Investing in shared accommodation in the Paris region

Île-de-France (IDF) is a region located in the North-Central France surrounding Paris, the country's capital. It has 8 departments, including Paris, Hauts-de-Seine, Val-de-Marne, Seine-Saint-Denis, etc. The entire Île-de-France region (Paris, the inner suburbs, the outer suburbs) has been showing superb performance in terms of rental real estate for several years. The arrival of the " Grand Paris Express " offers enormous opportunities for rental investors. In a few words, the Grand Paris Express is a huge public transport network project, consisting of four automatic metro lines around Paris, and the extension of two existing lines. Shared accommodation has become a very common rental method in the IDF. Investing in this type of lease agreement in the region is a good real estate investment. 

Why invest in shared accommodation in Île-de-France?

There are several reasons why rental investors want to get involved in shared accommodation in Île-de-France. 

Île-de-France: a significant increase in population

Thanks to its dynamism and attractiveness in all sectors, the Île-de-France region enjoys very encouraging demographics that appeal to investors. It is the most populated region in France, with nearly 12 million inhabitants. The number of residents moving there is increasing rapidly, and is expected to reach 75,000 households each year within a decade. This significant population growth is an excellent lever for the rental property market, it actually has a positive impact on rental demand. By choosing the right location and investing in a sought-after property, you will generally have no trouble finding tenants. In the Île-de-France region, shared accommodation is the most popular.

Shared accommodation in IDF: a lease sought after by roommates  

In Île-de-France, the average rent per square meter of an apartment is €25, twice as expensive as in the provinces (€12.56). Obviously, this figure hides significant disparities. Considering the average price of rent, housing in the inner suburbs costs around 20% more than in the outer suburbs, and housing in Paris costs 20% more than in the inner suburbs. This is why many people from Île-de-France choose to share accommodation. 

Shared accommodation is a highly sought-after type of rental in Île-de-France. Previously chosen exclusively by students, it now benefits from a broader clientele. In addition to students, there are employees, single-parent families and retirees. As an alternative to traditional rental, shared accommodation remains a particularly economical way to find accommodation, generally offering better living comfort. It allows roommates to reduce housing budgets, make considerable savings and meet people.

Shared accommodation in IDF: a very attractive return

Investing in a shared apartment is an effective strategy if you want to boost your real estate portfolio. The main advantage of opting for such a rental project is economic. For the same surface area, the rents from a shared apartment are generally much higher than those from a traditional rental. 

For example, you have a five-room apartment of 86 m2 in Paris 6th. If you decide to rent this property as a single dwelling (single dwelling), the rental price is €2,790. On the other hand, in shared accommodation, it is possible to rent it for €3,000, by dividing the rent by 4, or €750 per tenant. This represents an annual gain of €2,520. Moreover, by dividing the total amount of the rent between several roommates, it would be easier for you to find clients. 

Depending on the number of rooms and the location, the gross rental yield generated by a shared accommodation can reach 6% to 12% in Île-de-France.

Île-de-France: a region popular with students 

The main factor supporting the advantages of sharing a property in Île-de-France is that the region is home to a large number of highly sought-after faculties and renowned schools. Indeed, it is home to a large student population, coming from all over France and abroad, which continues to grow. Even if shared accommodation attracts various tenant profiles, students remain the core target for real estate investments in this type of lease contract. In Île-de-France, nearly 50% of shared accommodation searches are carried out by students. Rental demand is much higher than supply (8 requests for shared accommodation for one room). 

Investing in shared accommodation in Île-de-France: in which cities?

To make your shared accommodation real estate investment project a success, it is important to target cities where rental demand is particularly high. 

Aubervilliers: a living environment in full evolution

A city in the first ring, in the Seine-Saint-Denis department, Aubervilliers is one of the leading destinations for a rental property investment north of Paris. It offers a dynamic and commercial city center, and offers a comfortable living environment for young professionals with all its amenities within reach. By 2025, the inauguration of a new station connected to line 15 of the "supermetro" will support its demographic growth and the increase in rental demand. Aubervilliers is undergoing a major transformation, with many new housing construction programs planned there.

Investing in a shared apartment (three-room, four-room or five-room) in Aubervilliers is favorable for targeting young workers. For the purchase of your property, expect an average price per square meter of €3,594. The average rent per square meter is €19.8, with a gross profitability rate of 6.5%. 

Nanterre: a student city 

Nanterre is a city in the inner suburbs. Its location, on the banks of the Seine, between Paris and the La Défense district, makes it very attractive. The La Défense business center extends over part of the area. It is home to the Paris-Ouest University, with nearly 30,000 students and several head offices, such as Axa and PepsiCo France. Line 15 of the future automatic metro planned for the Grand Paris Express will connect Nanterre to the entire Paris metropolitan area by 2030. With its tens of thousands of students and its multinational headquarters in La Défense, the city has attractive profiles for making a real estate investment in shared accommodation. The average price per square meter of real estate is €5,755 for an apartment, and €6,966 for a house. The price per square meter of rent is €20.8 for an apartment, and €23.20 for a house. 

Saint-Germain-en-Laye: a chic and popular city 

A city in the first ring, in the Yvelines department, Saint-Germain-en-Laye is a highly sought-after area, offering its residents a friendly and dynamic living environment. Located 19 km from Paris, it benefits from two major motorways and an efficient public transport network. Several renowned companies are located in the city, such as Ford Mazda France, Genzyme Sanofi, Galileo, etc. An investment in student shared accommodation offers great prospects thanks to the many higher education establishments, such as the École supérieure de vente or Sciences Po Saint-Germain. To acquire real estate there, you will have to pay an average of €6,871/m2. The average rent is €19.5/m2. 

Saint-Denis: a well-served city

A commune bordering Paris, located to the north of the capital, Saint-Denis belongs to the Seine-Saint-Denis department. The city's commercial fabric, the Legion of Honor park, the many sports, cultural and historical infrastructures, as well as public transport make it an easy city to live in on a daily basis. Saint-Denis will house the hub (2023) which will connect metro lines 15 and 16. To connect Saint-Denis to the La Défense business district, residents will only need 13 minutes, compared to 27 minutes currently. The strong demand for shared accommodation is linked to the presence of Paris-8 University on its territory, which teaches more than 22,000 students. The city has a gross rental yield rate of 7% for this type of rental. 

Investing in shared accommodation in Île-de-France: what are the taxes?

Investing in shared real estate in Île-de-France allows you to make substantial savings thanks to various tax exemption schemes.

Rental property investment under the Pinel law

The Pinel law is a tax exemption scheme, intended for investors in new rentals. It allows you, as part of a shared tenancy, to rent your accommodation to several tenants while benefiting from a tax reduction on rental income. To benefit from the tax advantages of the Pinel law, your rental apartment must be new or in VEFA (Sale in future state of completion). If it is an old dwelling, it must have undergone renovation or rehabilitation work. Your residence must be rented unfurnished, and you must agree to share it for a minimum period of 6 years. The reduction rate will depend on the rental period. It varies from 12% to 21% of the amount invested.  

The most populated region in France, Île-de-France includes all the categories of the zoning plan eligible for the Pinel law. The first category, called zone A bis, concerns the city of Paris and its agglomeration. Aubervilliers, Nanterre, Saint-Germain-en-Laye, Saint-Denis are cities located in zone A bis. Other eligible municipalities are classified in zone A or B1, such as Blanc-Mesnil and Coulommiers. On the other hand, the most remote municipalities, such as Egreville or Brévale (located in zones B2 and C), are not eligible for Pinel.

Rental property investment in LMNP system 

The LMNP (Non-professional Furnished Rental) system is a legal and tax status that concerns investors in furnished rentals. Furnished rental investment has become an advantageous solution for investors in shared accommodation in Île-de-France. Purchasing under LMNP allows you to invest in both new and old properties. Rents from an LMNP activity are taxed in the Industrial and Commercial Profits (BIC) category. You have two choices of tax regimes. Under a real regime, you can deduct certain expenses (rental management, real estate agency fees, insurance premiums, etc.) from your rental income. For the "micro-BIC" regime, you benefit from a flat-rate reduction of 50% on your taxable rents.