Suppressed prices, a weak euro and recent changes to taxation policy have made property in the French Riviera more appealing to foreign purchasers says Savills in its Spotlight on the French Riviera launched today.
The French Riviera is one of the world’s most exclusive destinations for second home ownership. The playground of the super rich, globally mobile Ultra High Net Worth Individuals (UHNWIs) are the driving force at the top tier of this market.
Like the rest of France, prices have fallen in the region (Provence-Alpes-Cote d’Azur) and the market is a buyers one. Values in the region have tracked the national average closely and are down 9.5% from a 2011 high. The market did not see the same rally between 2009 and 2011 as seen in Paris, so property currently looks better value than those in the French capital.
The number of €3m+ deals fell by 44% across the region between 2007 and 2013. Cap Ferrat and St Tropez saw the sharpest decline, down 69% and 54% respectively. Although transaction numbers are down, purchasers of the regions best properties tend to hold for long periods so forced sales are rare with property in the Rivera viewed as a long-term asset and therefore a safe storage of wealth.
Regional statistics disguise local market characteristics however. What sets the French Riviera apart is the extremely limited supply in the most desirable spots. In Saint-Jean-Cap-Ferrat, there are only around 500 properties, a handful of which come to the market in any single year.
Cap d’Ail, Beausoleil and Roquebrune-Cap-Martin adjoin Monaco and have benefited from the surge in activity that the Principality has experienced. Prime property is significantly cheaper here (albeit without the tax benefits) and the area is popular with buyers who want quick access to the city-state at a discounted price.
British buyers accounted for 34% of all buyers in the Riviera between 2011 and 2014. Although the market remains cautious, an improving tax environment for non-domestic buyers, coupled with a weak euro, presents buying opportunities. A €2m property cost sterling buyers £1.44m in June 2015, compared to £1.65m the previous year, a reduction of 12%.
It is this currency play that is attracting US dollar dominated purchasers. The same €2m property cost $2.18m in June 2015, compared to $2.72m the year before, a reduction of 22%.
Russian buyers have historically been active in the super-prime markets, accounting for 30% of purchases between 2011 and 2014. Recent activity has slowed considerably due to economic sanctions.
Paul Tostevin, associate director, Savills World Research, said: “Of worldwide renown and synonymous with the global rich and famous, the French Riviera offers an ‘authenticity’ which emerging or purpose built resorts cannot emulate. It is one of the few leisure markets with a truly global demand base, something which will underpin the market for prime property over the long term.”
To access the Spotlight research, please click here.