PL38 – 28th February 2004.

Posted by admin in Property Letters | February 28th 2004

Dear All,

Another Property Letter in quick succession.

It is a little long, because I am going to encourage those who are ‘sitting on the fence’ to invest. I don’t normally nudge you, but for various reasons I feel I should this time.

There will be a summary of another couple of interesting properties at the end of this letter, in case you want to scroll straight to them. But please have another look at the properties I described in Property Letter 37. Apart from the Villa which is a very specific piece and is way out of the normal mould, the properties I have described in it are very good investment prospects which are unlikely to sit in this market for long.

Vicky and I leave Cannes to return to Cape Town in a week and return here on 12th April. I should try to get offers in on any of these before I go if possible although we do sometimes handle the whole negotiation from the Cape. I just feel happier if the ball is in motion before I leave. It seems tidier.


To understand property values and trends in Cannes I think it important for those of you who have never been here to be able to picture the geography.

The Bay of Cannes is about 2.5km wide with the Old Port, and the Old Town known as Le Suquet on the hill, at the western end of it. On the eastern end of the bay is the peninsula known as Palm Beach. The eastern side of the Palm Beach peninsula (facing away from Cannes) is on the Bay of Golf Juan and looks across the water at Juan les Pins and Cap d’Antibes with lovely views and beaches. That is the quiet side.

The Peninsula of Palm Beach is roughly rectangular and only three blocks (300 meters) wide and about six blocks long.

Cannes is a sprawling town made up of lots of little villages and suburbs spreading up as far as the eye can see and into the surrounding hills. However the part that concerns us is known as the “Banane”. It is the banana shaped belt of high value property which stretches from Le Suquet to Palm Beach, and for about 6 blocks back from the beachfront. The road that runs along the beachfront the whole way round the bay is the famous La Croisette.

Close to the Old Port on the Croisette is the all important Palais des Festival et des Congres. It is a huge custom made conference facility (which the Cadogan Guide to France describes as “Hitler’s bunker” – it is not very attractive on the outside I have to agree!) For the bigger congresses additional facilities are erected and dismantled again – enormous marquee tents stretching along the Croisette on the beaches which are decked, and serving mostly as hospitality venues for big companies and exhibitors. The organization and the scale of these things is mind boggling, not to mention the budgets!

Many of us will recognize the Palais from film and news reporting of the Cannes Film Festival each May. However it is a magnet for world and European conferences of all sorts.

Needless to say, accommodation is at a premium, and the closer to the Palais, the more it is in demand. Prices reflect this and the properties are more expensive the closer one is to the Palais, and so are the rentals. (Sea view also affects the price with a clear sea view adding 30% to the price of any property!)

Palm Beach is a 15 minute walk (or 8 minutes on the bus which runs every 15 minutes) through lovely gardens all the way along the Croisette, past beaches and harbours, to the Palais. It is also we are discovering the more difficult end to rent. What is happening is that the apartments in our group which are closer to town are filling first and the apartments in Palm Beach are catching the spill-over. That is the emerging trend.

Our personal position is this:
Vicky and I now have two apartments of our own in the centre and two in Palm Beach. (Of our entire group of investors combined, like ours, half of the apartments are in the centre and half in Palm Beach.)
We are not going to sell our apartments in Palm Beach and buy in the centre……WHY NOT?

I have been speaking to people and trying to sieve and glean from their local knowledge, their sense and savvy.

The central Croisette is saturated. There are 200 estate agents (they say), and no building taking place. There is no more space and what little there is, is stringently regulated, and this can be seen by a glance at the skyline. No cranes.

Palm Beach however is developing fast. It is the logical and only real area for the Croisette to expand into. It is also very beautiful, with beaches on both sides, quaint and charming restaurants and a village atmosphere. At its heart is Place de l’Etang where the locals gather every day to play “boulles” all year round and no matter the weather. A quick look at the skyline today shows 4 huge cranes – 4 new blocks going up! However, in defence of the development, the buildings are restricted to 5 floors and are being built in conformity with the character of the area. None the less 100 new apartments will be built in Palm Beach this year and 100 next year.
Last year the Casino de Palm Beach, a huge and wonderful old building built about 100 years ago at the very tip of the peninsula, reopened after 15 years of closure and uncertainty over its future. It is completely refurbished and drawing ever greater crowds, and increasingly hosting very big and important events and concerts. Next to it a seawater, heated pool and waterworld is being built and will open in 2005. Palm Beach is growing in importance and popularity and is not for long going to be the ‘forgotten end’ of the Croisette.

As things stand now a studio in the centre of Cannes costs what a one bedroom apartment costs in Palm Beach. Our rental rates reflect the same ratios. In the centre it is increasingly difficult for us to find any worthwhile property much under 6000€ per sq.m. In Palm Beach we are still able to find apartments between 4000€ to 5000€ per sq.m. But the prices are moving upwards fast. That is the reality.

For rentals, the centre is certainly easier and your investment is likely to yield a surer monthly return, and cover your mortgage more easily. Palm Beach may be a little more difficult sometimes, but we will continue to do everything we can to narrow the gap. Bear in mind that 2003 was our first proper year in business, and in 2004 we have a shop front in Palm Beach, and things are picking up for us all the time as we develop our markets and become known.

I am the proverbial optimist and I get into trouble (especially from my family!) for setting us all targets which are difficult to meet – but I truly believe that in 2004 we will meet our rental expectations, because the signs are there.

Also we are here, on the ground every day, taking the best care we can of the interests of ourselves and all who have invested with us. Especially for those who are continents away I think this is very important.

For capital appreciation, I think the Palm Beach investments are likely to perform as well as or better than those in the centre. My job is to find the best possible option for everyone who is interested in investing, and I do not ever recommend anything that Vicky and I would not buy ourselves if we were only able to. We see scores of apartments and pick the eyes out of what is on offer and have no regrets on what has been bought so far.

Once again, my personal optimism which is shared by many is undiminished. Our investments are demonstrably increasing in value at a very pleasing rate, and will continue to do so in my opinion.

Since we started buying for ourselves and others we have bought 22 apartments. They differ greatly in that some are in need of renovation and repair when we buy them and some are pristine, some are furnished and some are not, some are big and some are small. However all those factors do not enormously effect the per square meter price that we are required to pay for them, and the type of product we are looking at today is much the same as that which we looked at and bought 21 months ago. And we are no less discerning.

Here are some figures to think about:

o May 2002 – 7 apartments – 3 in the centre – average sq.m. cost 3112€
o November 2002 – 7 apartments – 5 in the centre – av. sq.m. cost 3308€
o April 2003 – 5 apartments – 1 in the centre – av. sq.m. cost 3619€
o September 2003 – 3apartments – 2 in the centre – av. sq.m. cost 4355€.
o In Property Letter 37 last week I recommended 8 apartments. The average per meter cost was 4824€. (Of course these have not been bought yet, and some reductions in their prices may be achieved to bring the average down.)

Is this a bubble? Will it burst?
You have to make your own judgment on that.
However I have said in previous letters –

o If the stocks market crashes and your investments with it, you can be left with nothing. If the property market crashes, the value of your property may drop, but you still have it! It does not go out of business or cease to exist.

o In the last 22 years in Britain (I don’t have European figures) property values have risen in 18 and dropped in 4.

o People in Europe have owned property and rented it out profitably for hundreds of years.

o The British have been great home owners for a long time whereas the French have been quite happy to rent. That is changing and the rapidly increasing demand among French young people to own their own home is a new and expanding phenomenon. The government is encouraging it, loans are easy to get and cheap, and the effect on the housing market is a steady increase in prices.

o Property prices here are still low when compared to the UK. (Bear in mind that in the ‘Banane’ in Cannes we are talking about some of the most valuable, prestigious, rentable and sought after real estate in all of France.)

This is a Quote from my ‘Summary’ document that many of you will have seen:
“It is a fact of Europe today that people are demanding more and more access to sunshine, wherever they may live and work.
The Cote d’Azur has superb beaches, a beautiful sea, a stunning backdrop of mountains and snow, and quaint and ancient villages boasting fabulous cuisine. It is only an hour and a half by car to some of France’s most famous ski slopes. What is not so well known is that 1.8 million business trips are made to the Cote d’Azur each year. There are year round congresses, conventions and trade fairs, and over 200 national and international professional events attracting 300 000 delegates yearly. The development and infrastructure to cope with this growth has been put in place over the last 20 years, and continues to improve. Cannes is undoubtedly the centre of it all.”

There is so much to think about, and we are talking about a significant investment for those of you who come in with us. It is important to have as much background and information as possible.

With very best wishes from Vicky and I,

Please remember that all the prices I give are asking prices and offers are often but not always acceptable. If you express an interest in any particular property then I can send you photos, and financials, and mortgage information etc. I just don’t burden you with it at this stage, and unless you ask for it.


***Super Croisette
Large 3rd floor Studio.
Situated on Rue Latour Maubourg just off the Croisette, opposite to and looking out at the Martinez Hotel. It has a good side sea and beach view.
38 sq.m. with a spacious balcony.
Asking price – 199 000€.
Price per sq.m. – 5236€
Super Croisette is a good and well maintained building in the centre of Cannes. One enters the apartment through a very spacious hall where the current owner has her desk and computer. Glass French doors then lead into the living room. Cream marble floors are throughout. Large sliding double glazed, double doors lead out to the balcony with a table for two and some views of the sea. The kitchen is well equipped with white cupboarding and wooden surfaces. There is a separate toilet, and an attractive bathroom with well lit mirror and basin and soft green tiling. The hall has a large double cupboard and the apartment has been very well kept and does not appear to need any work done.
The owner wants a sale quickly now and we feel she might be amenable to a reasonable offer.

***Palais Astoria.
3rd floor two bedroom apartment.
Situated on Ave. General Vautrin, one block back from the Croisette.
125 sq.m.
Asking price – 650 000€.
Price per sq.m. – 5200€.
This elegant apartment in a 1920’s building has been lovingly restored by its current owner, a Swiss architect. He has spared no expense to achieve the most wonderful and luxurious finishes throughout.
One enters the building through a hall which has hand painted murals, and the original concertina lift. On entering the apartment the hall has polished marble floors and beautiful hand painted wall paper. Immaculate! There is a double salon, with fire place and bay windows with double glazing, and a separate dining room with columns, which leads through to the salon. All have original polished wooden floors. The dining room and salon are lit by beautiful chandeliers and have hand made curtains. The chandeliers and curtains are included in the sale.
The main bedroom is spacious and looks out across a school grounds. It has a separate large dressing room. The second bedroom is smaller and would suit a single bed. Both bedrooms share the bathroom which has regency striped wallpaper, large basin and a Victorian bath. Beautiful! There is a second separate loo, again with regency stripes on the walls.
The kitchen has original wooden floors, and a retro feel. Stand alone kitchen cabinets are finished with generous wooden surfaces and open shelving, much of it glass. There is a small laundry, and a private balcony off the kitchen.
The apartment comes with a garage, and a cellar, satellite and gas heating.
The furnishing in this apartment is fabulous. He has taken so much care and the whole feel is luxurious and 1920’s elegant. Many of the decorations and furnishings reflect that era, and help build the feeling of originality. There are beautiful large Chinese carpets in the two main rooms.
He is prepared to sell it furnished as it is, but a price would have to be agreed for the furniture.
How can I best describe this? It is a very chic ‘pied a terre’, 100 meters from the beaches of Cannes and the Croisette, and close to the centre. I don’t know how we would rent it, as it does not suit the average delegate! It is for honeymooners or chief executives and millionaires who want luxury, or to make an impression.

Leave a Comment