Property Letter Sept 27th 2004

Posted by admin in Property Letters | September 27th 2004

Dear All,

I have not written for a while for a couple of reasons. Although the summer has been busy for us, generally businesses on the Cote d’Azur almost close as key personnel head off on holiday making it hard to get much constructive work done. Secondly there is remarkably little on the market!

All agencies in Cannes are finding that it is very difficult to find interesting new properties for sale and properties that do come on the market are often priced too high for us. Anyone visiting Cannes now will find a conspicuous absence of “A Vendre” (For Sale) signs hanging from apartment railings. We are expecting a few more to come on to the market in the weeks and months ahead, based on the assu mption that people have been holding on to them for their own use or for rentals during the summer. But prices continue to creep upwards.

Rental trends

We started in Cannes over two years ago with ideas based on reading, and on knowledge we could glean from people we spoke to. Our experience on the ground is changing the way we view the rental market.

Cannes is a very different market to cities elsewhere because of the people who visit. It is expensive here, and the very essence of Cannes is showy. Its name is synonymous with showbiz, it is the heart of the Riviera, and people come here to see and be seen. It could be said that “image is everything”. (All this makes it sound false, but in fact it has all sorts of appeal, being safe and clean, the weather is fabulous, the sea is beautiful, and it is surrounded by two thousand years of history. We must not forget that the food and wine are some of the best in France too. So it is not just a playboy destination – it is far more than that, and we relative newcomers are learning to love it!)

From a rental point of view we have found that there is a greater premium on quality apartments with a really superior finish than we would ever have imagined. It is often not sufficient to offer somewhere clean and decent to sleep and we are faced with ‘disappointment’ if the apartments we offer are adequate, and ‘delight’ with apartments that are finished to a very high quality. They may be more expensive to the guest, but it is these apartments that are seeing better bookings. The quality is recognizable on the website too, so just a few of them attract nearly all of our enquiries. Unfortunately it costs money to achieve a stylish finish. But on the other hand it is also true that the stylish finish attracts a selling price higher than the ordinary finish, and where people have spent more, I am confident that their investment will be rewarded in the end.)

We are looking for the next few months at the longer-term rental market as these fall outside the main conference season. So for some apartments we are signing four or five month contracts from September to Jan uary or February. That is the quietest time in Cannes and it is making sense in many cases to take a smaller monthly rental for that period rather than risk the vagaries of the short-term market. Some owners are opting for the security of year round rentals, and that is yet another option.

We continue to develop our short-term rental market in every way possible. Our reputation grows and our website draws in more and more short term rental clients from around the world.

The essence as I see it now:
o I have great faith that property in Cannes is an excellent investment and values rise steadily.
o We continue to search out the best of what is available from hundreds of properties that we see.
o Seasonal or short-term rentals will work increasingly well for the majority of the year and we continue to market them energetically.
o Longer-term rentals are a good option for the months October/November to January/February, and there is a demand for it. They may well form part of an overall strategy.
We are finding that the one bedroom and two bedroom apartments are doing well and some cases better than the smaller studio apartments, and the better the décor and quality of the finishes in the apartments, the better they are renting. This is contrary to our expectation that the most viable units were going to be the smaller ones, and that one would do well with economy finishes. However the increase in value of the smaller units matches the increase in value of the larger units, and they do continue to be rentable. They are a good way of getting a foot in the door of the vibrant property market here.

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We have a few interesting investments available now. However my normal format – writing a fairly detailed summary of six or ten apartments of varying prices and qualities, may be boring for many of you. It also takes quite a long time to do, and I am not sure that people really read them so please tell me if I am wrong and if you find that format interesting or a valuable tool. I will happily go back to it.

You need to let me know the level of your interest, because there is such a huge difference between products. If we know what you are looking for, and if you are patient, we will find the right thing for you – and we will never knowingly recommend something to anyone that is not a good investment.

In the meantime, we have: –

Studios –
Absolutely nothing that I can recommend right now, which does not mean there will not be a winner tomorrow.

One bedroom apartments –
o One is right on the Croisette with a partial view of the sea and a wonderful position. Spacious and good condition but the asking price is very high. An offer slightly below 400 000€ might be successful.
o Another is just off the Croisette, quite a bit smaller but very well finished and half the price.
o A third is between the Centre and Palm Beach, so it is a bit further out, but lovely with a very good balcony and aspect. It is a super apartment and not a bad price at 250 000€ and without any renovations to do. Once again an offer might be acceptable because there is a human factor in this one and the family need to sell urgently.
Two bedroom apartments –

o A beautiful apartment in Palm Beach, which has been on the market before, then was withdrawn, and has just come up again. It is a great rental and holiday prospect with its own garden, and needs nothing done to it. 405 000€ is the asking price.
o A lovely apartment close to the centre in a block with well kept gardens and pool. It has just come on the market and the price is 400 000€. Would do well to have a coat of paint and a general freshening, but no major work required.

Three and Four bedroom apartments –
We have some good apartments in this category, and some which are absolutely stunning.

Villas –
o We have some wonderful villas large and small, but one especially is magnificent. It is 600 sq m. of living space; marble floored, with 185 sq m. of garages and outhouses, and a separate two-bedroom cottage for the ‘gardien’ and his family. It has a big garden, a pool area and a fabulous view.

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Please do not hesitate to contact me for any further information you may want or need and I will get back to you as soon as possible with it, and if you are actively looking to invest, give me as reasonable a guideline as you can as to your requirement – including your price range.

For those of you who are new to my Property Letters, I hope you have seen a ‘Summary’ of our business here. If not please let me know and I will send one to you. These occasional letters deal with sel ected topical aspects of the property market and highlight them – I try not to be too boring or repetitive!

Price guide today (very approximate):

Studios in the centre – 140 000€
Studios in Palm Beach – 130 000€
One bedroom in the centre – 280 000€
One bedroom in Palm Beach – 250 000€
Two bedrooms in the centre – 450 000€
Two bedrooms in Palm Beach – 420 000€

With kind regards to you all, and please stay in touch,

Guy

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