Here in the 6th arrondissement, you will find what many consider to be quintessential Paris - elegant shops, historic sites and expensive real estate.
The median price for property here is 14,430 euros per square meter. That means a 350 square foot studio here would cost you over half a million dollars.($520,734).
And that’s just one reason why Paris has been ranked as one of the most expensive cities in the world.
During the 19th century, Paris was in a state of disarray as the city shifted between a republic, empire and monarchy, multiple times. In the early days, disgruntled Parisians would typically revolt against their leaders by blockading the narrow roads in the city, which prevented the movement of troops and hampered the military’s ability to squash their protests.
Napoleon III wanted to prevent these protests during his reign as president and then emperor. So he brought on controversial architect Georges-Eugène Haussmann. Haussmann led one of the most ambitious city overhauls of modern times, flattening out medieval Paris and building the dramatic boulevards we know today.
In the process, he demolished nearly 20,000 old buildings and constructed more than 30,000 new elegant buildings. They were largely uniform: made of stone, had iron-clad, perfectly aligned balconies and were no more than six stories - in direct proportion to the boulevards.
These buildings were so expensive that the poor were driven out of the city and relegated to surrounding suburbs.
Parisian authorities have preserved much of Haussmann’s transformation and have retained the city’s horizontal and vertical limits from that era.
That explains the lack of skyscrapers in the heart of Paris, unlike other cities such as New York, Hong Kong or Dubai.
Moreover, between 2000 and 2014, Paris has expanded its urban space by a mere 1.3 percent, compared to the global average of 4.3 percent.
Economists say the vertical and horizontal restriction of the city severely limits housing supply. At the same time, demand for housing has increased, as more locals and foreigners seek opportunities in the city each year. In 2018, a record 61 percent of buyers who purchased homes for more than 4 million euros were non-residents of Paris.
This helps explain why Paris is one of the most densely populated cities in Europe.
This growing demand, coupled with the city’s limited supply, has contributed to the increasing prices of real estate in Paris. In the span of a decade, the price per square meter of a home in Paris has increased by 64 percent. While new laws have been passed to circumvent the height and width limits, experts say it may take years before Parisians see a change in housing prices.
Differing policies by French presidents over the years have also influenced the city’s demographics, which in turn impacts housing prices.
Many wealthy Parisians who left under Francois Hollande’s socialist administration are returning, enticed by President Emmanuel Macron’s pro-business, trickle down approach.
Paris has one of the highest concentrations of wealthy people in the world.
As of 2018, 3,95522 ultra high net worth Parisians worth at least $30 million resided in the city.
Experts say their return has increased demand and consequently, the prices for luxury homes. Prices for these homes increased by 5.3 percent in 2018, and 12 percent in 2017.
An influx of wealthy individuals into any city raises the average price of goods - and Paris appears to be no exception.
One item that has seen a sharp increase in price is clothing. The cost of clothing has gone up by 14 percent in the last six months. Experts say the city’s thriving luxury fashion industry is to blame.
To stay competitive, luxury retailers in Paris have come up with creative ways to pique interest in their products. This helps increase the demand for their goods and allows them to get away with charging higher prices.
For example, Europe’s largest department store, Les Galeries Lafayette, which houses several luxury brands, recently opened a more than 30,000 square foot - or 2,800 square meter - store dedicated to one of its largest consumer segments: Asian tourists.
The department store designed an entrance tailored to them, by making it big enough for large tourist groups and using gold heavily because it’s an appreciated color in Chinese culture.
And it’s not just luxury companies experiencing this boom.
The overall retail industry in Paris has been thriving and appears immune from the retail crisis seen in other cities like New York, where retail vacancies have doubled in the last 10 years.
Demand for retail spaces has been growing so much that between 2008 and 2018, the value of a retail space on Champs-Elysees increased from just over 10,000 euros per square meter to 20,000 euros in 2018.
Despite being one of the most expensive cities in the world, salaries are actually quite low in comparison.
Paris is the fifth most expensive city to rent a two-bedroom apartment.
But when it comes to monthly salaries, it sits at number 22, leaving Parisians with far less disposable income than people living and working in places like San Francisco, Zurich and Sydney.
For more than 300 years, Paris has been seen as a city with expensive tastes - and it seems it could hold on to this title for more years to come.