The French Riviera Returns To Fashion

Large swathes of the French property market remain in the doldrums, but it seems that the Côte d’Azur is now luring back buyers to its glittering blue shores. Since the turn of the year, President Hollande has provided what one agent calls a “more benign landscape” for investors. Tax reductions and attractive borrowing rates are tempting domestic buyers with “serious budgets”. The weak euro is also persuading British, American and Scandinavian buyers (though not Russian) to return to the Riviera market. “It’s a great time to find a good deal on the Côte d’Azur because there has never been so much for sale,” says Dominique André of Aylesford. “Many owners still need to reduce their prices drastically and offers are being made for 10 to 30 per cent below asking prices.” So how do tax changes affect buyers and what prices are being achieved? A European Court of Justice ruling overthrew the French social tax of 15.5 per cent on the income derived from second homes — rental returns and capital gains (imposed in 2012); and the capital gains tax (CGT) for non-European investors has been reduced from 33.3 to 19 per cent, in line with the level for EU citizens. “In November a non-EU buyer was paying €490,000 [£352,900] on a capital gain of €1 million on a property; now they will pay only €190,000, so it is clear to see why we are seeing the number of American buyers triple on the Riviera,” says Mark Harvey, of Knight Frank. “But also because large American funds are now shifting money back into the EU because the euro is at the bottom of the economic cycle. Executives in these funds are once again seeking a Riviera property as a base.” Furthermore, homeowners in France used to be exempt from CGT after 35 years of ownership of a property; it is now 22 years and is likely to be reduced further to 15, according to André. “It really widens the options of prospective buyers: you can plan ahead for 15 years, but not 35.” Tax benefits and even stunning scenery aside, the French Riviera retains a particular appeal for the world’s high-rollers as a summer playground, says Nic Brennan of Savills. “It’s still got the edge over everywhere else because it’s the go-to place on the Med to informally mix business and pleasure — people can spend time with their families but also broker openings and make contacts while dining out at restaurants.” The Olympic gold-medal winning swimmer David Wilkie — a successful businessman since he retired from the pool — agrees that the Riviera has a unique cachet, which is why he and his wife, Helen, a Swedish interior-designer, have owned a villa there since 2005. The contemporary five-bedroom property with sleek white interiors and a 14m pool enjoys a stunning location looking down the barrel of Cap d’Antibes. “Apart from the people-spotting and the superb beaches, we love the fact we can leave our home in Windlesham, Surrey, and be here in three hours,” says Wilkie. “Also, unlike Spain, you always know the south of France is a good long-term investment.” The Wilkies are downsizing now that their two children have grown up. Their villa is for sale for €2.79 million through Leggett, but with Cap d’Antibes outperforming areas such as Nice and Cannes, according to Knight Frank, and the fact that the €2 million to €3 million property sector is the most liquid, their villa may sell well now after being on the market for a year. “The area ticks so many boxes with culture, golf, marinas, and lively Juan-les-Pins near by for nightlife,” says Harvey. “But while properties were selling for €40,000 to €50,000 per sq m at the peak, they don’t sell for more than €27,000 to €28,000 sq m. That’s quite a discount.” The same applies to the other two “overpriced” hotspots that are most in demand — ever-fashionable St Tropez and the exclusive little peninsula of St-Jean-Cap-Ferrat where the €50,000 to €60,000 sq m being achieved at peak is now €40,000. With Cannes, prices of €30,000 to €40,0000 are down to €25,000 in places. “When prime Paris is priced at €18,000 sq m you realise how much price adjustment is needed,” says Harvey. Agents report an awful lot of stock on the market in Cannes with “still some pain to come”, however French buyers are now showing an interest there; the strong rentals market — during events such as next month’s film festival — make it a good investment. Apartments on the Croisette command the €25,000 sq m ceiling — the same as the other two top addresses, La Californie and Chemin des Collines. An interesting trend within the resurgent €700,000 to €3 million sector of the market is that buyers are seeking better value — and a more authentic ambience — in the hinterland, according to Brennan. “Buyers are looking at attractive villages within 25 minutes of the coast such as Mougins, Saint-Paul-de-Vence, Valbonne, Fayence and Roquefort-les-Pins, where prices are a third of the [peak] price,” hesays. “We have a lot of British interest in a five-bedroom traditional Provençal house close to the centre of Roquefort reduced from €1.9 million to €1.69 million.” Entry level is about €700,000 for a four-bedroom house with a pool. For Knight Frank, the picking up of “peripheral areas” inland of Saint-Tropez is a sure sign that the market is recovering. “Grimaud village, Grasse and La Garde-Freinet are now in demand, along with the Luberon and Les Alpilles,” says Harvey. “Buyers don’t have to be on the coast now. Inland may be better.” What’s more, these areas will be more easily accessible by train when the Eurostar starts travelling direct to Avignon and Marseilles on May 1. The Riviera has never been within such easy reach.