An overview of the real estate market in France

Geography and more

The mainland of the country borders Belgium, Luxembourg and Germany in the northeast, Switzerland in the east, Monaco and Italy in the southeast, Spain and Andorra in the southwest. France is washed by the English Channel, the Atlantic Ocean, the Northern and Mediterranean Seas. In the west and north of the state lies the Atlantic (the Bay of Biscay and the English Channel), the south is the Mediterranean (the Gulf of Lyon and the Ligurian Sea). There are a total of 13 regions and four overseas territories in France.

As it is easy to guess, there are several climatic zones in the country. Winters here are not too cold: snow outside the Alpine regions falls quite rarely. But in the mountains, these are sunny days and impeccable ski slopes, along which prestigious chalets are located. The French summer is moderate, it is not too hot and a little humid.

The diversity of border and climatic zones determines the diversity of cultural traditions, as well as the types of settlements in France. And, accordingly, a huge selection of real estate for every taste. It can be either a purely investment studio in Paris, or a luxurious family estate somewhere on the Riviera, as a villa in a modern project, or a whole castle with a rich history. In France, not only housing can be purchased for personal use, but also a vineyard or even a lake.

As a rule, foreign investors buy real estate in large cities of the state and, of course, in resort coastal regions. The trend of recent years is the investment of funds by foreign and Russian buyers in commercial and profitable real estate in France: hotels, industrial enterprises, service companies, etc. 

The situation on the real estate market

The French real estate market is characterized by stability, which is based on strong euro positions. If we compare the profitability of real estate with other European countries, it is approximately at the same level, but the risks from financial losses, unlike many EU states, are minimal. Experts note that investing in real estate in France– it's like «putting your savings in a safe». An interesting fact is that 68% of the French live in private homes, which is 10% higher than the average European statistics.This directly affects the demand in the market.

In different regions of France, the dynamics of prices, as well as the ratio of supply and demand for real estate are quite different from each other. On average, in France over the last year, the volume of real estate sales increased by 5.4%, and in the central region of Ile-de-France by 7.5%.

The areas in which there is a steady increase in housing prices include Paris, major provincial cities, mainly those with international airports, as well as the Cote d'Azur. In other regions of France, on the contrary, in recent years there has been a slight decline in demand for real estate, and, accordingly, its value. As for the recent events in Paris, as well as the wave of immigration, according to official statistics, these negative factors have not greatly affected the overall picture of the market.

Advantages for investors

1. In France, comfortable business is accompanied by a developed modern infrastructure and economy, "sharpened" for the tourism market. This is a state that is "convenient" in terms of real estate investment.
In 2015, a record tourist attendance was set in the country: 85 million people. Guests and home buyers are attracted by the historical and cultural attractions of France, a high standard of living, prestigious schools and universities, a diverse selection of resorts, favorable weather conditions, gastronomy, and, of course, the stable economy of the state.
2. In terms of investments in primary housing, France is a country where construction methods and standards in the field of sound and thermal insulation, seismic safety, etc., are very progressive, which guarantees high quality facilities. Also, the state has introduced a number of tax benefits for investors in primary housing:
   • When purchasing a new home, the buyer does not pay registration fees. Thus, he pays only 2.7% for notary services instead of 7.5%;
   • The investor is exempt from paying real estate tax for two years;
   • The owner has the opportunity to receive a number of tax benefits if he invests money in housing for its subsequent rental.

4. Real estate in key regions of France is in stable demand, and prices for it are not much, but steadily growing. 

5. France offers an interesting choice of objects for renovation, be it ancient castles and farms or vineyards and production.

6. Unlike neighboring Switzerland, there are no quotas for the purchase of real estate by foreigners: for example, many who want to study or work in Switzerland often buy housing in the border regions of France.

7. With enough funds and assets, you can easily get a residence permit in France.

The most interesting regions for investment

Experts call the regions of France where the demand for real estate exceeds the supply the most interesting areas for investment.

First of all, this is an amazing Paris of the central region of France Ile-de-France is a city that attracts both romantics and cynics. Urban real estate in Paris is in great demand – and there is a shortage of housing in many market segments. Paris is exactly the place where you can buy housing for permanent residence or for investment purposes. The best educational institutions of France are located here, there are unlimited business opportunities, developed infrastructure and opportunities for a completely diverse entertainment - from fashion shows and theaters to exhibitions and gastronomic fairs. The cosmopolitanism of the metropolis and the huge tourist flow instantly erase expat complexes about language barriers and cultural differences with the local population. In addition, rental prices are quite high here, which allows owners to receive a fairly good income, as well as there is no seasonality characteristic of other regions.

No less important after Paris in terms of investment, of course, is the region Provence-Alpes-Cote d'Azur. Nice, Monaco, Saint-Tropez and Cannes, located here, are the standard of elitism and prestige.

The region occupies a leading position among tourists: more than 34 million visitors visit it annually. Every year, the Cote d'Azur itself receives 11 million tourists, 50% of whom are foreigners. In addition to such well-known facts as premium and a great lifestyle on the coast, the region is famous for taking third place in France in terms of concentration of representatives of the top management class. Numerous engineering and management schools are located here, a large number of research institutes and laboratories working in various fields of modern technology are open. Such areas as microelectronics, software, biotechnics, chemistry, eco-technologies are developing. Of the major cities in the region that are interesting for investment, experts also note Marseille, as well as Antibes – the largest yacht port of the Cote d'Azur.

The real estate of the Cote d'Azur is in constant demand, and prices for it are constantly growing. Demand here far outstrips supply, although, according to experts, the price-quality ratio on the Riviera is very adequate. Among the properties that can be purchased privately, there are both apartments and villas, as well as entire castles with a huge territory.

French Alps These are sparkling peaks, a huge variety of ski trails, as well as an impressive selection of prestigious real estate. The Alpine ridge stretches for 330 km across the French regions of Rhone-Alpes and Provence-Alpes-Cote d'Azur. Here, on the border of France and Italy, is one of the most iconic mountain peaks in the world.;the highest point of the Alps and all of Western Europe, the majestic Mont Blanc peak (4810 m). The most popular resorts on the ski slopes of France are Courchevel, Val d'Isere, Chamonix, Megeve and Meribel. And in the Lake Geneva region, these are Evian, Tonon and Ivorian. The level of profitability from renting real estate, for example, in Courchevel, is about 6-7% per annum. And a popular tool for buying real estate is a leaseback scheme, the so-called leaseback, which simultaneously brings the owner a guaranteed income and allows you to use your real estate only for a fixed time of the year. According to experts, 8 out of 10 buyers resort to this scheme resort real estate in the French Alps.

Tourist France is not limited only to the most famous and popular regions among Russian tourists - the Cote d'Azur, Paris and the Alps. Less well-known among Russian tourists, Pyrenean resorts are very popular among Europeans. It is customary to purchase chalets here, which are then perfectly rented out to winter sports enthusiasts.

It is also the historical region of Aquitaine in the south-west of France with the famous "wine" capital Bordeaux and the prestigious resort Biarritz. Interesting for investment Deauville in Normandy, Western Loire on the Atlantic with the "cultural" city Nantes, which is considered one of the best to live in Europe. Every year it welcomes not only a lot of foreign guests, but is also in special demand among French tourists traveling around the homeland.

Lovers of an active lifestyle and luxury of the lake Riviera are attracted by the thriving Auvergne-Rhone-Alpes ski region in the south-east of the country, where the transparent and prestigious Lake Geneva is located, and whose capital is the notorious Lyon.

The tourist city Lourdes (Hautes-Pyrenees department) is the second largest city in France after Paris by the number of hotels. It is interesting for investors engaged in the hotel business. 

Investment objectives

Determining the direction for investment, first of all you need to find out the purpose of buying real estate in France. If this is an investment object for subsequent rental, then experts recommend choosing regions that are attractive to tourists and students, such as Paris, Cote d'Azur, Lyon. If you need a holiday home, then, of course, this is the Cote d'Azur, where there is a favorable climate, there is an international airport with direct flights to almost all European capitals, as well as summer holidays at the sea and ski resorts in winter (about an hour's drive from Nice airport). For a measured lifestyle, the province of France is suitable: it can be a prestigious region with a developed infrastructure, while having the necessary pacification of the surrounding nature.

If the purpose of buying a home is to live with a family, then experts advise businessmen to choose cities near international airports that provide them and their families with greater mobility if they need to move frequently. There are also good international schools and universities for the education of children.

Prices

In key regions of France, real estate prices are showing growth, which makes them especially attractive for investment. This is especially true for Paris. So, according to journaldunet.com , the average cost of housing in the French capital in February 2016 was 7737 / 1 sq. m, which is 1.8% higher than in February 2015.So, for the amount of 500,000 euros, you can buy a two-bedroom apartment in a good district of Paris, a six-bedroom house in Montreuil (a suburb of Paris, just behind the ring highway). And, for example, already for €150,000 you can buy a one-room apartment in the 18th arrondissement of Paris. 

Positive price dynamics is observed on the Cote d'Azur, where the "basic" cost per square meter in Nice is "euro;3800, and in Cannes "euro;5552. However, the prices for villas with access to the sea, for example, in Saint-Jacques-Cap-Ferrat or Cap d'Antibes may well amount to 10,000 and 30,000 euros per square meter. So, in Cap Ferrat, you can buy luxury three-bedroom apartments with an area of 200 sq. m. for €3.6 million. A prestigious gated complex with a swimming pool is located within walking distance of the beach, shops and restaurants, and the apartment offers stunning views of the bay of Villefranche-sur-Mer. The apartment is sold with designer furniture made to order, all finishing materials are of the highest level. There is a Jacuzzi on the huge terrace. There is a wine cellar, two underground garages.

However, for example, in such a popular region as Provence, the value of real estate has fallen from -0.3% to -1.7% over the past year.

In general, in the country at the end of 2015, the rate of price growth decreased slightly, and the average cost of secondary housing was slightly more than 3,200 euros per square meter, which is 0.3% lower than in the same period last year. As for the "primary", the average cost per square meter increased by 1.2% compared to 2014 to €3800. The average cost of housing in Ile-de-France decreased by 1.1% and amounted to €263 700.

Rent

According to INSEE, the National Institute of Statistics and Economic Research of France, the average cost of a long-term studio rental in Paris is approximately €31.3 per sq. m. m per month, and in Nice – €14.6 / 1 sq. m. m per month. Prices for seasonal rentals are an order of magnitude higher. So, the cost of renting a villa for a week in Nice is on average €3500.

And the average profitability varies from 3% to 6% per annum for long-term – and from 8-12% for seasonal rentals. 

The subtleties of making a deal

The process of buying residential real estate in France is not difficult for foreign citizens. There are no restrictions on the purchase of real estate in France by non-residents, and in cooperation with a bona fide agent, the transaction procedure is transparent and strictly regulated. The main document is the contract of sale of real estate, which is concluded with the help of a licensed French realtor and a notary public.

The undoubted advantage of buying a home in France is the fact that a notary is obliged to fully verify the transaction and is financially responsible for mistakes, financially guaranteed by the Notary Chamber. It usually takes at least a month between the signing of the contract of intent and the main contract of sale, since the property must be comprehensively checked for a variety of factors (therefore, some checks take considerable time).

In France, the right to own private property is defined by the Constitution, and all foreign citizens wishing to take possession of real estate in the country have exactly the same rights and obligations as residents of France. They can be the owners of their property without restrictions: use it, receive income by renting or selling, transfer their real estate to inheritance.

Taxation of real estate

The taxation system in France is more complex than in other European countries. In addition to one-time payments for the purchase of real estate, amounting to about 5-7% of its value, there are also annual taxes.
 Local taxes are set by the tax administration annually and go to the budget of local authorities.

1. Real estate Taxe Fonciere. The owner pays this tax annually. The amount of property tax depends on its size and location. When buying primary housing, the owner is exempt from paying property tax for two years.
2. Residence Taxe d'Habitation. This tax is paid by the person who lives in the property and contributes his share to the costs of services and maintenance, which are partially covered by the mayor's office. If the housing is rented out, then this tax is paid by the tenant. If we are talking about apartments, the amount of tax is at least €1000 per year, in the case of living in a villa – from €3000 per year. The owner or tenant occupying the dwelling is obliged to pay the residence tax for this tax year if they occupied it on January 1 of the current year. This rule applies to all residential and utility rooms located on the territory of France.
3. Luxury Tax ImpotSur Fortune. Total capital subject to luxury tax inFrance, is from €1.3 million. At the same time, the calculation of the tax starts from the cost in €800 000. The amount of tax is calculated based on the total net value of the property: €800,000 to €1.3 million – 0.50%, from €1.3 million to €2.57 million – 0.70%, from €2.57 million to €5 million – 1.00%, from €5 million to €5 million – 1.25%, over €10 million – 1.50%.
4. The amount of income tax on resale Capital Gains Taxe, Le Plus-Value is set based on the difference in price when reselling a property that is not the main one for living.

Residence permit

Citizens of countries outside the European Union who wish to invest in real estate in France can request a temporary residence permit of the Visiteur category for a period of one year and the possibility to renew it every year. There are two main conditions for this: compliance with the obligation not to work in France plus the availability (and official proof) of sufficient financial resources to live in France.

Portal HomesOverseas.ru thanks Ekaterina Mikhailovskaya for her help in preparing the article (Aximonial), Tatiana Gavraeva and Nicolas Viale (INeuf) and Alexander Shvarev (RFC Estates).

_{photocredits: flickr / ineuf.com / rfc estates}