Property Letter 60

Posted by admin in Business, Property Investment, Property Letters, The South of France | October 13th 2006

Property Letter – 8th October 2006.

Dear All,

(Please scroll down if you want to get straight to the « Properties to Consider » at the end.)


It seems a long time since “Property Letter 1” which was sent to about a dozen people on 17th April 2002. Vicky and I and the family had been out of Zimbabwe for less than 4 months! The March 2002 parliamentary election had been violently orchestrated and stolen again, and farming in Zimbabwe seemed not to be an option for us anymore. With that we decided to start again – in real estate in France.

This is the 60th Property Letter and goes out to over 300 people around the world. A 60th seems worthy of a small celebration, so perhaps Vicky and I will open a special bottle with family when the opportunity presents itself, to toast and thank all who have supported and encouraged us!

Hopes and plans for the future.

The City of Cannes is planning a celebration for the 60th Cannes Film Festival next May. By all accounts they will be pulling out all the stops, so it will be one to witness, and I look forward to being a part of it. We hear that they are also working hard to lure numerous other world events to Cannes in the year ahead. There are hugely ambitious programmes including the renovation of the entire suburb of La Bocca and the building of a world class “Technology Park” there, and all that goes with it – schools and universities, office complexes, research facilities, conference and exhibition space, etc. All this is very encouraging for Cannes and for the region.

Included in the plans for the future is to try to get GSM back to Cannes! It was our second biggest event after the Film Festival, and a year ago after much politicking and huge payouts from Barcelona it moved there in March 2006 on a 3 year contract. Everything we hear from people involved indicates that the delegates themselves are not at all happy and want to come back to Cannes. The organization and catering was disappointing, but most of all, transport was a nightmare. Almost nobody could find accommodation near to the halls and centres of business, so commuting was the only option, and a very poor one. Our hope is that GSM will be back in March 2009.

What we do best.

Cannes is dedicated to making the events it hosts a pleasure for those who attend them, and the best possible for business (and huge amounts of business are conducted at these conferences). The beauty is that it is a small, safe and beautiful town, and every delegate should be able to be accommodated within a 15 minutes walk of the Palais des Festivals which is the centre of it all. The Film Festival sees up to 70 000 visitors to Cannes for the two weeks, and the atmosphere is vibrant. We seldom hear a complaint – everyone is having too much fun.

However Vicky and I had a meeting with one regular delegate last time we were back in Cape Town who said that he doesn’t come to Cannes for the food. It is disappointing! That is such a shame because some of the best food in France is on the doorstep (but not necessarily on the Croisette – least of all during Film Fest!) I will give a bit of guidance to visitors in future – and try to direct them to wonderful places to eat and relax, very close to the centre of Cannes, and a few which are only a few minutes away by car or taxi. I will try to ensure that all the delegates passing through our offices get a list of restaurants worth enjoying when they arrive.

Moderation in everything, including moderation.

(I don’t know the writer of this piece, but thanks to him for an interesting and amusing read, and thanks Maurice for forwarding it to me.)

For a lighthearted discussion over dinner the conversation had suddenly taken on a darker tone, one that even a few good bottles of Bordeaux could not lighten.

We had reached this point because I had been accused by one of my longstanding friends of being far too cautious when it came to property investment.

“For someone who is a keen property investor you spend an awful lot of your time telling everyone to be cautious about this, that, and the other”, he jibed.

The point was well made – albeit somewhat brutal, I thought.

Over the last ten years, property has doubled or trebled in value depending on where you bought. Whether you are a good investor or a bad investor, you either made a lot of money or an obscene amount of money.

“Where is the risk?” my friend continued. “Most of my investment property is now worth three times what I paid for it, and a lot is worth even more. Sure I expect there to be dips but I will never see a day when my property is worth less than I paid for it. On top of that, some kindly person is paying rent into my bank account every month. Heck, if property becomes unpopular there will be even more people wanting to rent and that can only push prices even higher”.

Then comes the bit when the room goes a bit quiet. My guest sits there with a smug victorious look on his face and every one turns to me as if to say, “Well he’s right isn’t he?”

Well, yes he is right. I would have made a lot more money if every time I had bought investment properties I had simply bought twice as many.

But that’s not my point, for two very good reasons.

When you first started reading this I told you that fear was the one thing that would hold you back more than anything.

Property costs a lot of money and the numbers you are dealing with when you become a property investor have an awful lot of noughts on the end; all very scary for the novice investor.

But there is an obverse to this story as well.

When you start making money these numbers suddenly become very insignificant.

When you have made a million then a £200,000 investment is not in the slightest bit worrying. Now, to some extent that mentality does work in your favour. You start to think BIG, possibly for the first time in your life.

You can never make big money when you are always counting the pennies. The concept of looking after the pennies and the pounds will look after themselves has never worked for me. Look after the pennies and you will end up with six hundred and thirty two pounds and ninety-seven pence. You will be completely anally retentive and even if you did ever make any real money, which you won’t, then you won’t know how to spend it or enjoy it.

To make big money you have to think big.

The down side is that you lose your sense of caution; you end up throwing the baby out with the bath water. Which brings me to my second point and that is you should never make the mistake of making your next deal as big as all your other deals put together.

This happens so often in life.

There are always stories of people who went for one last deal and blew the lot. I always wondered how anyone could do such a thing. How can you blow the lot? How can you be stinking rich one minute and a complete pauper the next?

There’s nothing wrong with going for one last deal but it should never be so big that it can undo everything you have ever built in your life up to that point.

Herein lies the difference between the two attitudes. If you go for broke it’s a double or nothing bet. In my world that is not a bet worth taking.

OK let’s now bring this discussion round to those who are not making a million-pound decision. How does the argument suit your current attitudes to money and risk?

Well, I have always said that investors should take both a short-term view of property and a long-term view of property. The long term-view is that property could make you an awful lot of money. The short-term view is that you need to survive the ups and downs of the property world long enough to ever see those profits.

My methodology does reduce your potential profits, but it also reduces the risk. In essence it ensures you will never be knocked out of the game.

Back in the nineties, many people stretched themselves financially and then found they were unable to meet their commitments. That’s game over, do not pass go, do not collect £200, and that is not where we want to be.

Yes being cautious does hit your profits but at least you are still a player and at least you are still making money.

Property investment is not a way of fixing your financial problems if you are broke, although I do not dispute that it has worked for many people in this category. If you want to play the property game you need to have access to some money in the early years not only to get the deals started but also to see you through the bad times. There is absolutely no point going on a crusade to become a property millionaire if the first month you are without a tenant you can’t pay the mortgage. You just end up looking stupid and losing money on the way through.

The good news is you don’t need a lot of money to make the numbers work so if you can’t afford to do it now stop spending, start saving. And come back to the market when you can afford to do it. Yes I know the market will probably have moved in that time but you can’t do this if you are counting every penny.

The French and their Bureaucracy!

It would seem sometimes that the French don’t see the point of doing something the simple way if a more complicated way can be found! Their reputation is well earned.

But consider this:

Zimbabwean investors have been able to use their (appropriated) farms and properties in Zimbabwe as surety against a French mortgage. Try that in the UK!

They have been able to use their Zimbabwean tax declarations (albeit that they are generally a year or two out of date) as proof of income.

We are able to open non-resident bank accounts for people when they are here, or in their absence, with ease. I know it is a major undertaking to open an account at all in the UK today, and shifting funds around has become very difficult.
Mortgage interest rates are at 3.4% now on loans of up to 25 years.

Monthly repayments are fixed for the duration of the loan making budgeting very easy. If there is an upward shift in interest rates the duration of the loan is extended, and the reverse applies, so the duration is reduced if there is a downward shift in rates. The term of the loan may not be extended by more than 20%, meaning that a 20 year loan can go to 24 years and no further, and the maximum permissible increase in the rate is 1.5%. At the present rate of 3.4% therefore, the maximum rate possible if rates go “through the roof”, is 4.9%.

There are ways to plan for, and to largely avoid inheritance taxes, capital gains taxes, and death duties.
Much of what is seen as unnecessary red tape is actually painstaking attention to detail (in disguise) – the aim of it being to ensure that everyone is protected. The seller, the buyer, the tenant, the neighbour (and his dog)!

Therefore I would say that for all of their bureaucracy, which we are learning to manage with the help of our very patient and loyal notary, accountant and advocate, the French have much to offer the would-be investor.

Out of interest.

Exchange rates today:

1€ = 0.67 GBP

1€ = 1.27 US$

1€ = 10.08 ZAR

1€ = 1.71 Aus$

1€ = Zim$ – too many noughts for the page.

Interest rates today:

3 month Euribor = 3.45%

12 month Euribor = 3.76%

Lending rate today:

Standard variable rate mortgage = 3.4%

With kindest regards to you all,


Some Properties to Consider:

Please remember, in every case the prices mentioned below are “asking” prices. Some are a little negotiable, and some are quite negotiable. I prefer that you look at the apartment and if it pleases you, then we look at what we can get it for, and how we can finance it. We don’t generally get away with ridiculous offers or even try them, and none of the prices below are ridiculously high. What I am saying is, if you like it, let’s at least have a try.

Lattre de Tassigny.

(The deal of the month!)

2 bedroom apartment
2 bathrooms
25 sq.m. private terrace
85 sq.m. (“loi carrez” – living space)
Asking price – 480 000€

It’s a 2 bedroom, 2 (lovely) bathrooms, and spacious loft apartment with character, a huge living area, and a spacious sunny private terrace, very close to the centre of Cannes. Ideal for rentals, but a place to enjoy too. It is beautifully finished with the most modern and quality appliances, great kitchen with dishwasher, washing machine, state of the art hob, oven, coffee maker, fridge and freezer etc. It is being sold completely and very nicely furnished.

The official surface area (legal) is 85 sq.m. But one can only count that which has a height of 1.5m or more. As this is a loft, it goes all the way to the floor, and they have utilised that space cleverly in the bedrooms and living rooms, so the impression is of far more space. If it were all included, it would be 135 sq.m.

At 85 sq.m the asking price is only 5600 per sq.m. and we are not seeing much under 6000 anymore, let alone without any work to be done and fully and expensively furnished.

The view is across red brick rooftops to the east, and the hills beyond, as it is itself on a hillside. Entrance to the apartment is from the upper side, up a single flight of steps, whereas in front of the apartment the ground falls away below.

I don’t think we have much time with this apartment – to the best of my knowledge it is still available, but I would expect it to go quickly – we are not the only people looking at it.

Le Bosquet.

1 bedroom apartment
3rd floor
8 sq.m balcony looking west
55 sq.m “loi carrez”
Asking price 298 000€

This apartment close to the centre and only a couple of hundred meters from the beaches and the Croisette is the end apartment on the third floor of a very good building. Being the end apartment it has windows on the side wall too, making it very light. It has been renovated and requires nothing done to it. The furniture could easily stay behind as part of the negotiation.

The view is over tennis courts (numerous courts, which are the Tennis Club de Cannes) and gardens, the nearest building being a couple of hundred meters away. It overlooks a very small road linking two bigger roads, and as such the apartment is extremely quiet. As with the apartment above, the price is reasonable in today’s market. The whole acquisition could be achieved with a deposit of little more than 100 000€ after all charges and costs. It is an apartment well worth considering.


2 bedroom apartment.
1 bathroom
1st floor
14 sq.m terrace looking east, and a balcony looking west
78 sq.m “loi carrez”
Asking price 382 000€

This apartment is well positioned not far from “Le Bosquet” (above), very quiet indeed with school sports grounds (closed at night) in front. It traverses the building and has balconies east and west. It is also only a couple of hundred meters from the main public beach towards the eastern end of the Croisette, but well before Port Canto.

The apartment needs complete renovation including putting in a second bathroom and toilet, making it into a two bedroom apartment with both rooms en-suite. It lends itself perfectly to that. It requires new floors and a new kitchen, new ceilings and air-con, new lighting etc. – in short a remake. That should cost about 60 000€ so the finished price of a modern and lovely apartment will be approximately 450 000€. However, I think this apartment could be negotiable – certainly worth a try. This is a very good proposition. Even at the asking price we are looking at a finished price of well under 6 000€ per sq.m

Le Californie.

2 bedroom apartment
2 bathrooms
1st floor
Looks south
78 sq.m “loi carrez”

Asking price 750 000€

The building is the most elegant apartment building in Cannes, and perhaps on the entire coast.

Le Californie was completed in 1876 by Charles Delmas, the same architect who built the Carlton Hotel at the centre of the Croisette, one of the most famous hotel facades in the world today, and the almost as famous Hotel Negresco in Nice. During World War II it was taken over by the Germans and used as their base and high command, and then between the years 1949 – 51 it was sold off as apartments. The façade and gardens are today “classees” or “listed” – protected by law.

These are entries from an historical publication I found:

• 1876. Hôtel de la Californie, a sumptuous neo-classical structure, was built in 1876 and enlarged in 1913. It has since been converted into a condominium.
• 1912. On the site of the former Hôtel de la Plage, opening of the Hôtel Carlton commissioned by Henri Ruhl from the architect Charles Dalmas. Legend has it that in designing the two corner towers with their domes, the architect was inspired by the breasts of La Belle Otéro, who was the muse of many 19th-century artists.

The spacious apartment itself has the typical mini balconies protruding from two huge front windows to the floor, overlooking the beautiful gardens, and a panoramic view across Cannes, the bay of Cannes, and the Isles de Lerins (St. Marguerite and St. Honorat) with the 12th Century monastery which was prison/home for so many years to the unfortunate “Man in the Iron Mask” clearly in view from the windows. The sunsets from this apartment across the sea and hills tumbling away towards St. Tropez are huge and breathtaking.

The photo I have used as a header for this letter (“A Room with a View”) was taken in the front room of this apartment from the same window!

The renovation just completed of this beautiful and prestigious apartment has been to the highest standard. It has everything – double glazing, air conditioning in every room, state of the art kitchen with every imaginable mod-con (and a few I hadn’t imagined), lovely bathrooms, floors, and ample parking for residents and guests. (It is as yet unfurnished so I have not included photos of the empty interior).

Ana Capri.

Two bedroom apartment
Two bathrooms
Third floor
Commanding views east and south over Palm Beach
93.75 sq.m “loi carrez”
Asking price 575 000€

Lovely and spacious apartment completely and thoughtfully renovated to a high standard. The building is a 50’s building in very good repair and dimensions are unusually generous. The living room alone is bigger than many apartments at 55 sq.m and the balcony is also spacious at 22 sq.m

The apartment is double glazed and air conditioned, there is a garage in the basement, and the open plan kitchen is modern and huge. The apartment traverses the building so views are almost panoramic of the suburb of Palm Beach and the Place de l’Etang, and there is air flow and ample light.


There are some smaller one bedroom and studio apartments, but I can’t mention them all in the letter – all I can do is highlight a few, and leave it to you to get in touch with me with your reaction to what is offered here, or your requests for more information. Equally we have some truly beautiful Villas on our books for those who are looking in that market.

Some people would like to be in the market but don’t know how or where to start. We have a few small syndicates of two or more families combining to own a property with a view, perhaps, to “moving upwards” in a couple of years. Some investors are selling our original investments and moving up already.

As a final possibility, we have developers with extensive Southern African experience actively getting organized to sectionalise and “share” ownership in very manageable bites, of significant properties here. I can put interested people directly in touch with the people concerned as their first phase is soon to launch – there is a possibility for those who are interested to get involved “on the ground floor” with a plan which is likely to develop into something very big in the next few years.

There are many possibilities…..

Phone Cannes: +33 493 940 940
Phone French mobile:+33 661 132 565

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