France’s Cote d’Azur feels ‘Macron effect’
As Brexit cools British buyers, fiscal reforms from Paris are reviving the market
In the 18th century, sickly Brits began travelling to the Côte d’Azur, hoping that a mild climate, swims in the Mediterranean and access to the Alps might cure them. The unhealthy have since been replaced by the wealthy, but the British still enjoy the French Riviera, as the south-east coast of France is known. As many as one in four buyers of prime property in France are British, according to estate agents Knight Frank, with many opting for the Côte d’Azur.
Its appeal has, though, dimmed of late. Since the UK’s vote to leave the EU, the pound has slipped relative to the euro, increasing the costs for any prospective buyer. On the day of the vote (June 23 2016), £1 was equal to €1.30; today it buys just €1.14 — a significant difference for purchasers of the multimillion-pound homes dotting the Côte d’Azur. Many prospective British buyers are “waiting to see” how Brexit plays out, says Grégory Moulin, a broker at Michaël Zingraf, an affiliate of Christie’s International Real Estate.
The dip in interest from the UK has contributed to a few relatively quiet years for estate agents on the French Riviera, which stretches from just west of St Tropez to the Italian border. A sluggish French economy has also slowed transactions since 2014, according to estate agents Savills. The average selling price of €10m-plus properties in the resorts of St Tropez, Cap d’Antibes and Saint-Jean-Cap-Ferrat fell 40 per cent between 2011 and 2017.
Yet, after a subdued few years, agents are feeling more hopeful. Knight Frank, for example, reports there were nine times as many enquiries across the Provence-Alpes-Côte d’Azur region in the first quarter of 2018 compared with the same period in 2017.
France’s provincial cities have felt a ripple effect from Paris, where prime values increased 12 per cent between 2016 and 2017, says Jack Harris, a senior negotiator at Knight Frank. The ripple has some way to travel to the Riviera — it is 700km from capital to coast — and its full effects have yet to be felt there. Knight Frank reports a rise of just 2.7 per cent in Cannes last year, while values in St Tropez — the resort town beloved by celebrities and the super-wealthy — fell 5 per cent.
Agents are pinning their hopes on renewed buyer confidence stemming from the presence of reformist President Emmanuel Macron in the Elysée Palace. “The so-called Macron effect has really been felt. There has been a return of appetite for the market between €4m and €10m,” says Harris, whose agency completed more €8m-plus deals in the first half of 2017 than in the whole of 2016.
An overhaul at the start of the year of France’s wealth tax — which now only applies to real estate, where formerly it included savings, investments and other assets too — and historically low base interest rates are also luring buyers back, say agents.
The most popular — and expensive — locations are on the coast. Cannes, St Tropez and Cap Ferrat in particular command a premium. “A good house with a [sea] view is at least €10,000 per square metre, and can go up to €20,000 or €30,000 if it is by the sea,” says Moulin. Savills, in a recent report on the Riviera, declared it “a buyer’s market, with discounts on asking prices [for prime resale property] ranging between 10 and 30 per cent.” Across the wider market, says Harris, the average discount is more like 5 or 6 per cent.
Buyers here are those who can afford a second home, he adds, and for many a purchase on the Riviera is “probably a third, fourth or fifth secondary home”. Not surprisingly, the Côte d’Azur can be quiet off-season, although year-round festivals and events keep the larger resorts busy — Cannes’ film festival is a May fixture, St Tropez’s yacht regatta takes place in September and October, and in the independent city-state Monaco motorsports, tennis tournaments and a jazz festival are all in the calendar.
Around Monaco, there is a busy market for second homes, with buyers seeking an escape from the city in the surrounding countryside, says Harris. Elsewhere, the area around Nice — which has France’s busiest airport outside Paris — sees the liveliest trade.
“After four or five years of decline, of uncertainty, of properties being on the market for several years, now there are these green shoots of properties selling quickly,” says Harris. The average time on the market for properties priced €1m-€5m is currently six-12 months, having been 12-18 months a few years ago, he adds. “The story is of cautious optimism, but optimism nonetheless.”