Paris Luxury Apartment Prices Slide As French "1%"ers Dump Real Estate To Avoid Soaring Taxes

Tyler Durden's picture

Back in July, when the news of the French foray into the "fairness doctrine" hit, and we learned of Hollande's plan to tax all those making over €1 million at a 75% tax rate, we said that "we are rotating our secular long thesis away from Belgian caterers and into tax offshoring advisors, now that nobody in the 1% will pay any taxes ever again." We should have also added that we are buying all the available long-dated call options in French real estate firms, with the imminent surge in luxury real estate dumping, once the French "1%" decide they want nothing to do with a regime that is hell bent on confiscating 75% of their annual cash flow at first, and slowly moving toward pocketing the balance of their assets (remember what we said in September 2011: that 30% global tax on all financial assets in a New Normal insolvent, and wealth redistributive world, is inevitable, and it is coming). Sure enough, the wholesale dump of luxury properties has now begun.

AFP writes: "A flood of top-end properties are hitting the market as businessmen seek to leave France before stiff tax hikes hit, real estate agents and financial advisors say. "It's nearly a general panic. Some 400 to 500 residences worth more than one million euros ($1.3 million) have come onto the Paris market," said managers at Daniel Feau, a real-estate broker that specialises in high-end property." But that would mean that in the New Normal real estate is once again merely a credit-bubble dependent, flippable asset: not a long-term housing investment, but merely one in which the pursuit of the greater fool is all that matters (not news to anyone here, but certainly news to all those who actually believe that 'housing has bottomed').

Turns out it hasn't, and just like the stock market, it was simply an alternative asset class for those closest to the ZIRP cost basis, to invest their money until Uncle Socialist comes a-knocking.

From AFP:

A flood of top-end properties are hitting the market as businessmen seek to leave France before stiff tax hikes hit, real estate agents and financial advisors say.

 

"It's nearly a general panic. Some 400 to 500 residences worth more than one million euros ($1.3 million) have come onto the Paris market," said managers at Daniel Feau, a real-estate broker that specialises in high-end property.

But if France is a loser, someone has to be a winner. For now it is the traditional real estate money-laundering venues.

The preferred destinations of those leaving are London, New York and Geneva, as well as Canada, Israel and Singapore, said Laurent Demeure, head of Coldwell Banker France.

 

He also noted that Brussels remains a favourite of those older, who have already sold their business interests, and are looking to benefit from Belgium's lighter taxation of trusts to pass on inheritances to their children.

 

"Next year to have dinner with friends, instead of a taxi I'll more likely need to take the Thalys for Brussels or the Eurostar to London," joked Demeure, referring to high-speed trains that link the three capitals.

 

He said he is currently receiving on average one request per day to appraise a luxury apartment or home.

 

As a result, in the previous two to three months the price of large Paris apartments had slid by five percent.

This is only the beginning as those who think Hollande was only kidding realize the folly of their ways. However, the biggest issue is that the encroaching taxation of the world's 1% by insolvent sovereigns is only just beginning. Very soon a comparable approach to the real estate assets of the uber wealthy will be adopted by virtually every other target of capital flows, just as we predicted a week ago, when we predicted that those countries which had heretofore been encouraging money laundering into domestic real estate, are about to see an about face, and going forward will instead pull a "Hollande" and proceed to tax the bejesus out of anyone with ultra luxury housing recently purchased on the territory of [you name it broke country]. To wit:

What the NAR is saying is that for now go ahead and lift every offer on every duplex and triplex off Central Park. Your money is absolutely safe with us... this instant. But the second a broke Europe comes demanding reparations for endorsing 4 more years of Obama (something that was already documented), for destroying the Swiss banking industry, and for keeping the EUR much higher than it would have been had it not been the Chairman's 5 easing episodes, all bets are off.

 

This means all European, Asian, and even local oligarchs may be sweating just a little bit, now that the winds have shifted, and suddenly what was considered safe and untouchable, has become fair game in the great "fairness" redistribution scheme that is the only game left in a broke and insolvent global town.

So while for now the French exodus is benefiting the other legacy (and now thoroughly centrally-planned) free market venues, soon, just as in the case of the collapse of Swiss bank secrecy, all nations will realize that the Nash Equilibrium has been broken, and if everyone hikes taxes comparably, there is no place where increasingly more diluted money can escape to.

Which ultimately is the endgame as more and more wealth is legally sequestered by the government so that it can be redistributed as a few politicians best see fit.

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Insideher Trading's picture

Tax the fuck out of everyone and everything!!!!!

Tax people for the privilege of being taxed. You should feel LUCKY you're being taxed, it's your patriotic birth right.

LetThemEatRand's picture

Squeeze the fuck out of everyone and everything!

Squeeze middle class people for the privilege of being squeezed.  You should feel LUCKY you're being squeezed, it's your capitalist birth right.

Insideher Trading's picture

That's exactly what happens when taxes are raised. At least you understand!

LetThemEatRand's picture

Yes, Bush (W) proved that lowering taxes for the wealthy = economic prosperity for all.  Just ask 2008.

Insideher Trading's picture

The President is limitied in his power to raise or lower taxes.

Who held control of the Congress under Bush?

*Congress being the authority that is supposed to be responsible for the finances of the country and the authority that regulates taxes.*

As to the credit/housing bubble you can refer yourself to the Community Reinvestment Act.

LetThemEatRand's picture

Bush had both houses during the large majority his Presidency.  Look it up.  The credit/housing bubble was thanks to Ayn Rand devotee Alan Greenspan and his ever decreasing interest rates that were expressly intended to increase consumer debt spending on real estate and consumer items.

Insideher Trading's picture

Ayn Rand believed in a centrally managed economy?

LetThemEatRand's picture

Her disciples sure have.  Ask Paul Ryan and Alan Greenspan.  Or do you care only about what they say rather than what they do?  If so, I'm sure you enjoy the Red Team/Blue Team debate.  Carry on with that.

Insideher Trading's picture

Ayn Rand believed in a centrally managed economy?

 

LetThemEatRand's picture

She actually did if you get past the bullshit  -- she believed the economy should be run (managed) by a few oligarchs from their marble walled offices.  Alan Greenspan implemented her philosophy, or do you disagree that he was 1) a disciple who co-wrote some of her works, who 2) put the bankers in charge of the ecomony?

Insideher Trading's picture

she believed the economy should be run (managed) by a few oligarchs from their marble walled offices.

Cite it; direct quotes from her.

LetThemEatRand's picture

If you can't figure it out, I'm not going to convince you.  There is no page and line quote -- of course she never overtly admitted that she saw herself as some kind of chosen one to rule the world.   But it is the overall message if you have the mental horsepower to see it beyond the fictional accounts of brilliant men and women being ever so productive while the rest of the world exists as a giant leech.  Alan Greenspan spent a career proving me right about the implementation of her philosophy.   You don't get it because you have a view of the world in which you imagine yourself in the marble walled office telling everyone else what to do (as Rand did), and you justify your narcissistic view by suggesting it is somehow what is best for those you would rule.

Insideher Trading's picture

she believed the economy should be run (managed) by a few oligarchs from their marble walled offices.

Cite it.

Cite it or STFU.

LetThemEatRand's picture

Do you really not understand the difference between understanding the message and seeing the message in action, versus reading the literal word?   That rather blatant deficit in logic seems to plague most followers of Rand.  Never mind.  Enjoy the cult and say hi to Tom Cruise (or is that a different cult?  So hard to keep them straight).

Insideher Trading's picture

So in otherwords you're going to STFU because you stated:

she believed the economy should be run (managed) by a few oligarchs from their marble walled offices.

Yet you can't provide a single reference to support that statement.

I think this conversation is over.

LetThemEatRand's picture

Yes, it is over.  Some day try to figure out what Rand's real message is, rather than just reading her little stories.  Study the career of Alan Greenspan.  It's like Cliff's notes for those who can't figure it out on their own.

Insideher Trading's picture

Thanks for the hot tip.

One day when you feel like studying the Swastika remember that Indians influenced Hitler.

falak pema's picture

Pocahontas sang him "I'll put a spell on you!"

formadesika3's picture

-- There is no page and line quote

Ha! Busted!

falak pema's picture

Ayn Rand was a novelist and a bad ideologue as she never understood the principle of trade-offs* in society; she was totally uncompromising and Manichean in her ideology. Zero defects or Galtian perfection is not collective human reality, its romantic, novelista iconism at best.  Good ideology, even if it establishes an ideal; Plato's logic; always BOWS to human fact; Aristotle's logic and basis of modern political man. She never practiced what she preached except in her book, so don't make her Eleanor Roosevelt's sister. At least Eleanor contributed directly to a major political platform : the 1948 declaration of universal human rights. That lives on for posterity as a political platform and now legal ideal in front of the International Court of Justice (that the US government does not recognise as valid jurisdiction for eventual crimes committed by its own citizens, the irony of it!).

* trade-offs = individual rights; aka bill of rights, and collective rights; aka duty of individual to defend country and uphold law and pay taxes: and never cross those white picket fences to butt punish the neighbour's dog. 

RSBriggs's picture

Bush hasn't been president for nearly 4 years now.  Get the fuck over it.

RockyRacoon's picture

They don't call 'em "Bush Tax Cuts" for nuthin'.  The so-called Founding Fathers have been DEAD for a LONG time but they still get quoted here -- because they have an effect that outlasts them.

jeff montanye's picture

"We should have also added that we are buying all the available long-dated call options in French real estate firms, with the imminent surge in luxury real estate dumping" (quoted from above post).

why call options if real estate is being dumped?  why not put options?  go easy; i'm slow.  is it just increased transactions?  the firms don't have any owned positions?  i realize it's a joke to start with, but still.

TWSceptic's picture

Another causal fallacy from LTER what a surprise!

LetThemEatRand's picture

Another conclusory statement without substance or argument from TWSceptic.  What a surprise!

TWSceptic's picture

I tried arguments with you already, they don't work. You are incapable of logical thinking, which is typical for someone who is as brainwashed as you. You already decided that the free market (freedom) can not work. So you have to defend that belief, regardless of reality.

LetThemEatRand's picture

The pot calling the kettle black.  Nicely done.

Quarky Gluon's picture

First, there is no such thing as a free market (all markets are bound by rules both within and without and it is nonsense to describe something as being both bound and free at the same time) and second it is a mistake to equate general human freedom with what most refer to as a 'free market.'

northerngirl's picture

I think 2008 had to do more crony capitalism...Too big to fail.

Top_Kill's picture

Gold is looking better and better. Just don't ask Charlie Munger.

 "Gold is a great thing to sew into your garments if you’re a Jewish family in Vienna in 1939 (Or hiding your wealth from a government hellbent on redistributing your wealth),but I think civilized people don’t buy gold, they invest in productive businesses (That will be taxed out of existence unless Wesley Mooch, aka Charlie Munger is your man in Washington),"

DoChenRollingBearing's picture

+ 1 + 1 + 1 + 1 + 1 .....

Finally someone mentions the obvious answer.

Weyland_Yutani's picture

Here in Sweden the government puts a sales tax ON the energy tax that is included on your electricity bill. The average tax on a electricity bill is 66 %.

FeralSerf's picture

In California there's a sales tax on gasoline that taxes the fuel tax, both state and federal, as well.  The fuel is, more often than not, purchased with dollars that have already been taxed.  Just because one pays the tax once doesn't mean he doesn't need to pay it again.  Just like sheep keep getting sheared.

New World Chaos's picture

New Zealand does this with sales taxes on taxes paid to local councils.  The key is to call the local taxes "service fees", even if we never wanted the "service" of having a bunch of bureaucrats telling us we need the blessing of the architects and urban planners' mafias before installing a toilet in our own fucking house.

WeekendAtBernankes's picture

At that point it is no longer your house.  It is their house, and they feel you should be grateful they've afforded you the privilege and dignity of renting it from them.  They also feel you should be grateful for being allowed to "buy" it in the first place.  Rest assured that if you miss a few rent payments they will gladly "re"-posses it and "sell" it to someone else.  That person should be very grateful because they will allow him to pay them far, far less than you did for the equal privilege of paying them the rent.  Enjoy!

falak pema's picture

I think the general idea is to encourage Swedes to have more babies in a cold bed! 

zorba THE GREEK's picture

Wealthy people invest their money

LetThemEatRand's picture

In hidden off-shore bank accounts.  Trickles down to Swiss and Cayman bankers.

nmewn's picture

Hidden?

How can it be hidden if everyone knows about it? And "hidden" from what?

LetThemEatRand's picture

Are you serious?  You don't know about the advantages of foreign accounts for the wealthy?

nmewn's picture

You're having a problem with first dollar earned aren't you?

The dollar was taxed ONCE at its earning. Thats the end of it.

Whatever they decide to do with AFTER TAXED EARNINGS is their business, not mine.

LetThemEatRand's picture

What if they inherit their money from a guy that died a long time ago, or they received it in a trust that avoids all taxation, which is where the vast majority of oligarch wealth comes from?

nmewn's picture

What part of it was taxed once already are you having a problem with?

Are there not state sales taxes in place? What is this thing you have with the federal government being the final benefactor for all private wealth?

LetThemEatRand's picture

Nice logic.  The problem I have with your desire to end all federal tax on the wealthy because their inherited money was taxed 100 years ago is that the federal government has a useful current role in things like creating the interstate highway system, GPS, airports, national defense, and numerous other things that benefit society as a whole including you.  Winker.    The 400 people who own 1/2 of all wealth in America thank you for your support.

nmewn's picture

lol...the taxes has already been spent ON THOSE HIGHWAYS, ROADS AND BRIDGES at its earning 100yrs ago that you so adore.

What you're doing here is saying, the federal government is coming for the rest of it, with the idea that the FEDERAL GOVERNMENT has the best ideas and will be the most productive use for that wealth.

Thats really the position you want to stake out here?

 

LetThemEatRand's picture

If you can't answer the position I take, restate it and create a straw man.   I'll discuss with you more when you actually respond to what I'm saying rather than your ideologically based straw man version of it.

nmewn's picture

Ok...lets start again with the fucking strawmen...from yours:

"The problem I have with your desire to end all federal tax on the wealthy..."

I never said end ANY taxation.

"...because their inherited money was taxed 100 years ago..."

I said it was taxed ONCE didn't I?

"...is that the federal government has a useful current role"

"...herein lies the rub. It was taxed. One hundred years ago or yesterday, it doesn't matter. The obligation to the government was met by the one who earned it. What they decide to do with AFTER TAX DOLLARS is no longer a concern to the federal government in an ethical system of federal taxation. The debt (tax) was paid just like someone serving a prison sentence.

"...in things like creating the interstate highway system, GPS, airports, national defense, and numerous other things that benefit society as a whole including you. Winker.""

Alinsky blather ensues.

"The 400 people who own 1/2 of all wealth in America thank you for your support."

I don't envy them, if they got it lawfully. I have a real problem with the rich and connected instituting laws that ALLOWS them to become rich or richer...like Solyndra, Fisker, LightSquared etc.

I'm sure, being the "green weenie" nanny statist you are...you're mileage will vary.

Strawman you say?...you need to go to remedial classes...lol.

DoChenRollingBearing's picture

+ 1 whole tonne, nmewn!  Or would you rather have the $59 million is CA$H?

knukles's picture

Psssst... DoChen...
Has somebody been smoking crack here?

Makes no sense, won't shut the fuck up, won't go to sleep....