Property Letter – March 15th 2005

Posted by admin in Property Letters | March 15th 2005

Dear All,

I am back in Cape Town for March and part of April, and I must say it lovely to be here after what seemed like a long winter of 2.5 months in the UK and Europe.

In my last two weeks in Cannes I came across a few really good apartments which I need to tell you about, but importantly they include a couple of smaller budget units. I wrote to you in February and two of the issues I feel are important enough to copy into this letter, to remind those of you who read them, perhaps quickly, and to recycle for those who may not have read them last time. This is what I wrote:

Lower Budget Properties of sufficient quality are increasingly hard to find and when we do find them they are often too expensive. Many people would like a smaller property to start with, or else their budget will not stretch beyond a small apartment and it is what they need. We find ourselves in a situation where we have “orders” and we search to fulfil them. Where we know what someone is looking for and his budget, and providing that person has some patience, in a few weeks or months we are normally able to get back to them with exactly what they need at a price that they can manage.

Capital Appreciation. The main reason for interest in investment property is always capital appreciation. It is nice to have a place to use sometimes for holidays, and it is wonderful if rental income can cover or almost cover the mortgage and expenses incurred through ow ning the property, but capital appreciation is what sets property apart for those who believe in it. So I applied to the “Chambre des Notaires des Alpes Maritimes” which is the Chamber of Notaries for our Department of France, for their statistics. Every property transaction has to go through a Notary so their records are complete and definitive. I have received a number of pages of records covering the period from the third quarter of 1998 to the second quarter of 2004, but what really interest me are the figures relating to apartments in Cannes specifically, as that is the area we have focussed on.
• Using the fourth quarter of 2000 as a base for the index ( = 100 ) they track each quarter until the second quarter of 2004 ( = 154.3 )
• This represents a steady increase in prices amounting to 54.3% over the 14 quarters.
• This also represents an increase of 15.51% per annum over the period.
That is official and verifiable, and I would be happy to fax or send a copy of the report to anyone who is interested.

Our Work in Cannes is to locate and evaluate property for investment. Vicky and I look at many, but only pick out those that we feel have something to offer the investor, and it is those that you hear about. It is hugely important to us that we get it right.

Is Cannes the Right Place? We have been buying there for three years now (34 properties) and we have no doubt at all that it is. We have spoken to hundreds of savvy people in and out of the business, and examined our operation in Cannes in comparison to the alternatives in France, in Spain, Portugal, the UK, and even Croatia. If we were to turn the clock back and begin again, we would choose Cannes.

The Investor Group is beginning to show some movement. As we come to the end of our first three years some investors are now selling their properties and buying another – thereby upgrading their holdings. They have seen an increase in their asset and are cashing in, and buying at a higher level in order to do the same again. Others are holding on to what they have got, and buying a second or even a third unit. There is no question that most of us would like to leverage our investment upward, to maximise it, and to make it work for us.

With kindest regards,

Guy.

SOME PROPERTIES TO CONSIDER: (Don’t miss looking at the bottom one)

Louis Grosso.
A two bedroom apartment.
Asking price is 380 000€.
57.15 sq.m. of living space (after deducting for cupboards and kitchen units)
It is on the first floor of a very good apartment block with Guardian.
Balconies at front and back – all rooms open onto them.
The apartment block is situated 50m from the Croisette and with a small sea view and a view of the Croisette. It lies just behind Port Canto between Palm Beach and the Centre of Cannes. It has a parking space in a closed car park. It is fully and newly furnished and equipped with all new appliances (and all are part of the sale.)
The kitchen is open plan to the living room, very modern, spacious and charming.
It has a full main bathroom with toilet, and a separate second toilet, and a second shower. The whole apartment was completely renovated in 2004. This is a prestige apartment a short walk from the centre of the Croisette and the Palais des Festivals. It is ready to rent with everything that is required, down to the knives and forks an d the pictures on the walls. Its position for festival and congress delegates and for holiday-makers is excellent.

Brieux – Canto.
One bedroom apartment.
Asking price is 260 000€
52 sq.m. of living space.
It is on the second floor of a good building with Guardian.
Spacious balcony overlooking a quiet French neighborhood in front, and another sunny balcony off the bedroom behind.
It is situated in the next street, behind Louis Grosso(above).
This apartment is excellently placed for congresses and for holiday guests, and would need a coat of paint, perhaps some minor modernizing, and furnishing throughout.
The kitchen is separate and modern.
There is a bathroom and the toilet is separate.
It does not have dedicated parking, but the area is quiet and street parking is not difficult.

L’Atlantide.
Studio apartment.
Asking price is 150 000€
29.5 sq.m. of living space.
It is on the 5th floor of a very good 6 storey building with Guardian.
It has an 8.5 sq.m. terrace facing west. It is situated in the little suburb behind the Martinez hotel – very accessible and excellent for delegate guests. (We have many apartments in this area) The apartment needs some work – electrics are modern and repainting is included in the price, but the kitchen would need complete renovation.
Floors throughout are fine, but bathroom and separate toilet need stripping and retiling/repainting. A cupboard in the entrance hall needs to be replaced with new.
Parking is collective to the building.

Victor Cousins.
Studio apartment.
Asking price is 120 700€.
27 sq.m. of living space.
It is on the 3rd floor of an apartment block in the centre of Cannes. It overlooks, across low rooftops, the Rue d’Antibes, and is a matter of meters from the Croisette and the five star hotels. BUT it is right next to a construction site for the next y ear. There is good news in that – what is being built is a very smart shopping and eating complex which will lead directly from the Rue d’Antibes towards the Croisette, in the same way that the shopping mall at Gray d’Albion does (for those who know Cannes). So, the area is undergoing transformation which although noisy at present is very good for the future.
From a rental point of view it is excellent, and even whilst construction is ongoing, it is rentable to delegates who do not spend the days in their apartments anyway.
The apartment needs renovation entirely, and the kitchen to be broken out and opened up to the living room. The floors are good quality tile and need no work.
Good little investment in my opinion.
Rue Lacour 1st Floor.
Two bedroom apartment.
Asking price is 230 000€.
56 sq.m. living space.
It is on the first floor of a very good apartment building with a Guardian, in which we already have two investor/owners.
The first floor has no balconi es or terraces in this building, although the apartment is very light and bright.
It is situated (like L’Atlantide above) in the suburb behind the Martinez and is therefore well placed for rentals.
It is adequate as it is and could be prepared for rental with a coat of paint and furnishing, but it would benefit from being raised to a higher level with a renovation.
The kitchen is equipped and there is one bathroom and a separate toilet.
There is also an underground parking wh ich is a huge advantage in this part of town.
The price makes this apartment very attractive, and I am fairly sure it will not be on the market for long.

Rue Jean de Riouffe. (This could be a joint venture)
4 studio apartments
2 one bedroom apartments
120 sq.m. of attic to construct another two one bedroom apartments, or one two bedroom apartment.
Total asking price is 1 060 000€.
Living space is 220 sq.m. and the 120 sq.m. of attic space is additional. Total space 340 sq.m.
Each apartment is self contained, light and spacious. And all are behind a common front door (so each apartment has a key to its own door and one to the communal front door). Every apartment has been totally renovated – modern and efficient – and is fully furnished and equipped. Floors are tiled throughout, and the ceilings are old style wooden beams with a great deal of charm and character. Each apartment’s electricity is metered individually. It is an extremely smart setup, custom made for rentals an d resembling an all-suite hotel. Each suite has beds, kitchenette, a table and 4 chairs, 2 comfortable arm chairs, T.V. etc. The attic is tall (headroom) and has windows, and planning has been granted for the completion of the project – the creation of a large apartment, or two one bedroom apartments in that space, and the plans for both options are available.

Where is it? As you walk out of the front door onto the street, you turn left and walk the 100 meters to the front door of the Palais des Festivals. Tur n right and it is 50 meters to the Rue d’Antibes. It is as close as you can get to the centre of the Congress and Festival activity of Cannes, and the most commercial property I have ever seen offered. And the apartments are quiet, as Rue Jean de Riouffe is a tiny street next to the cathedral. Church bells might be the biggest noise (on Sundays).

I throw this out to gauge interest. Perhaps someone will want the whole project – I would not hesitate to recommend it. Perhaps I will have a few responses from people interested in forming some sort of joint venture. I await your reactions and when I have them we can plan the next step. These apartments should achieve as high occupancy as it is possible to achieve in Cannes. What do you think?

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