French property prices to rise next year
Rural regions such as Loire are bringing in the British bucks Photo: Erminig Gwenn
The rating agency says that after an overall drop of 4 per cent in 2014, 2015 will see property values bounce back. Prices are forecast to climb 1 per cent next year and by a further 2 per cent in 2016, boosting the potential returns for investors entering the market now.
2014 has already marked a positive period for French real estate, with demand increasing significantly on TheMoveChannel.com. Indeed, France overtook Spain to become the second most popular country on the portal at the end of 2013, holding onto to its position for eight months in a row. The rise in interest from overseas buyers has been fuelled by the affordable prices as well as historic low mortgage rates and the country's timeless lifestyle appeal.
Demand has continued to climb this summer, with France's share of enquiries on TheMoveChannel.com jumping from 6.54 per cent in May 2014 to 6.84 per cent in June 2014.
French commercial real estate is enjoying a period of growth too, with investors injecting €10.7 billion into property in the first half of 2014, up 73 per cent year-on-year and the best start to a year since 2007.
The country, though, is suffering from a housing shortage, notes Standard & Poor's. Construction slumped to the lowest level in 13 years in 2013, with major cities particularly badly hit. With buyer interest on the up, especially in such cities, where leisure facilities are more common, the lack of supply is set to drive values higher once more.
As a result, investors are making a move. According to BNP Paribas, British buyers returned to the country in force last year, rising 5 per cent to snap up more second homes than any other nationality. In the prime area of Paris, wealthy Russian and Chinese buyers overtook the Brits to dominate activity.
Global property investment specialists Target Markets, who are marketing a luxury development of villas in Poitou-Charentes, say that now is the time to buy in France.
Robert Stones, Managing Director at Target Markets, comments: "We have seen a drastic increase in the number of clients registering for investment and life-style properties in France. We now have the perfect storm for investors in French property with prices set to see increases in value, a lack of supply, record low interest rates which can be locked in for the life of the mortgage, strong rental income due to France’s position as the Number 1 tourist destination in the world, and excellent new products which are ideal as investments but which can also be used by clients for their own holidays."
Stones believes that there is currently a unique opportunity to capitalise on the current French property market:
"France currently offers investors opportunities which no other market can offer. Mortgage loan to values can be gained up to 90% with low interest rates. The market is proven to grow strongly and even during the recent long-downturn property values in France did not dip the way they did in say, England. Rental incomes are proven and demand for rental property is high at all times. Indeed, there are French government schemes devoted to assisting investors to purchase property to let as there is a real shortage of supply in coastal and city locations as well as in ski areas."
So which properties are proving most popular with investors at present and why?
Stones continues:
"Top of the list are freehold apartments and houses/villas which are in good locations and which have on-site management. This seems to be the growing trend. Our clients want to use their properties when they wish to themselves and when they are not using their property, they want management on-hand to let their property and manage all aspects of this process.
"The ideal property for investors allows them flexible use while taking advantage of the high returns available in good French locations. Hassle free property investments with the added benefits of free holidays in key French locations. With the average holiday in France costing 6,000 Euros for a 2 week villa break, there are all sorts of advantages to buying investment property in France."
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