The French Riviera Still the Most Wanted Second Home Market Globally

The French Riviera Still the Most Wanted Second Home Market Globally

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In the years since 2009, the general trend has been for luxury property to lead the recovery.  It’s been a return to health with its roots in major cities and its main support has come from wealthy individuals buying homes: the recovery may have driven up house prices in global hotspots like London and it has created a two-tier housing market, but it isn’t an investor’s market; it’s driven by purchases.

Now, though, it’s time for the recovery to take a holiday.  According to Savills’ new report, Spotlight on Prime Residential Retreats, the recovery left beachfront properties in former hotspots like the Mediterranean, Alps, South Africa and the Caribbean high and dry while the rising tide floated boats in New York, Paris, Berlin and London.

In 2013 that story began to change.  A renewed appetite for leisure property saw growth of up to 10% in some leisure property markets, with more forecast.  Savills sees recovery in this sector led by Tuscany, the Balearics and the Caribbean – places characterised by the same combination of high quality and low supply that make London’s markets glow red-hot.

A major player in the new international property market is the investor-purchaser.  He’s not looking for a property to make money from: he’s looking for somewhere secure to put his money.  Bricks and mortar has always been option number one for the cautious investor, but properties in cities with strong markets are returning to full valuation (some say, and then some), leading investor-purchasers to look elsewhere.  Regional cities in Europe have been beneficiaries of this trend already but the markets of Greece, Spain, Italy and Portugal represent too great a gamble.  Overseas prime leisure property is the answer.

Low interest rates in the Eurozone are another stimulatory factor for this market.  As the Eurozone’s governments try to make borrowing cheaper as an economic stimulant, overseas loans get cheaper and more attractive.

A final impetus is provided by the ‘Golden Visa’ schemes rolled out by various countries in the Caribbean and elsewhere with varying amounts of fanfare.  While they differ in their particulars, these schemes all operate by offering residency status to purchasers of properties above a certain value.

The French Riviera is the most desirable location for second home purchases.  The market is recovering, especially in terms of transaction volumes, though it’s starting from a low base.  An extremely limited stock, with little opportunity for new builds to match currently available quality, because of stringent French planning laws and the fact that in many cases the age of the property is part of its appeal, must be balanced against increasing demand from buyers worldwide.  Supply is inelastic, while demand is growing, making the outlook for the Riviera prices look sunny.

Currently, prices are running about a quarter below their 2007 peak, meaning that there are still some undervalued properties to be snapped up by savvy bargain hunters, though they’ll have to be starting with a solid financial base in a market where the average 4-bedroom house costs £2m and upwards.  Already got that Mayfair flat, St. John’s Wood house or Kensington mews?  The Riviera beckons…