 ($A9950) to €8000 per square metre and Marais €10,000 per square metre.”

Brincat said it did not matter if the apartment was renovated or not. “It’s cheaper if one overlooks a street. A Parisian prefers an apartment on the courtyard because it’s quieter, but a tourist is the opposite — he or she would rather look on to the street,” he said.

Brincat renovated the first apartment himself. “I’ve got the building skills. I can do it in a short period at a time.

If had to rely on having a kitchen made and a cabinet maker . . . it becomes a long, drawn-out process and too hard from Australia. I can go over and do it all in six weeks,” he said.

Paris is noisy, so double-glazed glass was essential. “It’s equivalent to a brick wall,” he said. Plumbing and electrical work was done locally. “Major structural work . . . I won’t even look at it.”

Brincat subsequently took the plunge and bought a second apartment — in the Bastille area, dating from 1850 — but that created the need for a business plan. “Borrowing in France at the euro rate, the asset is still protected.

I then calculated how many weeks the apartment must be booked for,” he said.

“If you can borrow in France it’s quite good. The interest rates are much lower, and it’s safer, buying with the currency your asset is held in. There are pitfalls to financing something in a different currency. You can win or lose, you need to hedge . . . it becomes very complex.”

Brincat said a resale after renovation may only create a profit of €5000.

“There’s no 20 per cent increase like here. They didn’t even dip 10 per cent in the GFC, unlike Ireland or the UK. Capital gain reduces after 15 years, which encourages people not to buy and sell. Negative gearing is structured differently. There are no write-offs against own income. Negative gearing here (Australia) encourages capital growth and speculation.”

Brincat travels to Paris at least twice a year to look after the apartments. They are booked for most of the year, 99 per cent by Australians.

Many are repeat visitors, and others hear through the bush telegraph.

“I’m making a good living. I love it when I get an email from people saying they had a fantastic time,” he said.