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valorisation investissement immobilier
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Global financial crisis and buying in France
15th September 2007
They always say that in times of doubt, put your money in bricks and mortar. But what do you do when the financial uncertainty is caused by those very bricks and mortar – or in the case of American homes, clapboard?
The stock markets around the world have been jittery since the serious nature of the so-called sub-prime loan market in the US became apparent in the middle of 2007. Lenders have been told by central banks to be more careful how and to whom they lend money, while there are rumours that some banks around the world have become seriously over exposed as a result of the crisis.
But what impact will this have on the property market in France – and will investing in French real estate still make sense?
French banks
The first point to make is that French banks are generally more cautious in their lending policy than institutions in some other countries. The result seems to be that there is little sign of a serious impact on the French banking industry and lending market.
A second point is that with nervousness in the stock markets still quite high, some investors will be looking to put their money into less turbulent and more secure areas. And some experts believe that France’s stable and secure property market could be a beneficiary.
Already several reports have suggested that the wider Paris region is likely to be one of the European property hotspots in future years – indeed the market there has already been growing at between 10% and 15% in recent years. This contrasts with the more modest 4.9% growth currently seen in the overall French market.
Many observers also believe that President Nicolas Sarkozy will be able to kick-start the French economy which has been notoriously sluggish in recent years. He has set up a commission to discover those fiscal and employment factors that act as ‘brakes’ on economic growth, presumably with a view to removing them if that is socially and politically acceptable.
Vote with wallets
Already it seems that many foreign investors are voting with their wallets. For example, Paris based property investment company, VPS-Global, says it has seen a dramatic increase in foreigners investing in France.
CEO Pascal Morin believes Paris offers exciting potential for investors. ‘Given the current state of the world economy, investors are opting for more secure, stable and long-term investment opportunities. Investing in France used to be a lifestyle choice. Today we are seeing more and more of our clients choosing France as a pure investment choice, purchasing with no intention for personal occupation.’
Other factors that might boost demand for property in the future include beneficial changes in the French inheritance tax laws that will help many foreign tax residents in France and also, in the longer term, the extension of the TGV high-rail network to other parts of the country.
And Charlotte Clarke of Sextant French Property Agents adds: ‘France also has extremely low Euro interest rates with highly competitive mortgages, has government support - for leaseback investment in particular – and has world-famous popularity with tourists.
‘Even for those who have difficulties in selling their property in the UK prior to buying in France, there is now a short term mortgage available from French banks which allow people to move to France without having yet sold their UK property.’
Unions
However, it would be wrong to suggest that the picture is entirely rosy. President Sarkozy and his government may well have tough battles ahead if they want to introduce meaningful reforms to the economy. His would not be the first French government to be blown off track by popular and union protests. A battle is already looming over changes to the special pension regimes that some public sector workers enjoy.
Moreover, while property prices are buoyant in Paris and parts of the south and some big cities, they actually fell overall in France in July and August 2007. And long term property investment in rural areas outside Paris and other big cities such as Marseille, Bordeaux and Lyon and away from the south and coastal areas is not necessarily likely to yield huge results.
Morin at VPS-Global agrees. 'While Paris and parts of France provide strong investment opportunities, do not expect to see increases of 10-15% per year in all regions of France.
'Alencon in the Orne department in the Lower Normandy region saw a negative increase in property prices in the last quarter.'
As ever, location will be key. But French bricks and mortar do have a solid look to them just now.
Michael Streeter, FrenchEntrée property editor
http://www.frenchentree.com/france-investment-property/DisplayArticle.asp?ID=28727
Useful addresses:
VPS-Global: www.valueps.com
Sub-prime crisis sees investors look offshore
3rd September 2007
Given the recent turbulence in global equities, as a result of the fallout from the credit storm affecting financial markets, the relative appeal of the outperforming Paris property market is understandable. Added to this conviction is the current state of the US housing market with the bubble bursting and the likelihood being for an extended period of weakness in the form of a housing recession, tighter credit and invariably a weaker consumer. Given such weakness it is little wonder that savvy investors are looking offshore for returns on their investments.
Paris property prices continue to increase at approximately 10-15% per year, depending on the district, and the last 5 years has seen a dramatic 60% increase in property prices. This trend is set to continue, strengthened by the ‘Sarko effect’. It is anticipated that the centre-right politician, Nicolas Sarkozy, will strengthen France’s economy and property market, with France expected to become a much more property owner-oriented country. The favourable borrowing terms and relatively low interest rates, among other factors, gives Paris strong investment potential. The interest rate cycle of Europe is now turning, with the likelihood of just one further raise in interest rates this year to 4.25%, comparing favourably with the US 5.25%, even with the likelihood of a cut in September in the States.
The ''Emerging Trends in Real Estate- Europe 2007'' published by the Urban Land Institute (ULI) and PriceWaterhouseCoopers has identified Paris as the top real estate investment market in Europe. President of ULI Europe, Bill Kistler, commented, ''Paris rates highly for both total return prospects and low risk, and thus its risk-adjusted total return prospects were judged the best in Europe. Survey respondents pointed to the city's economic stability and sustainability, in addition to its status as a global gateway, as major reasons for its top ranking as an investment market. As a top market for the past several years, Paris still has good prospects for the next two years''.
Paris based property investment specialists, VPS-Global (www.vps-global.com) has seen a dramatic increase in foreigners investing in France. CEO, Pascal Morin, believes Paris offers exciting potential for investors, ‘’given the current state of the world economy, investors are opting for more secure, stable and long-term investment opportunities. Investing in France used to be a lifestyle choice. Today we are seeing more and more of our clients choosing France as a pure investment choice, purchasing with no intention for personal occupation’’.
Furthermore a quick comparison between returns from the French equity market and the property market paints a stark and damning picture. The CAC40 has returned just 1.75% year to date and given volatility its appeal to the risk averse investor is waning. Closer to home it wasn’t too long ago that the DOW was hitting record highs, however with the sub-prime mire lingering and likely to play itself out with volatility, the uncertainty of global equities remains.
During these times of uncertainty investing abroad may just be the answer and where better to do so than in the world’s most visited city.
http://www.europeanproperty.com/news/article-102.php
The Côte d’Azur: very expensive sun
25th August 2007
The Côte d ‘Azur has long been regarded as one of the most desirable holiday destinations in France. Everyone dreams of buying a secondary residence on the seaside but with land on the Côte d’Azur becoming more and more rare, prices are reflecting this trend, placing real-estate investments on the Côte d’Azur out of reach for all but a select few. The widespread appeal of the Cote d’Azur, combined with the limited number of scarce new properties available, is resulting in prices reaching record levels from Nice to Cannes.
The capital of cinema and boasting the most expensive real-estate per metre square, be prepared to pay several million for a nice villa near the seaside. Investment properties and leasebacks can be more attractive but still come at a price: a 3 bedroom of 61m2 in a luxury residence with all commodities and just a few minutes from the famous Croisette, is selling for 600 000 euros, just under 10 000€ per square meter.
Why is the French Riviera so expensive? One of the biggest problems for developers is not finding the land itself but gaining construction permission, as technical bylaw standards continue to become more and more restrictive. Prices have not reached such levels from market speculation but simply a result of the economics of supply and demand.
According to real estate professionals, the attraction of this region is forever on the increase. The British began to flock to the Mediterranean sun at the end of the 19th Century and this phenomenon continues to grow today.
With the Euro star, TGV and the large number of low cost carriers operating regularly between Nice and London (Gatwick, Stansted, Luton), holiday makers and investors are free to come as often as they choose, making this phenomenon only set to continue.
Paris announced as top real estate investment market in Europe
31st July 2007
The ''Emerging Trends in Real Estate- Europe 2007'' published by the Urban Land Institute (ULI) and PriceWaterhouseCoopers has identified Paris as the top real estate investment market in Europe.
President of ULI Europe, Bill Kistler, commented ''Paris rates highly for both total return prospects and low risk, and thus its risk-adjusted total return prospects were judged the best in Europe. Survey respondents pointed to the city's economic stability and sustainability, in addition to its status as a global gateway, as major reasons for its top ranking as an investment market...As a top market for the past several years, Paris still has good prospects for the next two years''.
VPS-Global is a group of property investment advisers and consultants who specialise in delivering a variety of tailored investment (VPS-Invest), residential (VPS-Residential), financial (VPS-Finance) and rental (VPS-Rental) solutions.
The VPS-Residential management service, designed to cater to the huge demand of foreigners wishing to purchase an apartment in Paris to live in for weeks or months at a time, offers a first-class management service.
VPS-Residential manages their client’s apartments on a short-term rental basis. This allows for:
*the flexibility to stay in their Parisian apartment as and when desired
*take advantage of considerably higher returns when they are not occupying their apartment
*benefit from on-site management, piece of mind and a hassle-free investment in the world’s most visited city.
http://www.europeanproperty.com/news/article-68.php
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