PROPERTY LETTER NO. 15 – 1st October 2002

Posted by admin in Property Letters | October 1st 2002

Dear All,

I got back home on Saturday after a very successful and busy trip.

The garden and horticultural Expo in Padova was an experience – over 2000 stands in 15 halls! Our stand was very good and our South African products very well received (Ross and I were the only S.A. exhibitors). We had many enquiries, all of which need to be followed up now, which we are doing, but most excitingly we won the trophy, judged and presented by the 6 main glossy gardening magazines in Italy, for the most innovative new products. This was awarded for the ‘kit-form shade house’ and the ‘tiller-weeder’ jointly, and means that we will get free coverage and photos in all of the magazines in their write up of the Padova Fiera. That was a complete surprise!

Ross and I then traveled to Cannes, and Ross returned to Durban after a few days, leaving me behind for another week. I had the great pleasure of meeting and spending time with two couples from home who visited Cannes for the first time, timed to coincide with my visit there. That brings to three now the number of couples who have been to have a look at what we are doing, and all three are now owners. (To each of you, I really loved being able to show you around, and it is a great boost to our morale and sense of purpose when you then decide to become owners of property in Cannes.) It has been so rewarding to be part of the pleasure and thrill that both couples got from experiencing Cannes and the South of France, and it reminded me that it is a very special and different place – good food and wine go without saying, and character, intrigue, and awe-inspiring are all words that spring to mind. Carefree, peaceful, and liberating also, and I suppose that is why half the world wants to go there.

As I anticipated would happen, there were a number of apartments to visit, of which two were too good to miss, so after some urgent phone calls to and fro, we secured both. Neither of the buyers has seen their new properties yet of course, but they are both excellent buys. Of the balance of properties that I saw, I have a shortlist of three that Vicky and I must look at again when we get back there next week.

It is interesting that the various agents are taking us increasingly seriously (of course – we’re buying) and showing us a far greater proportion of properties that suit our needs, and a lot less of the rubbish that used to waste our time. I also know that every property we have bought has been bought below the banks valuation (each property is valued by the bank before they offer to finance it), and I can see that the agents and sellers are competing for our business on price and quality now. There are subtle changes, and a growing respect for our enterprise.

We now have 10 apartments in our group, and at least that many of you are waiting for one. I can not promise that Vicky and I will manage to satisfy all of your needs this trip, but we may. It is the end of the summer season. I will phone you as soon as the right one comes up, and I ask you to guide me now with what you feel you require if I don’t already know. In every case we search for the very best value for money that we can find, negotiate the price down if we can, and consider rentability which goes hand in hand with position as the paramount consideration. Prices of the apartments we have been concentrating on vary from 80 000€ to 200 000€. The exchange rate has moved in the Euro’s favour and now stands at about 65 pence, or 65(pounds):100(euros) versus 60:100 last May. Many analysts that I speak to and read believe that the Euro and property are good to be in, and that Sterling, $US, and the stock market are not so good to be in at present. Hard to argue with that.

For Zimbabweans I’m afraid news continues to be less than wonderful. Entenial Bank headquarters in Marseilles have ruled that Zimbabwe falls into a category of dicey nations, in line with international banking evaluations!! For anyone whose income derives from Europe or the UK, they will accept a 30% deposit, and finance 70% of the cost of a property. For those whose income derives from S.A., a 40% deposit is acceptable, and for Zimbabweans it is set at a 50% deposit. Sandrine has tried very hard to convince head office that we are not reliant on Zimbabwean incomes, have overseas accounts and security, etc., but their response is that it is generous of them to offer us 50%, as other banks will not, and I think there is truth in that. I believe we have no option but to accept their ruling, and I am personally not very inclined to shop around any further, although in theory we can. I would be nervous to highlight ourselves in any way.
Look, a higher deposit is not all bad, although I have been the one pushing for the maximum credit possible. The pressure will be less on you. Repayments obviously will be lower each month, and therefore surplus cash income more quickly attainable, and the likelihood of having to pour money in to cover the mortgage and other costs, taxes and levys, especially in the early months before rentals get going, will be reduced. Other conditions remain the same, with the interest rate at 4.1%, reviewable only once annually, and according to strict pan-European banking rules and formulae (they can as well come down as up), and the term remains at 15 years if you want that long. (We have all gone for 15 years so far.)

When we were there in May and June Vicky and I were told that the Casino at Palm Beach would be reopened shortly, but we were not really sure when that would be, and were reluctant to take the promise too seriously, and so never mentioned it to you as a possibility. To remind you – The front of Cannes is banana shaped, with the old port and city at left if we look at it from the sea. The glitz and festival hall etc. are in the middle, and the suburb of Palm Beach, which is charmingly quieter, with a village square dedicated to the traditional game of “boulle”, is to the right. At the tip is a Casino that was built at the beginning of last century, a truly historic landmark, which closed down 15 years ago. It has been maintained since, and used for conferences and so on, but fairly low key. Well, the Casino has reopened! I was delighted and amazed to find that it opened a month ago. It has a Lido type extravaganza show each night, a massive heated salt water pool is under construction, and goodness knows what else, but it is the centre of a new development. It is I think very good news for the value of property in Palm Beach where we have already bought 5 properties. I don’t know to what extent it will impact on the rural and traditional character of the Place de l’Etang, but I think not much, because I have seen that in the centre of St. Tropez “boulle” and the traditional life seem to miraculously coexist with the mega rich and their lifestyles. It’s part of St. Tropez’s charm. I have seen apartments in Palm Beach this trip and Vicky and I will have a good look again, but I think that area is in for a boom.

Our Website is up and running. Lao has done a fantastic amount of work on it, and built it in its basic form. It is not yet under the Azur-Accom name, because we have to fill in the blanks as it were. We need to photograph the apartments and write our promotional and descriptive material before we can put it into the public domain – or “launch” it. He has put in some hypothetical stuff and some imaginary apartments so far, so please go in and have a look. It is at for the time being, until we are ready. I am delighted with it I must say, and it really shows what we are going to look like.

Next week Vicky and I return there and on 15th October – two weeks today – Steve and Avril arrive to live in Cannes for good!! I have no doubt that you all join us in wishing them all the best for their new life in France and like us, admire their courage. It will be no mean adventure for them, filled with excitement and possibilities, but also new challenges, not least of all the language, and the beaurocracy for which the French are famous. They have been practicing their French for much of this year, and they go with the most positive attitude imaginable, and that alone will carry them I believe. The French are the most welcoming and friendly people, and I know they are going to fall among many friends, both old and new. Their stream of visitors from home will become a torrent as more and more of us choose to spend some time there, and already there is pressure on me to come up with dates for our first “owners jolly” in Cannes – next September sounds good. What do you think?

Steve has suggested that he and Avril might write a newsletter from time to time. They are both professional artists, and I know Steve’s writing and his humour well from three years of working together on CFU, and from some of his deeper writings too. (The most beautiful and heart wrenching account of an eviction from a farm that I ever read was Steve’s account of theirs, entitled “Surplus to Requirements.” It will surely be published one day, if Steve and Avril allow it to be.) I think Peter Mayall who wrote the best seller “A Year In Provence” had better step aside because here comes “Tales From Cannes”. You’ll see that a section has been allowed for it on the website, and I think it is something we will all look forward to.

Vicky and I are working on the best way to refurbish apartments. We are aware that each of us who buys one needs work done quickly to bring it up to standard, some needing more work than others. We want it done tastefully, and some of us would like to communicate with the people doing the work, and have our ideas and preferences respected and complied with. We also need the work done on time and without costing any more than it has to. How do we achieve all that when we are thousands of miles away, and in most cases haven’t even seen the place? We have ideas on this and hopefully solutions which I will enlarge upon in my next letter.

Accounting is going to be manual using a pad and column paper to start off with. Everything will be recorded, and Steve has a great deal of experience and the administration skills needed for the tasks he will be required to perform. Once we are running, we will look at the software which is best suited to our French environment, and best liked by our French accountants, and computerize before long. Ross and I had a very positive meeting last week with an accountant in Nice who raised no obstacles to our proceeding along the route we are on, other than the inevitable red-tape which we will deal with. Ross is himself a C.A. so I was particularly pleased that we could have the meeting while he was with me.

I want to run through the process of buying an apartment again.

* We decide we want to buy a property and make an offer.
* If the offer is accepted and a price agreed, I sign an agreement on your behalf. (A “compromise de vente”)
* Then I ask you to transfer by SWIFT 10% of the agreed price to the account of the Notary, which amount is held in trust until the final signing and transfer takes place. The purchase price agreed always includes the approx. 6.5% agent’s commission.
* From the moment I sign that agreement, either the buyer or seller may cancel the agreement for any reason within 7 days, and the deposit will be refunded in full. After 7 days that deposit is forfeited.
* Only one condition exists under which you may be refunded your deposit if you withdraw after the 7 day period, and that is if the bank refuses to finance you.
* We make application for finance, and the bank will have various things that they will need from you, like copies of passports, marriage certificates, a bank reference etc. You will be told exactly what you have to provide.
* A reply should come from the bank within 30 days.
* Once the bank have approved the loan you will have to sign an acceptance of their offer. (“offre de prêt”) This is fine done by fax.
* You then go to the French Consulate, or a lawyer, and sign a “procuration” or power of attourney in favour of the French notary, but he will fax you the procuration to sign. i.e. it’s all in French, and lengthy.
* You send that signed and certified procuration (which is OK on fax paper – it becomes an original once you sign it) back to the notary by hand or by DHL, not fax. That gives him authority to sign the final deed of transfer on your behalf.
* A signing date and time is set up, and you must pay the balance of what is due by you to the notary’s account before that date. It includes the balance of your deposit, and the approx 7% transfer duties, on the price agreed less the agent’s commission.
* At the signing, the notary and our agent represent you, and the seller and his agent are present. Signing takes place, cheques change hands, and our agent walks out with your keys.
* The flat is yours.
* Finally, once you have your keys, I will ask you to transfer 2.5% of the purchase price to my account – to cover our costs.

It’s not difficult. But it takes a couple of months, unless you are not waiting for approval of a loan (i.e. you are buying for cash) in which case you can cut a month off the time required.

We have established a very good relationship with a bank in Cannes (Credit du Nord), and the lady looking after us speaks good English, and is used to us foreigners now. She’s a honey. As soon as we start the process with acceptance of an offer, I will give her your details, and she will send you application forms etc. and open your account, which will become the account through which all your future transactions will channel, being debit orders for mortgages, payments for water, electricity, taxes, etc., and into which Steve will bank all rental income due to you. If you already have a bank, or for some reason prefer another bank, that’s fine too. (Entenial does not run accounts for conventional banking – they are loan specialists.)

A final word, regarding the management of our apartments. I said at the outset that we would need 20 apartments for Steve to look after to justify his existence in Cannes. That was at best a thumb suck, but I still think it’s not far off the mark. It seems we may have nearly 20 very soon, which exceeds my expectations by far. I have again had meetings with another management company (English run), and we are certainly in a position to be mutually supportive. It’s in all of our interest to assist each other at times, because the logistics are going to be the real challenge, and at times a headache. Things are bound all to happen at once sometimes and our learning experience will sometimes be hard. However we will learn “on the job”, and respond to whatever the need or circumstance is, and from my experience to date I don’t think it is going to be difficult to far exceed the quality of service which is the norm there – that being surprisingly shoddy. It may be necessary to employ someone else to help Steve earlier than we thought we would if the interest shown so far continues and more people want apartments, and equally if we start to achieve the occupation figures we are aiming for. Fortunately in a way the trough month in Cannes is November (before it hots up again in December, and then conference season gets going in Jan – May) so we may have a fairly soft landing, and a month or two to find our feet. I anticipate Christmas being very busy, and the start of the rush.

I look forward to hearing from you all sometime, especially if you are in the market now. I know some of you are just staying in the information loop and that’s great too.

Reminder of our dates: London 10th – 11th October
Cannes 12th – 30th October (Vicky)
Cannes 12th – 7th November (Guy)

Our laptop will be with us so we will be accessible on this e-mail.

Roving mobile – 00 263 11 202 193 – it does work, so persevere if you don’t at first get through.

Alternatively leave a message with Mira (speaks English) at Burger Real Estate – 00 33 4 93 38 50 33 and I will get back to you.

Best love and regards from Vicky and I.


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