To Buy Or Not To Buy

Incredible but true, says Trisha Mason, of property consultants VEF, who even predicts a small growth in the French property market this year. "The French property market remains one of the most stable in the world at the moment," she says. "Mainland Europe continues to hold its own during the credit crunch, with France on target to show growth of 1 percent this year, which is not a lot, but much better than America's and Britain's predictions of recession."

So how has France escaped while its neighbors languish in property market stagnation? Mason explains: "French lenders have traditionally been much more cautious than U.K. and U.S. lenders and although a few banks have been affected by the sub-prime, it has not been a large enough problem to cause any real shortfall in mortgage funds."

To limit risk, French banks usually spread their investments much more widely than those in the U.S. or U.K. Only about a quarter of banking activity is related to investment banking and dealer-broker activity, while the rest is retail banking.

More banks, from Paris to Tokyo to Madrid, emerged Monday as victims of Bernard Madoff's

BNP Paribas, the biggest French bank, said Sunday that it has as much as €350 million, or $472 million, at risk from Madoff's investment advisory business. Nomura Holdings of Japan has ¥27.5 billion, or $302 million, at risk from Madoff's funds, while Banco Bilbao Vizcaya Argentaria of Spain may face up to €300 million in losses.

Madoff, 70, was arrested by federal prosecutors Thursday and charged with operating what he told his sons was a long-running Ponzi scheme in the New York-based firm's business advising rich people, hedge funds and institutions. He told senior employees that the firm was insolvent and "had been for years," prosecutors said in the criminal complaint.

"A frothy market encourages slack oversight," said Peter Hahn, a fellow of finance at London's Cass Business School. "Whenever something like this happens, everyone who has been hit will comb through their investments."

Paris came next after London

September and October were worthless in real estate market - sales were dropping catastrophically. The forecasts of “downing lightly” were not proved at all in the capital of France. The crisis has mostly touched flats the worth of which was from 1M to 3 M euros - compared to 2007, sales in 2008 dropped in 24 percent. In one of the most beautiful cities of the world one could buy exclusive and very exclusive apartment in an old-style Parisian house for such a price.

It was locals who bought such flats in Paris. They spent 8500 euros per square meter in 2007, and 10000 euros - later. During the crisis prices has dropped to the previous level.

Experts declare two reasons for the drop in real estate value: on one hand, buyers are not sure about their own future, on the other hand, the smarter are waiting for a bigger drop in prices.

Paris and Ile de France: hopes pinned on public sector

In normal times the agency would see 200-220 businesses set up or move into the region under its remit – the city of Paris and its eight neighbouring administrative regions or “departments” – every year. But a change in climate has hit the region.

“2009 is largely played out,” Mr Baudoin says. Business investment is tied to mergers and acquisitions activity, which has shown a 30 per cent fall in the first eight months, leading him to expect a similar decline in activity in 2009.

With the private sector catching an investment cold, that puts the burden on public authorities to maintain the spending needed to keep Paris attractive in the global market and provide amenities that companies and employees require. Public investment is more likely to go ahead, Mr Baudoin says keeping hope alive that Paris will retain competitiveness. Transport links and a “greening of the Ile de France” are two priorities that he hopes will help the capital develop.