The French Riviera, or ‘Côte d’Azur’, is one the world’s most exclusive destinations for second home ownership. The stretch of coast including the towns of St Tropez, Cannes, Antibes and Nice was one of the first modern resorts, tracing its origins as a winter retreat for the British and European upper classes at the end of the 18th century.

Today, the Riviera is a popular additional home location for the global super-rich. The region offers many of the most desirable characteristics of an established resort, such as marinas and coastal property, but also has many city living benefits with high end retail, restaurants and a full social calendar.

^{Source: Savills World Research}

Economy

France is the world’s sixth largest economy, and accounts for one fifth of Europe’s combined GDP. The country has a modern, service-based economy (contributing to 70% of GDP) and employees are highly educated (France boasts the highest number of science graduates per thousand workers in Europe). The country benefits from a strong industrial sector, making it the second largest exporter of goods within the EU. France’s export-orientated economy helped it ride out the early stages of the global financial crisis (GFC).

When the GFC hit France the economy contracted by 2.9% in 2009 and recovery has been sluggish compared to its European counterparts since. Unemployment remains high at 10.4% (youth unemployment stands at 24%). 2015 is forecast to see a return to modest economic national growth (1.2%, followed by 1.7% in 2016), while certain regions, such as Provence-Alpes-Côte d’Azur (in which the French Riviera is located), have consistently outperformed the national average (Figure 2).

^{Source: Oxford Economics}

Tourism is the largest industry in the French Riviera. Attracting over 11 million tourists annually, it is the second most popular tourist destination in France after Paris, and accounts for approximately 1% of the tourism market worldwide. Nice Côte d’Azur Airport is the second busiest in France and over 850,000 cruise passengers also visited the French Riviera in 2013.

According to Côte d’Azur Observatoire Tourism, the region is home to eight convention centres (providing 114 meeting rooms), 38 Michelin-starred restaurants, 17 golf courses, 15 casinos, 200 beaches with concession agreements, and 28 spas. The area’s tourist industry enjoys an exceptionally diverse demand base; 48% of tourists are foreign, 36% of whom are from outside Europe (Figure 3). This wide spectrum of demand makes the industry resilient and, in turn, provides a broad base of prospective additional home purchasers.

^{Source: Côte d’Azur Observatoire Tourism}

Beyond tourism, the R&D & technology industries are the largest contributors to the French Riviera’s economy. Located in the Valbonne area, Sophia Antipolis is the largest science and technology park in Europe and home to 4,500 researchers, 5,500 students and 1,335 companies with an excess of 31,500 employees.

The playground of the global wealthy

Globally mobile UHNWIs are the driving force for the top tiers of the Riviera property markets. According to Wealth X, these individuals number 211,000 globally, accounting for just 0.004% of global population, but holding 13% of global wealth and owning around 3% of the world’s real estate. Some 5% of all the second residences owned by UHNWIs worldwide are located in France.

Our research has shown that the residential holdings of UHNWIs are concentrated in top-tier world cities, but are frequently paired with properties in ‘retreat’ locations. The French Riviera is one of the most important global retreats. With high profile events such as the Cannes Film Festival, and the Monaco Grand Prix, the Riviera provides an appealing social calendar to UHNWIs.

Analysis of Savills and Wealth X data suggests that UHNWIs holding a Riviera property most frequently hold their city base in London, followed by Paris and Moscow (Figure 4). It is no surprise that Nice airport is a top three global hub for private jet traffic.

Source: Savills World Research, Wealth X

The French Riviera is a place for global UHNWIs to mix, socialise and conduct business. It offers vibrant cities for shopping and nightlife, the coast for year-round sports, quality beaches, along with history and heritage. The diversity of its offer is something which emerging or purpose built resorts cannot emulate. This puts the French Riviera in a particularly strong position with younger wealthy individuals who seek authentic experiences and wish to maximise their leisure time.

The lifestyle offer is appealing to families too. The region’s international schools, favourable climate, safe environment and frequent flight connections to cities such as London, Frankfurt, Moscow and Dubai means there is a steady demand from wealthy families too.

Taxation in a global context

The perception of France as a high-tax jurisdiction is, to some extent, unjust in the case of non-domestic residents. France’s much quoted 75% income tax rate is not payable by those whose source of income is from another country. Capital gains tax has recently been reduced for non-residents following an EU court ruling which removed the ‘social charge’ element, bringing the charge down from 34.5% to 19%.

Figure 5 puts the cost of buying, selling and occupying a property in France as a non-resident into a global context. The scenario assumes a £2m property held by a non-resident private individual for five years, not as main residence.

Note: Estimated costs assume a non-resident private individual owning the property for 5 years not as main residence
Source: Savills World Research

As the comparison demonstrates, when it comes to the combined costs of buying, holding, and selling property (under this scenario), France sits mid table against some of its global competitors. Both Hong Kong and Singapore levy foreign nationals with an additional 15% duty on the purchase price.

In the US, Federal, State and municipal property taxes make holding costs especially high. In New York, for example, approximately 1.6% of the property value is due annually, although this varies notably from building to building and changes over time.