Rental real estate: the top 10 cities to invest in (Photo credit: Fotolia)
Which cities should be favored for a rental investment? The LPI-SeLoger barometer gives its ranking of the 10 cities where it is urgent to invest.
The LPI-SeLoger barometer puts the city of Toulouse at the forefront of the cities where to invest. The average price per sqm is very reasonable for a city of its size (almost 500,000 inhabitants) at € 3,382 per m². Prices rose 6% in one year. With the introduction of LGV (high-speed line) and a dynamism both economic (aeronautics, research) and demographic (5 620 new inhabitants per year), the city attracts more and more. In addition, Toulouse has about 100,000 students who are potential tenants. According to the barometer, the areas to be favored for a rental investment are the hyper-center, the district of the Croix de Pierre and the sector of Rangueil.
Nantes is second in the LPI-SeLoger ranking. Because of the very high prices in Bordeaux (more than € 4,600 per m²), investors will fall back on Nantes where prices are more moderate (€ 3,475 per m² on average). These rose by 6.3% in one year, under the pressure of a growing demand, especially in the hyper-center. More and more investors would turn to homes, popular with families and people looking for a roommate. According to the barometer, the neighborhoods to be privileged are the hyper-center even if the market becomes very competitive because of the imbalance between supply and demand, and the Hauts-Pavés – Saint-Félix, the district of the students and the active youths.
Lille is in third place. Real estate remains accessible (€ 3,224 per m² on average) for this type of city. Lille attracts investors because of its economic dynamism, its student pole and its geography. Close to Paris (just over an hour by TGV), the city is also close to other major European cities. According to the LPI-SeLoger barometer, the neighborhoods to be favored are the Vauban district and the surrounding railway stations (Lille-Flandres and Lille-Europe).
With an average price of m² to € 4,817, Lyon is the second most expensive provincial city. Nevertheless, according to the barometer, Lyon is a safe bet. Prices rose by 6.3% year-on-year. With such high rates, investing in real estate in Lyon would be more of a heritage investment than a rental investment and would rather interest investors looking for added value than a regular return. According to the barometer, the entire Lyon market is broadly suited to real estate investment, but the Bron, Part-Dieu, Gerland and the 9th arrondissement sectors also offer great opportunities.
The rental market in Rennes is mainly concentrated on studios because of the very high density of students in the city: one inhabitant in three is attending higher education. The average price of m² is trading around € 3,490 and prices are rising sharply (+ 9.5% over one year). According to the LPI-SeLoger barometer, it is advisable to focus on the hyper-center.
The sixth place in this LPI-SeLoger ranking goes to the city of Angers. Real estate is very accessible (€ 2,288 per m² on average) and prices are up sharply (+ 7.1% over one year), although the city is no longer eligible for the Pinel scheme. According to the barometer, the rental demand is important (20% of the population is made up of students) and rental profitability would range from 5% to 7% gross. In addition, the city is only 1h40 from Paris thanks to the LGV. The neighborhoods to be favored for a rental investment remain the small areas of the city center as well as the sectors of line B of the tram that will link Belle-Beille and Monplaisir via the hyper-center of Angers.
Seventh place in the ranking is the very promising city of Montpellier. Real estate price growth is moderate but continuous (+ 3% in one year) and prices are accessible (€ 3,089 per m² on average). The city benefits from a dynamic economy, a growing population and attracts students and young people active in the research sector. The areas to be privileged are the city center of course, as well as the district Hospitals-Faculties.
In Tours, the small surface market (from studios to T2) is very active. The average price per m² (€ 2,422) is lower than the national average (€ 3,689 per m² for an old apartment), which allows investors to optimize rental yield. According to the LPI-SeLoger barometer, the neighborhoods to be privileged are the hyper-center and the surroundings of the Bretonneau hospital and Plumereau square.
According to the barometer, the property market in Poitiers would benefit from high prices in Nantes and Bordeaux, or even in Paris. Real estate prices have risen by 4.8% in one year, but remain very accessible (€ 2,060 per m² on average). The city is located halfway between Bordeaux and Paris by TGV (less than 2 hours). The neighborhoods to be favored would be Le Plateau, Chilvert, Gibauderie, Les Prés-Mignons, Poitiers-Sud and the Poitiers train station.
Less than two hours from Paris, the Strasbourg market enjoys a strong rental demand (students) and a population with strong growth. According to LPI-SeLoger, prices are affordable for this type of city (€ 3,030 per m² on average) and moderate growth (+ 3.1% over one year). The neighborhoods to be favored would be the city center (students and young active) and the Robertsau-Wacken district (European officials).