Tales from the Front Line

Dreamers or Buyers?

by Nigel Hindle
on August 18, 2010 in Buying in France

It never ceases to amaze me, how many different languages one hears while travelling around the hotspots of the South of France. Whether it is Monaco, Nice, Cannes, Antibes and St Tropez or the inland towns of Provence such as St Remy, the number of different nationalities is quite extraordinary. The diversity of language is equal, I suspect, to the diversity of wealth. On the one hand there are the billionaires with their private jets, yachts and villas, on the other are those with more modest means who might choose a campsite as their chosen holiday venue. Irrespective of wealth or nationality, the one thing they all have in common is a love of France and all that it offers. In fact, in an average year France expects to receive about 70 million foreign visitors. The most visited country on Earth.

‘Now what has this got to do with the property market?’ I hear you ask. Well you just have to stand near the shop windows of some of the better known agents or look at the readership of the local property magazines to see that many people love the idea of owning property in France. Some people will be dreamers, others will be ‘tyre kickers’ but some will undoubtedly buy... Crisis, austerity measures, double dip recession, eurozone worries…? Sure, these issues do weigh on people’s minds and influence their short-term decisions. Nonetheless the world’s love affair with France continues and if only a tiny fraction of the 70 million annual visitors purchases a property the prosperity of the market here will be maintained.

It’s Snow Joke

by Nigel Hindle
on April 1, 2010 in Buying in the Alps

Thankfully Alpine glaciers and snow levels have not retreated as quickly as Alpine property buyers did eighteen months ago.

The ski chalet, arguably one of the most discretionary of property purchases, was, quite understandably, pretty much at the bottom of everyone’s list of priorities, along with the super yacht and private jet.

However, much like the piste conditions at the moment, the snow is back and so are the buyers. Not to the extent that we need to issue an avalanche warning as buyers are not buying ‘anything’ at ‘any price’. But with one agent we know, located in a top French resort, having sold five chalets between Christmas and New Year and others reporting greater levels of demand even from UK buyers, market confidence in the Alps is at last drifting back.

Terrific Terraces…

by Nigel Hindle
on January 26, 2010 in Properties

Looking out of the window of my Paris apartment, watching the flakes of snow fall gently past the window, I was hard pressed to remember the balmy summer and autumn of only a few months ago when the possibility of sitting on the roof terrace overlooking the magnificent urban landscape dotted with the many ‘monuments historique’ was very real. A glass of chilled rose, a newspaper and a table at which to sit and enjoy the view was the perfect antidote to a busy working day. Roll on springtime…

Nonetheless there is an important point to this reverie. Private outdoor space in Paris, like any other major city, comes at a premium. Roof terraces are routinely valued at 50% or more of the value of the internal floor area which in some cases can value the terrace at 10/12,000 Euros a meter. Not exactly cheap. Unlike central London, Paris does not have an abundance of houses with private gardens, neither does it have an abundance of garden squares. The vast majority of residential property is apartments that have no outdoor space at all. Most buildings have some form of inner courtyard but these are neither private nor great places to enjoy a view. The other conundrum is that the best apartments tend to be on the second or third floors where ceiling heights and room volumes tend to be at their greatest. These apartments do not, generally speaking, have any outside space apart from the traditional ornamental balcony seen on the front of the buildings. The higher up the building you go the chance of finding a terrace improves but at the expense of ceiling heights.

So, as with most property decisions, choosing an apartment in Paris will depend on personal choice and lifestyle. If you want the ‘grand salon’ feel you will have to forego outside space and if you can live with a more loft type of apartment then you will more likely benefit from a terrace and a good view. Just make sure that if you go for a roof terrace on a higher floor that the building has a lift. Values diminish significantly without one.

With all this snow around at the moment my attention is increasingly being drawn from Paris to the Alps. Now where were those skis..?

A Cautionary Tale

by Nigel Hindle
on December 14, 2009 in Properties

That awful feeling we have all inevitably had, of overpaying for something is at best irritating, at worst expensive. It normally involves something relatively minor, such as discovering you could have bought the same washing machine for £100 less ‘on line’ rather than at John Lewis. But when it comes to ‘bricks and mortar’ these mistakes can be considerably more costly.

This is especially true in the Côte d’Azur. Asking prices very often bear no relation to true value and it is not at all uncommon for prices to be twice the actual value. Caveat emptor is very much the name of the game.

A recent case of some purchasers who we knew but were not acting for neatly illustrates the point. The purchasers, Mr. and Mrs. X, who were well known around the market, agreed to pay nearly € 20m based on two, allegedly false, ‘valuations’ provided by the selling agent. They took the agent at his word that these were ‘independent’. The preliminary contract was duly signed and the seven day ‘cooling off’ period expired. A subsequent and genuinely independent valuation by a well known and trusted professional firm struggled to value the property at half the figure that had been agreed. Ouch!! A 10m Euro mistake. Unsurprisingly this matter is now in the hands of expensive lawyers and has left the purchasers feeling bruised and very jaundiced about property dealings in the Côte d’Azur.

This situation could have been so easily avoided. Independent advice and due diligence are the key.

Paris: A Paradigm of Boredom for the Prime French Property Market?

by Nigel Hindle
on September 21, 2009 in Properties

Over the last 10 to 12 months we have tried very hard in our newsletters, commenting on the French market, to take an objective and dispassionate view. To have attempted to hype up the market, in the face of overwhelming evidence against it, would have made us look cheap at best and undermined our reputation as trusted advisors at worst.

Over the last few months we have made the case that while the French market would be affected by worldwide economic events, it would not go into price freefall as has been the case in other parts of Europe. The reasons we gave to support this line of argument were that because the French property market is supported by much lower levels of debt than, for example, the UK, the effects of ‘deleveraging’ have been comparatively negligible. We also pointed out that demand for prime French property is very broad based internationally giving the market a core strength and resilience. So, do the market ‘numbers’ give any credence to the case that we have made?

In Paris, the arrondissements we cover are principally the 8eme, 16eme, 7eme and 6eme. The most recent figures from the Notaires de Paris make very interesting reading. The latest year to date figures are as follows:

Arrondissement (% change)
8eme: - 4.3%
7eme: + 4.2%
6eme: + 2.1%
16eme: - 2.4%

For Paris as a whole the figures work out to just -1%. In effect, prices have remained static over the year. This is extraordinary given world events but does demonstrate the ‘safe but boring’ nature of prime French property as an investment vehicle. There is however one note of caution; the volume of transactions has dropped by 29% in the same period. This is not altogether surprising as many buyers and sellers have adopted a ‘wait and see’ attitude during this time.

Although we have no statistics to support recent events there is plenty of anecdotal evidence to suggest that from the late Spring to date there has been much more confidence around the market. It would not surprise us to see an upswing in the volume of transactions when the next figures for Paris are released.

What has this got to do with our other markets, principally the Cote d’Azur and Provence? Unfortunately there are no recent official records that we can turn to for these areas for the moment. We know from our own experiences and observations that there is a greater degree of confidence around now and that transactional volumes have improved.

The key question is whether this is a false dawn or not. Does the financial crisis still have ‘teeth’ that could bite the unwary? It is of course a possibility, but we take the view that in terms of price movement the market will be a very ‘boring’ place with prices remaining stable for the foreseeable future. But, in this context, ‘boring is good’. We like ‘boring’. Boring equates to stability and stability is the seed bed of a long term return to confidence.