France

France is much bigger than you might think – it is only marginally smaller than Texas (and over twice the size of the UK) – but the food is a lot better, at least many Europeans would say so. But apart from culinary comparisons, both Texas and France are economically strong. And in France’s case, with good reason.

At the beginning of the 1990s, France ranked eighth in the world in terms of economic output per person, but by the end of the decade it had slipped to 18th place. Nonetheless, according to the National Institute for Statistics and Economic Studies (INSEE), by the first half of 2004 French economic growth was better than the eurozone average, thanks to various factors including buoyant household consumption and the property market.

Fuelled no doubt by international buyers, French house prices rose by 70 per cent between 1998 and 2004. The main growth markets – and those that continue to draw increasing numbers of international buyers – are Paris, the Hauts-de-Seine region and the south of France, particularly the Côte d’Azur. Nowadays prices in Paris are rising around 13 per cent a year, and the Côte d’Azur at 12.5 per cent is similar.

While Paris appears to be a relatively new market for the recent upsurge in foreign buyers, the south of France is tried and tested and has been popular for well over a century. For the English aristocracy – not to mention Queen Victoria and Coco Channel as well as the likes of F Scott Fitzgerald, Aldous Huxley, and Thomas Mann – and today’s host of celebrities, the south of France has not lost its allure.

Hotspot

The French Riviera is generally accepted as stretching from Saint Tropez in the west to the Italian–French border in the east. The region arcs inland as far as the town of Grasse. The property market in the Riviera has a life of its own compared to the rest of France, apart from Paris.

The market can be subdivided between coastal and hinterland, with the latter typically costing about one third less. An upmarket two-bedroom apartment with sea views will cost anywhere from €500,000 to €800,000; and a three-bedroom villa with a pool will range upwards of €800,000, according to Olivier Morvan, manager of Hampton’s International
in Nice

“The property market on the French Riviera – and in Provence – remains as strong as ever,” says Morvan. “But,” he cautions, “a key factor affecting the market is the lack of new property.”

With the region bordered by sea and mountains, there is limited land available for building. New developments are either on smaller plots or extensions to existing buildings, perhaps by adding more floors. There are more than 500 newbuild units available in the whole of the region at present, the majority of which will not be available for over a year. “The government is predicting an increase of 5 million new inhabitants by the year 2010,” says Morvan. To address this issue the local government has undertaken massive infrastructural development over the next four years, which will inevitably result in higher local taxes.

Hampton’s anticipates that popular destinations for house-buyers in 2005 will be Tourrettes-sur-Loup, Vence, Cagnes-sur-Mer and St-Laurent-du-Var to the west of Nice and Eze to the east. Earlier hotspots such as Villefranche-sur-Mer and St-Jean Cap Ferrat were good investments and have become very expensive. Hampton’s expects steady price growth in 2005 on the French Riviera of around 12–15 per cent.

Buyer beware
Whether you are buying in Paris, the Riviera or elsewhere, draconian tax laws can easily trap foreign buyers. Recently the Law Society in Britain put out a warning to British buyers to take legal advice before embarking on a French property purchase. As a matter of financial acumen anyone considering the purchase of a French property should be aware of the tax situation. Death taxes, for instance, may be as high as 6o per cent for gifts to non relatives. In France spouses do not automatically inherit a property, but children have a legal right to a share of it.

Saundra Satterlee