Overview
The South of France property market has not been immune to post Lehman difficulties and has seen a significant reduction in the number of transactions as well as prices achieved in almost all market sectors. That said, activity levels picked up in 2011 and this trend seems to be continuing in 2012. The main problems when analysing market activity and trends in the South of France are that there are no publicly available figures relating to prices achieved or indeed the level of transactions. These problems are compounded by most properties being advertised for sale at prices that bear no relation to actual value. It is not uncommon to see properties on the market at prices of 30/40/50% more than they are actually worth. In some cases even more. Another characteristic of the market is, generally speaking, that most buyers do not have to buy and most sellers do not have to sell. There is very little distressed selling in the South of France and virtually all purchases are discretionary. The market however, is far from uniform, and there have been winners and losers.
Winners, losers and why
The market is segmented both by geography and price but it would seem that geography has had a key role in determining which areas have performed better in recent times.
Cap Ferrat
The home to some of the most expensive real estate on the planet. Its performance as a real estate investment over the last 5/6 years has been very similar to prime central London. An influx of Russian and other international money has ensured that prices paid for the best villas has outperformed other financial indices by a considerable margin. A proximity to Monaco for financial services and excellent air links from Nice airport make Cap Ferrat a natural choice. Supply of the very best villas is very limited keeping prices at eye watering levels.
Verdict: winner
St Tropez
The popularity of St Tropez remains undimmed. A name that immediately conjures up images of glamour, super yachts, beaches and beautiful villas. A veritable distillation of the south of France in one small area. Apart from its history, the other key to its success has been a fervent desire by the authorities to protect it from over development. Happily, St Tropez and the surrounding area remains largely unchanged and are highly protected. This has maintained property values and demand remains for well located villas. 2011 witnessed several notable transactions between €25 and €55m with demand in 2012 looking favourable.
Verdict: winner
Arriere Pays Cannois
The area behind Cannes, taking in Mougins, Valbonne and other villages towards Grasse, has been the mainstay of property market in the Cote d’Azur for many investors of the last 20 years or more. Many buyers who wanted to be near the coast but not on it were attracted both by its convenience and its more ‘rural’ and verdant nature. Like most markets prices kept rising until 2007/8 but by 2009 demand had largely collapsed. What has become apparent is that the area has become a victim of its own success. The reasons that people originally invested there have to a large extent, disappeared. Planning restrictions have been lax and the whole area has become much more suburban and a dormitory for Cannes and Nice. That is fine if you are living in the South of France all year but is it your dream for a luxury holiday home? It would seem many investors have voted with their feet (and removal lorries). Although there has been renewed activity in this market in the last 12 months it is not on a level with other areas.
Verdict: loser
Provence – Luberon/Alpilles
Provence has very quietly been performing well in the last 2/3 years. Of course demand has been down overall but compared to other areas in the South of France it has done very well and this trend is set to continue. Why? Provence to many buyers is the South of France. Olive and fruit trees, rows of lavender and vines, wide open landscapes all set the scene for the ‘dream’. Peter Mayle’s A Year in Provence may have started the process many years ago but it seems Another Year in Provence is in the offing. The area is highly protected, being classified, in the main, as a regional park. This will ensure that the area will not suffer the same fate as the Arriere Pays Cannois thus protecting long term value. Access and communications are now first class with airports at Marseille and Avignon. There is also excellent access to TGV lines to Paris and the motorway network. Pretty, accessible and protected!