Property Letter: June 29th, 2006

Posted by admin in Business, Property Investment, Property Letters, The Companies, The South of France | June 30th 2006

Vicky and I will be in Cape Town for the month of August and I hope we will be able to see some of you there.

Cannes is amazing this year.
I suppose it is inevitable that we would feel increasingly secure in our environment, and we have been here for over four years now – we’re no longer “new boys” on the block.

What is it that’s so good?

*Most importantly Vicky and I became grandparents in May, for the very first time! Lao and Katherine are doting (if slightly sleepless) new parents, little Noah is an angel, and for us to be able to be close to them is very special.

*On the business front demand for property remains very strong, and we are not finding it easy to find the properties we need. That, on the face of it, seems to be good news for owners (which it is) but not such good news for prospective owners. In fact we are searching each day amongst what is available, and have a very attractive selection to offer (see below), and I must add that we have been able to match some lovely apartments to very happy investors in the last couple of months.

*Rentals have never looked better. Lao has put a huge amount of work into it. It is a bit like growing a crop; it takes time to bring it to maturity, and a great deal of care, but if handled properly the result can be very rewarding. Resolutely he has built his market, and his excellent website is attracting increasing numbers of happy guests. The standard of the apartments and villas he has to offer is slowly improving, and his client base is expanding. He has been able to forge a couple of partnerships recently, the most important being a contract with the main organizer of all the major festivals and conferences here. It’s taken him two years to get it and as of right now we are one of only two official suppliers of accommodation, bannered and connected on their site, and we are very excited about it. This alone will improve occupancy for all of us investors in the year ahead. His team is motivated and efficient, and I think he’s done a great job, and exhibited patience, skill and maturity in a big and ruthless market. He has carved a place in it for all of us, which grows by the day.

Who does what?

Some of you ask how we are structured.
Simply put we are inter-related, while allowing each other the freedom to look after our own particular link in the chain. By so doing we avoid a situation of “too many chiefs and not enough Indians” – and it is more efficient.

Vicky and I concentrate on investors and owners and their needs, and ongoing administration of their very precious investments. We work alone under the banner of Azur Accom, but liaise closely on the identification and purchase side with our partner Nathalie of Azur Eden.

Lao concentrates on marketing for rentals and focuses on guests under the Azur-Online banner. He has Lizzie working with him on the marketing and bookings side, while Jacqueline and Emmanuelle (who trade as Jem Cannes) control operations, which in turn sub-contracts out the cleaning and laundry and minor maintenance.

No single part of this chain is easy to manage. Each throws up challenges most days, but we all support each other, and we’re getting quite good (though I say so myself!), and everyone is a winner, from the happy investor/owner, to the happy guest, and of course, importantly, the happy team on the ground.

Extracts from an article in the Financial Times.

Earlier in June the Financial Times (U.K.) carried a glossy colour supplement which included two full pages on Cannes under the headline:

CANNES.

Lords, maharajahs and, more recently, movie moguls have made this jewel on the Cote d’Azur home but, as Margaret Kemp discovers, the city has lost none of its flair for Gallic good things.

With apologies to Margaret Kemp and the Financial Times, I will quote just a tiny bit of her article:-

Destiny brought Lord Brougham, a former Lord Chancellor of England, to Cannes. In the winter of 1834, traveling to Italy by sea, he was unable to continue his journey via Nice due to a cholera epidemic. Where to go? His Lordship’s forced stopover was at the tiny fishing village of Cannes. Brougham was enchanted and, rather than finish the journey, he bought a plot of land on which he subsequently built the Italian-style Villa Elenore Louise. He wrote home: “enjoying the delightful climate…the deep blue of the Mediterranean glimmers before us. The orange groves perfume the air, while the forests behind, ending in the Alps, protect us from the North winds.”

The Cannes surveyed today by the bronze effigy of Lord Brougham – a tribute erected next to the Town Hall by the city fathers – has come a long way from that sleepy fishing village. This is a city that has nurtured the world’s most famous film festival, and now welcomes pitchers and deal-makers to a string of lucrative gatherings, not always of such glamorous status. Its once forested hinterland is home to some of France’s leading aerospace industries, and a thoroughly urban skyline dominates the bay and the red-tiled roofs of the old ports at either end. Today’s Cannes is a city with attitude and the perfect place for latter-day lords – and their ladies – to indulge in a long, luxurious weekend of unbridled Gallic glitz.

Mme. Kemp goes on over the next couple of pages to describe in detail many of the highlights which Cannes has to offer, and finishes with:-

As you breathe in the scent of the mimosa and gaze down along the Croisette, you can only agree with Jean Cocteau that Cannes is “Paris by the sea”. Life may be a beach elsewhere, but here it is a festival.

The property market in Cannes today:

I have the annual report on the property market in “Nice Cote d’Azur” (our region), released by the Chamber of Commerce and Industry in Nice.

For the politicians it is a hard report to stomach, and for the salaried person in this region it is hard to buy or rent a home. But for us, the investor, it says that the laws of supply and demand are at work as they should be, and property in this highly sought after part of Europe is and will remain very valuable.

The report covers all transactions and movement in the market for the year 1st April 2005 to 31st March 2006 and it is accompanied by statements from various officials and politicians, planning and regulatory bodies, and a top banker.

Please remember that politically the approach is a sociological one, and the need for affordable housing for the people of the region is the main concern. Therefore escalating property prices are seen as a problem, of course.

Bottom lines:

*Across the region the average price per square meter of sales rose from 4412 euros to 4836 euros. That is an increase for the 12 months of 16.76%. (Please note that the average includes everything from the Croisette penthouse to the crowded flat in the tenement block in the back of Nice.)

*The “delai d’ecoulement” or the average time between a property coming onto the market, and its completion of sale is a very short 8 months.

*In the “Secteur Cannes” (which includes Cannes, Le Cannet, Mandelieu, Mougins and Theoule sur Mer,) studios cost an average of 4659€ per sq.m., one bedroom apartments 5065€, two bedroom apartments 5191€, and three bedroom and above 5318€. The overall average price of transactions in the Cannes sector in the 12 months was 5264€ per sq.m., an increase of 13% on the previous year.

In the introductory paragraphs to the report it is noted that the only way The Chamber can see to halt the spiral of price increases in the region would be to release large quantities of land for construction, thereby increasing supply, a scenario which they admit is unlikely, and impossible to foresee.

I think it worthwhile to translate the report to The Chamber by the Director of a leading bank.
He says:

“Broadly we can consider that all the good intentions put together have not managed to limit the perverse effects on a market where supply is insufficient.
Some remarks to illustrate this:
* During the year sales and properties coming onto the market have stagnated but the “delai d’ecoulement” (rate of distribution and sale) is still too rapid.
* In the same period the higher priced bracket at over 4500€ per sq.m. represented 63% of properties coming onto the market, but in the last quarter that price bracket accounted for 69%.
* Against all technical logic the bigger properties, as a result of their obvious rarity, demand a higher price per sq.m. than the smaller ones.
* The resale market no longer manages in its role of regulating and holding prices at a level.
* In this context the efforts of the banks to finance clients to their limit, in spite of offers disconnected from financial reality, have forced a slight increase in rates.”

Please find below a selection of available properties.
But also, please don’t hesitate to contact me directly. What I describe in this letter might not suit you, or your budget. We can talk about it, and if I know what you need it helps me too.

With kind regards,

Guy.

Some Properties to Consider.

Studio Apartments – Palm Beach.
*28 sq.m. apartment – 146 000€ (needs some renovation)
*22 sq.m. apartment – 143 000€ (ready to work)
*38 sq.m. apartment – 190 000€ (needs some renovation)
*26 sq.m. apartment – 160 000€ (ready to work)

Studio Apartment – City Centre.
*30 sq.m. apartment – 180 000€ (great position – ready to work)

One Bedroom Apartment – Palm Beach.
*39 sq.m apartment – 265 000€ (needs some work)

One Bedroom Apartments – City Centre.
*37 sq.m. apartment – 310 000€ (great position – ready to work)
*55 sq.m. apartment – 485 000€ (fantastic position – beautifully finished)

Two Bedroom Apartment – Palm Beach.
*60 sq.m. apartment – 375 000€ (ready to work)

Two Bedroom Apartments – Near the centre.
*65 sq.m. apartment – 350 000€ (needs some work/painting)
*68 sq.m. apartment – 480 000€ (prestigious property)

A Loft in the OLD TOWN – ANTIBES:

When I say a “loft” it is because that is what the French people refer to it as. In fact it’s on the first floor of a very, very old building. I have only been there once and felt as if I was stepping back into a time long before the French Revolution, and I am sure I was. The owners have been there for a few generations, and the seller who is in her 90’s is very ill – it’s definitely a “forced” sale of circumstance. Her daughter tells me the building dates to the 16th century, but I’d need to check that.

It is in the heart of the Old Town, under the ancient walls –Les Ramparts – that have protected the City since ancient times (Antibes was an ancient Greek outpost and important port before the Romans). The ramparts still dominate the town today, as you can see from any postcard! A tiny street, too small for a car, ends in an ancient door which opens into a wide sweeping stairwell. Up the single flight of flagstone stairs, with heavy blackened wooden beams, alcoves and murals from various times is a landing and the entrance to a living room which is as if from a movie. It is huge – reminiscent of a tavern, with a wonderful wide fireplace, supporting pillars, and a low roof of a mass of old and well preserved wooden beams – higgledy piggledy and in all shapes and sizes. The floor is of original flagstones and as worn as th e stairs are, and the wall panels and doors have been the tableau for an artist to paint life-sized iconic scenes, probably a hundred years or more ago. They are beautiful. The walls are half a meter thick, plastered over time and again and whitewashed between the pillars and beams. It is quiet as there is no traffic, but the view is mediocre over low old-town rooftops, although the window from the main room looks out over a garden, with lemon trees, olives, and birds.

Once out of the main room (which has not been spoilt) it’s a disaster of mis-managed and cut price renovations. However, the space is there to do so much – perhaps 3 or 4 bedrooms, bathrooms, and an improved kitchen. Or retain and renovate the existing separate one bedroom rental apartment adjacent, and create a lovely two bedroom apartment with the “tavern” at its centre.

I have yet to get its dimensions but I estimate that we have a total floor space of about 120 sq.m. and maybe more. I also have yet to get the price, but believe that it is in the 300 000’s which is cheap for any space in Antibes, let alone with such history. Vicky and I hope to visit again this week or next, and get more detail (and some photos) – but for the time being it is not on anyone’s books for sale. We have exclusive access.

It is not in Cannes so is not part of our business rental opportunity, however, in Old Town Antibes there is a vibrant local and holiday community. It’s a very popular place, so rentals are possible on short or long term, especially if a separate apartment forms part of the whole. However, this property deserves someone who has a passion to create something special, either for resale when it is done, or for them, in combination with part rental.

Please get back to me if you are interested in this or know someone who might be, and we will take it from there.

Petit Juas – two bedrooms.

In my Property Letter of 28th February I detailed this apartment (copied below). We had two people extremely interested in it at the time, but for various reasons the sale fell through, and the apartment went off the market. The owner lives in it and is fairly relaxed about the sale. On enquiry she is still prepared to sell however, but three things need mentioning.
1. The price has gone slightly up to 381 600€ and is not negotiable (contrary to what I suggested in February). It is the “negotiated” price.
2. The roof of the building is being renovated in October 2006, and the cost of the work has been covered by the seller. The apartment therefore comes with a new or renovated roof.
3. The renovation of the common parts and stairwell which is needed was delayed in favour of the roof, but has been placed on the agenda for a decision at the next general meeting of the co-proprietors. It will be to the account of the buyer when it happens, but the cost is not great.

Price 378 000 euros……..(now changed to 381 600)
Living space 63 sq.m. on 3rd and top floor.
Huge (by French standards) open and lovely rooftop terrace of 25 sq.m. with a barbecue.
Aspect – almost 360 degrees – east, south and west.
This lovely old house has only 3 apartments in it – with shops (currently unoccupied and a bit run down) on the ground floor, and an apartment each on the first and second. The two bedroom apartment on the roof has its own entrance on the second floor, and the staircase leads up directly into a spacious living room with wooden beams, interesting shapes and angles, big windows, and an old and working fireplace. From the living room a short passage leads to a bathroom with an attic-type bedroom on each side of it. They are spacious, light, and well supplied with cupboards. Also off the living room are a separate toilet, a kitchen, and big glass doors to the sunny terrace which is quite charming with barbecue, lovely old plants and lots of space.
This apartment is a “coup de coeur” – one can fall in love with it.
Its position is just off the centre of Cannes – quite close enough to be considered “Cannes centre” from a rental point of view – no more than 10 minutes walk to the Palais des Festivals.
The garage is large and enclosed and private, just across the street. It is a major and valuable asset in its own right in this part of town.
I will send some photos with pleasure.

And finally for something that has just come in – we saw it yesterday for the first time!

Beautiful – Luxury Apartment – Cannes Eden.

One bedroom.
Price 550 000 euros.
Living space 70 sq.m.
2nd floor of 3.
Beautiful panoramic and utterly private balconies.
Garage and cellar below.
Magnificent swimming pools (choice of two) and beautiful expansive gardens. Tennis courts.

This spacious one bedroom apartment was bought off plan by an Italian couple who have used it for their holidays and loved it since it was built in 1988. It is in one of the largest private residences on the Riviera, covering 23 hectares of prime sea facing hillside. The buildings of the development are discreetly spaced so that it is almost impossible to see one block from another, and the blocks themselves are small and low and understated. The gardening is lovely and the facilities such as tennis courts and the two pools (which have to be seen to be believed) are beautiful.

The apartment itself has been built to the highest specifications with Italian marble kitchen and bathroom surfaces, and tiles, and marble floors in the 40 sq.m. living room. The balconies look east and south west and are so private that one could spend the day in the nude (if one wanted to) and nobody would be any the wiser .The sea views are uninterrupted from the Isles de Lerins and Palm Beach peninsula in the west to the charming seaside towns of Golfe Juan and Juan les Pins, and the west coast of the Cap d’Antibes in the east.

The address is very exclusive and has played host to Sharon Stone and many other discerning visitors to the area, and the apartment itself overlooks the sprawling red roofs of the villa of one of the Princes of Saudi Arabia, and just below that running down to the sea is the King’s private retreat.

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