PROPERTY LETTER 28th August 2007

Posted by admin in Property Investment, Property Letters | August 28th 2007

Dear All,

Oops, Here we go again.

We were all a bit stunned by reversals in world financial markets (once again). Headlines announced the biggest 1-day fall (16th August) since March 2003, and the FTSE hit its lowest level since September 2006. To my simple brain that meant that anything I may have made on my funds and investments in the last year just disappeared, and we don’t know what it will look like tomorrow. It could get worse again – we hope not, but it actually could! On the other hand, it might continue to drag itself back up again, but if past experience is anything to go by, then “slowly” might be the operative word.

They say that we (novices like me) should diversify our investments, and that the stock exchange has made money for those who have invested for the long term. I don’t have a hundred years, or even 50, or 25!

Like most farmers, whilst I farmed almost every spare cent went back into the farm as there was always a new development that needed cash and there was never enough of that. But in the 90’s we decided that the time had come – we really must put something into a “safe” investment somewhere – so we invested in a mutual fund and an executive savings plan. A little while ago we pulled out of the mutual fund (to invest the proceeds in property) but we had to swallow the bitter pill of extracting less than we had put in over quite a number of years. Similarly, the savings plan is worth less today than we have put into it.

We’re in good company judging by this headline of 17th August: “Falls over the past week have wiped more than £73bn off the value of London’s leading stocks” – and I think it’s you and I who paid for it.

 

Why I am more comfortable in property.

Here are a few thoughts:

  • You don’t need much of the purchase price in cash to buy the property you want. The bank will lend you money (often at preferential rates) to invest in property, which they will not do for the purchase of shares. (This is called leverage)

  • You can often increase the value of the property you buy significantly without spending much on it. (Forced appreciation by way of simple improvements)

  • You don’t have to sell the property to reap the benefits of your growth. (Re-mortgaging or refinancing – further leverage)

  • You don’t have to monitor your properties closely from day to day because the market is not volatile. (As the stock market is)

  • Property prices tend to increase smoothly and consistently. (Natural appreciation)

  • Property has exceptional and privileged tax advantages.

  • Fluctuations of any one property’s value relative to the average for any area are very slight. (20 square meters in Rue d’Antibes is likely to be priced similarly to any other 20 square meters in Rue d’Antibes)

  • It is not difficult to locate a geographical area or region or city where you are going to do better than the national average.

  • It is a relatively simple, reliable and consistent investment, with great cash and wealth building potential. (From rentals and capital appreciation respectively)

Of course property prices can also drop but it is far less likely and generally far less dramatic because as stated above the market is not volatile. The far more likely scenario in a well chosen investment area is that a so called “downturn” actually is a “flattening out” for a while, before returning to growth.

He who hesitates is not only lost, but miles from the next exit.

(I don’t know where that quote comes from, but its how I’ve felt twice this year!)

Our business is not based on looking for speculative buys. If we did that we should be fanning out all over France. Instead we seek out good properties, in a good position, with as many “positives” going for them as possible, at a good price. An equal part of the responsibility we take on is the ongoing care and management of the properties we buy on behalf of our investors, and for that reason we limit ourselves geographically to a radius not too far from Cannes. Obviously it would be difficult for us to manage a property in Montpelier or Bordeaux.

However, sometimes in the course of our searching we unearth a property that is a “no-brainer”; a property that is obviously too good to turn away from – at a price that is well below the market. Of course this sort of property is what everyone would like to find, so it doesn’t sit around and wait for us to make our minds up.

This year only three properties that we have seen have fallen into this category so far, and my record in securing them is very poor. I have only managed to secure one! If you have read my letters you will have seen the other two. This is how I headlined them in Property Letters 64 (April) and 66 (July) respectively:

 

An Important Possibility to Come.

Marachal Joffre:

 

La Gallea. ***** (opportunity)

Both these properties elicited numerous responses and when that happens the first person to get back to me expressing interest is the first person in line.

I was far too relaxed. Or I pretended I was, so I didn’t “push” anyone. I waited patiently for people to think, to digest, to receive photos and talk to spouses, to plan a trip on Easyjet to visit. All of this as the days ticked bye, and I didn’t say a word. When someone is making decisions involving hundreds of thousands of euros who am I to exert pressure on them – to ask them to get a move on? Besides, Vicky feels very uneasy if she thinks I am being too “pushy”!

You guessed it – we moved too slowly – I should have pushed! We lost both of the apartments and it’s a shame because they were too good and too inexpensive, and in both cases we had more than one person interested.

Here’s another quote that has my name on it, this time from the originator of so many enduring and often cheeky one-liners, Mae West: “He who hesitates is a damned fool.”

I apologise to the people who recognised the opportunity that both these properties presented, and next time I will be more direct – more persuasive if I can be, and quicker. (And take my chances with Vicky!).

With kind regards,

Guy.

 

Some Properties to Consider:

A Magnificent Villa in Mougins!

Asking price was 3.9m euros.

We have been in negotiation for many weeks for a client who has had to withdraw. However, before he did, we were able to negotiate a remarkable price of 3.15m euros. This price was tied to some conditions, but it is still an indicator of what we could try to achieve again.

Neither this description nor the few photos can do this beautiful property justice. The unimpeded view from the whole of the front of the building across Cannes, and the Bay of Cannes from the red Esterel hills in the west to the Isles de Lerins in the East is breathtaking.

There is no question that this is a RARE property. The quality of the building, the grounds, and the facilities and finishes is outstanding, and the price is considered by our expert advice to be “too low for the market”. It is a fact that we are seeing some luxury apartments changing hands at almost this price, and I believe that in the case of this villa you are getting “more than you paid for”.

I do recommend an urgent visit to anyone who might be interested.

 

 

 

 

  • Magnificent villa

  • Living space – 440 sq.m.

  • 2734 sq.m. of land.

  • 5 bedrooms.

  • 5 bathrooms.

  • The villa is ideally located just a few minutes from the Old Village of Mougins.

  • The views across the Bay of Cannes are superb.

  • The property has been entirely renovated to an exceptional standard and the gardens are immaculate and landscaped.

  • The living room on the garden floor is 80 sq.m. and equipped with a fireplace.

  • The kitchen is huge, and equipped, and leads to a dining room, and to a separate outdoor dining patio.

  • 3 garages and ample enclosed parking.

  • Infinity swimming pool.

  • Sophisticated alarm system.

  • Elevator from the garages to the garden level of living rooms and kitchen.

  • Enormous basement.

  • Wine cellar.

On the subject of Luxury Apartments…

A Beautiful Two Bedroomed Apartment in Basse Californie :

  • Two en-suite bedrooms.

  • Equipped kitchen.

  • Office and dining room.

  • Huge living room.

  • Library.

  • 174 sq.m. living space.

  • 7th and top floor.

  • Panoramic sea views, east, south and west.

  • 240 sq.m. of private top floor terrace.

  • Double garage.

  • Double cellar.

  • Asking Price – 2 050 000 euros.

 

The panoramic “U” shaped apartment occupies the entire top floor of the building and the lift to the 7th floor is private on this level. Although the suburb is described as Basse Californie, for those who know Cannes it is actually situated on Blvd Alexandre 111 which is reasonably central, has immediate access to local shops, and is within easy walking distance of the beaches and the Croisette.

If the buyer wishes, there is a studio apartment of 30 sq.m. with its own terrace, parking space and cellar on the 1st floor for an additional 160 000€. This apartment is not available on its own, and will only be for sale separately if the buyer of the top floor apartment does not want it.

 

This is interesting.

Two bedroomed apartment at the bottom of Le Suquet.

(Le Suquet is the « old Town » of Cannes, charming and bustling with little streets, markets and restaurants, AND most importantly, it is a stones throw from the Old Port and the Palais des Festivals – the most sought after rental location of all).

  • Two bedrooms.
  • Two showers, with toilets.
  • Living room with open plan kitchen.
  • 1st floor of two, in a house built in 1900.
  • Aspect – west.
  • View – narrow streets.
  • Living space – 72 sq.m.
  • Asking price – 371 000€.

The apartment is still under renovation and will be sold completed, and with the kitchen equipped. The little street where the apartment actually is, is just off our favourite Rue Meyandier. It is a pedestrian street very close to the parking garage that we use when we go to shop in the open air market which we do most weekends (that is Marche Forville). It is quiet, and the apartment is double glazed and air conditioned.

The position is excellent, being close to parking, very close to the popular and vibrant Marche Forville, and only a couple of hundred meters from the Palais des Festivals, the beaches, the Croisette, and the heart everything that makes Cannes what it is.

I am excited about this one.

Fabulous views.

Two bedroomed apartment out of Cannes in the direction of Golfe Juan.

  • Two en-suite bedrooms.
  • Third and top floor of a lovely apartment block.
  • Aspect – looks east, south and west.
  • The view across the sea is panoramic – “paradisique” as Nathalie describes it!
  • Living space – 85 sq.m.
  • Terrace 92 sq.m. – fantastic. (There are actually three terraces, and they include the private rooftop!)
  • Asking price – 900 000€.
  • Garage and cellar.

The block is set back in lovely gardens and has a pool, tennis courts and a private beach, although the beach is shared by three blocks of apartments, and is currently not “looked after” – that is up to the management of the three to decide on. Previously there was a “plagiste” responsible for cleaning, and supplying beds and mattresses and umbrellas during summer months, but I know that has not been the case this year.

The apartment itself needs a little attention in that it has not been renovated for ten years or so. That is not a concern – we are always happy to organise and supervise the renovation to the specifications of the new owners, and the result is an apartment done according to their needs and wishes.

Commercial / Residential in the heart of Cannes.
A total of 101 sq.m. office space with the option to convert back to residential if desired.

  • Main reception and two offices (living room and two bedrooms) on ground floor
  • Bathroom & toilet.
  • 61.5 sq.m. living space.
  • Lower level with another 39 sq.m. comprising two rooms.
  • Empty kitchen.
  • Aspect south and west.
  • View of streets.
  • Air conditioned.
  • Three cellars – meaning plentiful storage.
  • Asking price – 530 000€.

The issue here is that whether this property is to be renovated to create offices, or an apartment, the position is very good. It is situated close to the Croisette, and a little closer to the centre of Cannes than Lao’s (Azur-Alive) offices which are on Rue Pasteur, for those of you who know them.

One bedroomed apartment in a brand new block.

  • The block (in Palm Beach) is on the verge of completion.
  • 36 sq.m. living space.
  • On the 4th floor.
  • Small 5 sq.m. terrace looks east.
  • Garage,
  • Air conditioned.
  • Equipped kitchen.
  • Asking price – 295 000€.

Palm Beach is the area on the peninsula at the eastern end of the Croisette, fifteen minutes from the Palais des Festivals on foot or 5 minutes by bus. It is right in amongst the beaches and ports, and a popular holiday venue, but also quite a sound renter for festivals and congresses. Being new, the notarial and transfer charges are at 2% instead of 7% for any property over 5 years old.

A little apartment in Super Cannes with a big, big view.

 

  • Studio apartment.
  • 31 sq.m.
  • 15 sq.m. balcony.
  • Aspect is south and east.
  • On the 1st floor of 3.
  • Equipped kitchen.
  • Parking.
  • Asking price – 255 000€.

 

This apartment with a sleeping alcove is actually quite big for a studio, made more so by the fact that the balcony is spacious and the panoramic view across the Bay of Cannes is fabulous. Super Cannes is the suburb in the hills directly above and to the eastern side of Cannes. It is a beautiful suburb with many fabulous homes and villas, and a few quality apartment blocks. It is too far from the centre to be a reliable conference rental prospect, but would suit someone wanting a ‘pied a terre’ on the beautiful French Riviera, and would be a very good investment if one put it out for rental on an annual basis.

Last but by no means least.

A Villa in Mouans Sartoux.

  • Four bedrooms.
  • Four bathrooms.
  • 230 sq.m. of living space.
  • Living room and open kitchen of 80 sq.m.
  • Main bedroom and bathroom make up the entire mezzanine level.
  • 60 sq.m. of terrace
  • 1 750 sq.m. of land entirely enclosed.
  • Aspect is east, south and west.
  • Swimming pool.
  • View of the garden.
  • Double garage and ample parking.
  • Asking price is 1 195 000€.

If you imagine a triangle with Mougins at the bottom next to Cannes, and Valbonne and Grasse in the top two corners, Mouans Sartoux is in the middle of the triangle. What a triangle! It is only minutes from Mougins, and just a short 10 minutes into Cannes. It is quiet and secluded prime residential property in the foothills of the Alpes Maritimes, surrounded by ancient hilltop towns and world class golf courses, and some of the best restaurants in all of France! Why wouldn’t you want to own a villa there?

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