The French Riviera rises again

The French Riviera has always appealed to wealthy visitors and property buyers and did not suffer the same devastating slump as other European regions following the 2008-2009 economic crisis; indeed, prices in the Provence-Alps-Cote d’Azur (PACA) area peaked in the third quarter of 2011 and houses there are consistently the most expensive in France.

Prices have still tumbled on the Riviera just as they have elsewhere, however, and as of December 2014 they were down 9.5% from 2011, compared to 8.1% nationally. The latest French Riviera residential market report from Savills suggests that as property prices cool in the most expensive cities globally, investors may look to the Riviera with renewed enthusiasm.

‘Ultra-prime markets in world cities are cooling following a period of sustained price rises,’ states the report. ‘Investors are now beginning to peel away from expensive city centres and seeking alternatives in other cities and leisure hotspots. The Riviera is poised to benefit from this trend and it is also regarded as a safe haven.’

 

Iconic status

The report highlights the Riviera’s iconic status as a glamorous Mediterranean resort and a major global tourist market. 17% of properties in the region are second homes, and owning property there is regarded as a long-term investment and even as a status symbol. The region’s perceived authenticity and history are among its strongest assets, the report concludes, suggesting that more recent, purpose-built resorts can never match the Riviera’s old world appeal and classic aura.

 

Limited supply

Sales of €3m (£2.1m) and higher fell by 44% across the Riviera between 2007 and 2013, while the largest prime markets saw the steepest declines: -54% in St Tropez and -69% in Cap Ferrat. Savills does not necessarily see this drop in transactions as indicating a loss of buyer confidence, however, pointing out that the region’s most desirable properties are rarely put on the market.

‘What sets the French Riviera apart is extremely limited supply in the most desirable spots,’ states the report. ‘In Saint-Jean-Cap-Ferrat, a peninsula of land east of Nice, there are around 500 properties and only a handful come onto the market in any single year. Supply is kept low and prices high by wealthy buyers who hold for long periods and are not generally forced to sell.’

 

International market

 30% of buyers between 2011 and 2014 were Russians, who favoured Cap Ferrat and made up 67% of the peninsula’s purchasers. Economic sanctions have had an impact on Russian activity, however, and the biggest spenders are now from the Middle East, who often buy property on the Riviera to escape political tension back home.

St Tropez, by contrast, is mostly a domestic market, while the weak euro has encouraged more British and American buyers, who are finding that the pound and the dollar are both going a lot further than they did a year ago.

The region’s reputation as a hub for high-end tourism also means that potential rental yields are much higher than in most super-prime markets. These factors, together with an improving tax structure for overseas buyers, are making the Riviera a hotspot for international property investors once again, the report concludes.