Property Letter 74

Posted by admin in Property Letters | July 11th 2008

Dear All,

We’ve had a very good couple of months in Cannes.

Some have invested and none of them will regret it. Others have visited us and had a good look around, but decided to “wait and watch” – with the current environment and talk of recession it isn’t surprising that people are hesitant, but my hope is that they won’t hesitate for too long because at some point the bounce-back will begin and those that “got in” will be well pleased and rewarded. (I’m not even sure that on the Riviera we are going to feel the full force of the downturn, although there are some good offers on the market at the moment – detailed below.)

Back to the visits to Cannes, and on a personal note: We have had an amazing spring of visits from all sorts of people from very old friends, to people we had never met before but now class as our friends. Vicky and I have so enjoyed both catching up with old friends and making new ones, and as we have commented to each other “we have more visitors here than we ever did on our beautiful farm in Zimbabwe”!

A Little Politics – Please Forgive me?
Although I was involved in politics and agricultural politics in Zimbabwe before we left there in 2001, I have made it a rule not to talk politics in my Property Letters – but it’s hard not to make at least a mention of it with the situation as bad as it is there today. The people are reaching the end of their tether, survival is a grind, and for many every day is an ordeal fraught with very real dangers. The crackdown on the opposition before the sham election in June has, if anything, intensified since it was held. Certainly the death toll mounts, homelessness grows, and inflation and unemployment have reached unthinkable proportions. The quote below was received in an open letter on 7th July from a brave opposition Member of Parliament:

“…The second point is that an urgent humanitarian crisis is developing in Zimbabwe so serious that if it is not addressed in a matter of days or weeks, will make life simply impossible for every Zimbabwean not hooked up to the ruling party gravy train. I spoke to the Headmaster of a school today and his salary – paid last week, bought 4 bananas. Inflation at more than 2 million percent is simply wiping out the accumulated capital assets and companies in a matter of weeks. If they do not have access to hard currency, these individuals and companies simply will not survive.

Basic essentials from soap to food staples are simply not available – I passed the largest supermarket in Bulawayo yesterday and it had two cars parked outside. The largest wholesaler in the country is close to closure.

People can only withdraw Z$25 billion a day from the banks – not enough for one kilogram of dog food. Cash is in very short supply so that cash rates for foreign exchange are now a third of the business rate. This impacts on millions who rely on remittances at about US$100 million a month from (family) outside Zimbabwe.

Add to this harsh reality and take into account that the State has stopped all food aid for a month now – depriving about half the country of their basic needs and you get the picture.  We are in meltdown and the only way out is across the Limpopo to South Africa – or anywhere. A friend of mine opened his factory on Monday to find that 11 of his staff had left the country for South Africa. This is taking place across the country – what is making this migration different is that many are taking their whole families – they have been terrorized for three months by this regime, their homes burnt, their physical safety threatened and their assets destroyed. They cannot even buy food if the money is available and the new developments in the money market make remittances much less valuable. The only answer is to leave and to take your whole family with you.

If this is not addressed and soon, the consequences will be catastrophic.
South Africa is already struggling to cope with millions of economic and political refugees. Squatter camps and high-density townships are packed with people – all living on the margins of society, many by crime. They simply cannot absorb a fresh wave of humanity from beleaguered Zimbabwe but they need to know it is on its way.”

You might be excused for thinking he’s exaggerating but he is not. Our family have a house in the capital city Harare, and here is our rental agent’s summary of July for your interest – madness indeed when you consider that only two years ago the government knocked three zeros off the currency to make it more manageable – so one should add another “000” to all of the numbers below.

“July rental US$160 multiplied by the interbank rate on the 25th June of Z$9,500,000,000 equals Z$1,520,000,000,000

Rental                        1,520,000,000,000
Less 15% commission    228,000,000,000
Less Levy                       35,000,000,000

Balance to your A/C   1,257,000,000,000

One trillion two hundred and fifty seven billion dollars.

The zero’s take a bit of getting used to, also for your information we are only allowed to sign cheques to the value of maximum Z$900,000,000,000 so will do two cheques, one each day over two days as we also are not allowed to present two cheques from the same company to the same account in one day. All my banking has now doubled up.”

I’m not going down the road of the “fear and violence” (this is supposed to be a Property Letter!) – but rest assured that it is unbearable and all of our voices need to be heard to help bring a resolution and some desperately needed peace to this beautiful country which was until recently a jewel in Africa, and deserves to be again. Please tell someone that you don’t approve of what has been allowed to happen there – like your M.P. perhaps when you next have the opportunity. The world has sat on its hands for far too long when you consider that the murder and destruction started in 2000, and it should have been stopped then.

Back to Property – Back to Cannes.
Cannes is renowned as the “Jewel” of the French Riviera. There is no doubt that it is the most glamorous destination, home to more than 150 international conferences a year, and famous for its luxury shopping, super-yachts, palace hotels and palm fringed boulevards lining sandy beaches. With all of that it is compact with a population of only 70,000, and everywhere is accessible on foot. It is less than 30km from Nice International Airport, the second busiest in France after Charles de Gaulle, and the TGV passes through it.

Property prices which we have seen more than double in the six years we have been here (officially +101% from 2000 to 2006) have slowed to 6% in 2007, although prestige properties are still increasing at a double digit rate.

Cannes is one of the most expensive property markets in the world, Knight Frank having ranked it 6th in the world in their wealth report 2007, with average prices of 4,500 € per m². Prices are also hugely differentiated however, with prestigious apartments on the Croisette selling for 15,000€ to 20,000€ per m² and properties in working class neighbourhoods selling for 3,000€ per m².

Most of our visitors very quickly realise what is special about Cannes, and it is difficult to put it in words. There is a little rhyme that dates back to Victorian times but is still so very true, and it goes like this “Menton is dowdy, Monaco is brass, Nice is rowdy, but Cannes is class.”  That neatly and accurately sums up the Riviera from east to west. It sums up the enduring popularity of Cannes, with its havens of tranquillity just minutes from the Croisette for those who seek quiet, fabulous and panoramic views from almost every suburb and street, safety almost guaranteed and cleanliness a hallmark of the town, from ultra-chic neighbourhoods to billionaire enclaves.

It offers privacy and is discreet by nature and by tradition – nobody stares in Cannes – the people are used to royalty and the stars and allow them their peace and their space (Film Festival on the Croisette is an exception of course because the paparazzi are there in force, but they are supposed to be there at that time!) And the weather….is sublime!

At the beginning of this letter I wrote: “I’m not even sure that on the Riviera we are going to feel the full force of the downturn” – I made that statement because the buyers of luxury property are less likely to be affected by market fluctuations than middle class families are, and most of the property market in Cannes is in the “luxury” category by virtue of its situation, and is driven by international demand. Only three regions of France fall into this category and they each significantly out perform the French market. They are: Paris, where prices are expected to continue to appreciate; the French Riviera; and the major ski resorts.

And finally, if you want to feel that you are in good company when you invest in property, “high net worth individuals” worldwide (those having more than US$ 1 million investable) have increased their allocation to property from 16% in 2004/05 to 24% in 2007/08 according to Merrill Lynch, and much of that is in choice locations, Cannes and the French Riviera being high amongst them.

Common Questions Answered – In Brief:
(Please note that I am neither a lawyer nor a tax expert. However I have done the best I can to consolidate accurately the most essential information. If there are points that need clarifying I am happy to get expert opinion in order to give you the answers you require.)

Loans and Lending:
•    French lending banks willingly lend to non-French residents.
•    Typically a fixed rate capital repayment mortgage of up to 25 years attracts a rate of 5.20% to 5.35% today.
•    There are constantly new products on offer, and one of those very recently introduced is offered at of 5.50% and described as “fixed rate, adjustable at the bottom”. This means that if ECB rates increase, the rate and duration applicable to your loan remain constant, but if ECB rates decrease, the duration of your loan decreases proportionally.
•    Another new product is a variable rate mortgage (typically at 5.35%), fixed for the first 6 or 8 or 10 years with a choice of capping it at +2% or +3% after the fixed period expires. The duration of the loan may adjust but not by more than 20%.
•    Another is a variable rate loan fixed for 3 years and capped at +3%.
•    For European residents “interest only” loans are available in various forms and combinations of rates. For non-European residents these are not available.

Work and Residence Rules in France:
•    E.U. residents can work and live in France, and so can spouses of E.U. residents.
•    Non-European nationals need a “carte commerçent” to work. This has to be applied for.
•    Non-European nationals can buy or establish a company in France, and may be salaried, but they should have an E.U. resident as their company manager (“gerant”).
•    A “carte de sejour” (residence / work permit) can be applied for at the regional “prefecture” (in our case in Nice) or at an Embassy in your country of origin, and typically there will be a delay of 6 to 12 months while police checks are commissioned through the Embassy in your home country.
•    Once you have had a “carte de sejour” for five years you can apply for French citizenship.
•    It is possible to apply for a family “carte de sejour”.
•    In business there are rules applying to many professions – to be manager of a hairdresser, a bakery, or a real estate agency for example, you must have a qualification in that trade and obtain a French “carte” to allow you to manage. In sales no such qualification is required, therefore to be a restaurant owner, or a shop owner etc. no “carte” is needed.

Taxes and Inheritance Issues:
•    For most of us the objective is to transmit what we have to our children whilst incurring the lowest possible taxes.
•    We however want to achieve the above whilst not depriving ourselves of occupation of our property or decision making over our assets whilst we are still alive.
•    Where property is concerned this is facilitated by the creation of a small company (an S.C.I.) wherein the “parents” own the usufruct, and the “company” owns the property.
•    When a usufructee dies the value of his usufruct is not taxed, but the value of his shareholding in the company is. His share of the company can be as small as he likes (5% for example), and his usufruct can pass untaxed to the surviving spouse.
•    There are huge savings to be made in taxes, and each family or investor group should create their company in France according to their own circumstances.
•    The S.C.I. is very flexible and adaptable to all family and partnership situations, including warring families.
•    To create an SCI is simple and typically costs about 2 500€ in total.
•    Each child inheriting receives an abatement (allowance) of 150 000€, and is only taxed on any inheritance above that figure.
•    Inheritance tax is 20% up to 527 000€ and then rises slowly to a maximum of 40% when the inheritance reaches 1.7m€
•    In order for your spouse to receive your usufruct upon your death, it is necessary that you put in place a very simple “donation au dernier survivant” or “donation to last survivor”. It can be done simply at any notary in France, or at any French Embassy worldwide, and covers all French assets at the time of death. The assets do not need to be itemised, and the “donation” will be automatically registered at the central registry so that there is no risk of it being lost or overlooked. All you need to take to the Embassy or the notary is your birth certificates and your marriage certificate.
•    There is no inheritance tax between spouses.
•    You can not disinherit your children in France so when you die your assets will be divided equally between your spouse and your children, meaning that if you have one child the inheritance is split two ways; if there are two children, three ways; if there are three children, four ways etc. Your French assets will be distributed under French law as your South African or English will does not have any validity in France. EXCEPTION: In the case of an unmarried person without children French law will direct the inheritance towards 1) the parents, or 2) brothers and sisters, or 3) cousins. However if a will has been registered (all French wills being automatically centralised) the wishes expressed in the will are taken into account. If there is a partnership a “pacs” can be registered with the “donation to last survivor” through your notary or Embassy, and the same rules will apply as for spouses.
•    The S.C.I. is important and very useful for all of the above reasons, particularly when the value of individual inheritances are likely to exceed the allowance of 150 000€ per child.
•    Wealth tax kicks in at 770 000€ of “net” asset. You will be taxed 0.55% per annum on the amount above 770 000€. From assets of 1 240 000€ to 2 450 000€ it increases to 0.75%, and after 2 450 000€ it reaches 1%. (However, the 1% only applies to the amount in excess of 2 450 000€ – not the whole fortune!) There is talk of abolishing it soon.

•    If you are investing in that bracket, it is worth considering borrowing against an investment offshore, and in that way you will not have an asset in France, but a debt. No wealth tax.
•    Capital Gains Tax on sale of your asset has been adjusted recently, and the rates today are 16% on “net” gain (after all allowances and deductions) for E.U. residents, 27% for French residents, and 33% of non-E.U. residents. After five years there is an annual allowance of 10% resulting in 0% C.G.T. after 15 years.
•    Company tax (in simple terms) is 15% on profits up to 38 120€, and 33.33% above that, for those contemplating going into business.

Please have a look at our website – comments would be welcomed:

With kind regards,


Properties in ascending price order – please scan through until you find the budget that suits you:

•    The prices quoted are asking prices only.
•    The selection offered in the Property Letter represents a few properties chosen from hundreds, so if what you are looking for is not here, we can tailor-make our search for you.

Properties Below 300 000€.

Palm Beach.
The third floor apartment.
•    37m² of living space.
•    Fully renovated and ready to work as a rental unit.
•    Double glazed.
•    View of streets leading to the Palais des Festivals.
•    Price is 230 000 Euros.
•    The apartment is being sold furnished.
Centre of Cannes.
Large Studio Apartment.
•    37m² of living space.
•    Fully renovated and ready to work as a rental unit.
•    Double glazed.
•    View of streets leading to the Palais des Festivals.
•    Price is 230 000 Euros.
•    The apartment is being sold furnished.

Village Sablons – Palm Beach.
One bedroom apartment.
•    One bedroom apartment.
•    35 / 38m² living space.
•    Small balcony at front and small closed in balcony at back. (Potential to expand this west-facing balcony and make more use of it.
•    Aspect – east and west.
•    Fully furnished.
•    Asking price – 235 000€.

Place Vauban.
One bedroom apartment.
•    38 m² of living space.
•    4th floor of 4 (with lift).
•    Historic building – excellent condition.
•    Aspect west.
•    View of city and rooftops – absolutely no vis-à-vis.
•    Air conditioned and double glazed.
•    Asking price – 276 500€

This apartment in the roof of a lovely old building situated right in the centre of Cannes, three minutes on foot from the Palais des Festivals, seems far bigger than the official measurement of 38 m² would suggest. Space that is lower than 1.8m can not be counted in the survey as “living space”, but as shown in the photos this space has been well and attractively used and adds greatly to the apartment. The floor plan shows 50 m².

The living room is spacious and light and the whole apartment very quiet. There is an entrance hall, a separate kitchen which is fully equipped, and a lovely bathroom. The whole apartment has been renovated to a very high standard, and furnished for rentals. Although the furniture is not included in the price, I am sure it can be negotiated.


300 000 to 600 000€.

Rue Borniol.
Three bedroom apartment

•    78 m² of living space.
•    2nd & 3rd floors of 3.
•    Aspect south, west, north and east.
•    View of city and rooftops – no vis-à-vis.
•    Asking price – 319 000€.

Brilliant apartment at an exceptional price.
It is clean and inhabited today, but to achieve its potential in this excellent position close to the centre of Cannes, it merits some renovation. This good apartment can become an absolute gem, and the price is such that one can improve it and still come out with an apartment well under the going rate for that part of town.

On the 2nd floor is a kitchen and a spacious living room opening up east and west, with a lovely old (working) fireplace. The main bedroom has a bathroom en-suite and looks east, across rooftops. The apartment is on a hillside so although it is only on the 2nd floor, it overlooks rooftops of six storey buildings on the east side. On the west side overlooking the street is a long balcony running the length of the building, and accessible from the kitchen and the living room. All rooms are double glazed so no expense is required in that area.

From the living room an attractive staircase mounts to the third floor with two bedrooms, a bathroom and toilet, and a laundry under the eaves in the attic. There is plenty of head room throughout, good windows, and a large storeroom which is over and above the 78 m² of measured living space advertised. This space begs to become the third en-suite bathroom, and the plumbing is already in place.

La Croisette.
Large studio apartment.
•    40 m² of living space.
•    1st Floor of 7.
•    Construction 1960.
•    View over gardens, La Croisette and the sea.
•    Exposition east, south and west.
•    Terrace.
•    Gated parking in the complex.
•    Air conditioned and double glazed.
•    Asking price – 385 000€.

Palm Beach.
Two bedroom apartment.
•    Two bedroom apartment.
•    One bathroom with toilet, separate shower and toilet.
•    Balconies east and west.
•    57m² of living space.
•    1st floor of 5.
•    Air-conditioned and double glazed.
•    Fully furnished.
•    Private parking.
•    Asking price – 450 000€.

Three Bedroom apartment.
•    90 m² of living space.
•    Three bedrooms and 2 bathrooms.
•    Aspect south.
•    View of gardens.
•    Ground floor.
•    Very new and high quality building (2006).
•    60 m² of sunny terrace.
•    Swimming pool.
•    Double glazed and air conditioned.
•    Garage and cellar in the basement.
•    Asking price – 521 000€.

Excellent and bright apartment in a new building – it’s got everything a family would want. It is five minutes from the centre of Cannes by car, right on the bus route, but in a quiet and well-to-do neighbourhood. The added extras such as an exceptionally large terrace, lockable private garage and pool all make it a very attractive rental prospect. We would recommend long term (annual) rentals rather than conference and summer rentals if rental income is required. If the objective is to have a very comfortable second home in Cannes, then it suits that requirement too.

Isola Bella close to Cannes centre.
Two bedroom apartment.
•    Two bedroom, two bathroom apartment.
•    Large east and south facing balcony.
•    78m² living space.
•    1st floor of 2.
•    Fully furnished.
•    Air conditioned and double glazed.
•    Garage and cellar in the basement.
•    Asking price – 550 000€.

Palm Beach.
Two bedroom apartment.
•    73 m² of living space.
•    Construction 1965.
•    1st floor of 5.
•    Aspect east and north.
•    View across the Place de l’Etang.
•    Large balcony.
•    Asking price – 598 000€.

This apartment is fabulous for it’s position overlooking the famous Place de l’Etang, the world home of “boulles” or “petanque”. The village square is alive every day with a kaleidoscope of people and activities and the clink of metal balls. There are five restaurants and brasseries surrounding the square (none adjacent to or below the apartment), a patisserie, a grocer, a pharmacy, a newsagent, etc. Here one is within a short walk of the glamorous centre of Cannes and yet in a village that has not changed in its character for centuries. People visiting us in Cannes consistently fall in love with Palm Beach, and very often say “this is where we want to buy”. It has enormous charm, but is also spotlessly clean, one minute from beautiful beaches, surrounded by top restaurants, and SAFE. Palm Beach is where Vicky and I have bought and live, family and friends have bought, and the suburb, for us, is the best.

The apartment is functioning as it is, but we have looked at it with a few visitors and clients now with a view to doing a complete renovation and lifting it to a higher level, with new floors and ceilings, air conditioning, a modern open plan kitchen, and a second bathroom. All of that is easily achievable, and whereas the price of the apartment might be negotiated, the cost of the renovation should be somewhere in the region of 1 000€ per m². Therefore budget 70 000€ to achieve a result that will be spectacular.


Over 900 000 €.

Rue du Lac.
Four / Five Bedroom apartment.
•    180 m² of living space.
•    4 bedrooms and 4 bathrooms.
•    Aspect south.
•    Sea view from top floors and balconies.
•    Balcony on 3rd floor and roof terrace on 4th floor.
•    Swimming pool (almost private).
•    Gym, sauna, and modern glass walled squash court!
•    Air conditioned, and with a very efficient fireplace.
•    Two garages in the spacious basement.
•    Asking price – 958 000€.

This is an unusual apartment. Amazing in fact.
In the 1960’s an aircraft component factory very close to the centre of Cannes was closed down and a well renowned architect bought and converted the building into 17 apartments. One of them is on the market now – the architect responsible for the project still lives there in the unit next door.

The apartment spans four floors and the living space is very generous – the feeling of space is overwhelming. On the ground floor a large and fully equipped kitchen leads to a dining area, the fireplace and a spacious living room. This on turn leads directly onto a patio with a large swimming pool with water features, water fall and attractive lighting features. Only 4 of the apartments have access to the pool, but it is only this apartment which opens onto it. The others with access are almost never there, living in Paris and elsewhere, and for that reason the pool is “almost private”.

The first floor has two spacious bedrooms and bathrooms, the third floor the same, with south facing balconies, and the fourth floor is a “loft” style living room with a roof terrace and views across Cannes and the Bay of Cannes.

The sports facilities in the basement are extraordinary, with a proper glass squash court, a gym with machines, and a sauna and showers. The garages are below the building and spacious and very clean.

The position is very close to what we would term “the centre” and quite walkable to the Palais des Festivals. (On the website you will be able to see the position of this apartment on the map)

The apartment is a beautifully kept family home today, in perfect condition and much loved by the people who have lived there for 10 years. It can be a “second home” in Cannes for someone, or a rental proposition, or a mixture of both and the price is very reasonable (and may be negotiable).

On The Croisette.
Two bedroom apartment.

•    85 m² of living space.
•    A building “Grand Luxe” constructed 1970.
•    7th floor of 7.
•    Balcony.
•    90 m² Private roof terrace.
•    Aspect south and west.
•    View – impossible to improve on.
•    Asking price – 1 960 000.

This is a unique product in a “top” residence. The price at well over 20 000€ per m² will be achieved because the apartment is with a number of top estate agents and a 7th floor apartment on the Croisette with a roof garden is a very rare offering. The apartment is owned and lived in by a very old lady and a very old dog, and has not seen any improvements since the 1970’s, so is in need of renovation. But what a position! What possibilities for the buyer looking for “the prime” property in all of France!

Three bedroom apartment.
•    180 m² of living space.
•    “The” Classic building in the suburb of La Californie.
•    Constructed in 1900.
•    4th floor of 4.
•    Aspect south and north (traverses the building).
•    View panoramic.
•    Terrace.
•    Garage and parking.
•    Asking price – 2 150 000€.

The apartment is immaculately renovated, and decorated to a very high standard. Anyone knowing the area of La Californie will know that this is an apartment that has to be seen to be imagined.

A Bastide (Country House) in La Californie.
•    260 m² of living space.
•    Spacious gardens and pool.
•    Construction 1920.
•    Aspect south.
•    View of gardens and the sea.
•    Separate guardians apartment.
•    Asking price – 2 600 000€.

This family home just a short walk to the centre of Cannes is charming. Some small improvements are required (perhaps) but overall this 4 bedroom and 4 bathroom villa is ready to move in. On the ground floor the kitchen opens onto the dining and living room which in turn open onto the pool patio and gardens. On the first floor there are three bedrooms and bathrooms and an office, and on the second floor the master bedroom and bathroom and “solarium”. In the basement is the flat. There is a garage and parking for another two cars.

This is a villa in a prestigious suburb, with large grounds, lots of space, and its position just above Cannes, with sea views, make it a very attractive property.

A Stone Villa in the Heart of Palm Beach.

•    320 m² of living space.
•    Contemporary in style and decoration.
•    740 m² of gardened land.
•    Aspects east, south and west.
•    View of the gardens and pool.
•    Swimming pool.
•    Beautiful gardens and trees.
•    Triple living room.
•    Two kitchens and a bar.
•    Three bedrooms and bathrooms.
•    Double garage.
•    Asking price – 4 150 000€.

There aren’t any other villas like this in Palm Beach! They simply do not exist any more. This villa has been renovated and decorated to an exceptionally high standard throughout – no expense has been spared to achieve the best finishes, the best quality of fixtures and fittings in bathrooms, staircases and kitchens. Even the teak walkways through immaculate green lawns speak of extreme care and forethought.

It is situated in the heart of Palm Beach, just a minute to the beaches and the Crosiette, and it is so well disguised by the walls and vegetation that without access nobody would imagine that a villa such as this could exist in this suburb.

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