A major economic recession is coming! The banks are falling! Everything is getting more expensive! House prices are going to drop dramatically!
You must be thinking, that’s ‘a nice start’ to a realistic real estate story about southern France. We are indeed heading for a recession in Europe, which will have unpleasant consequences for many people. But the Cote d’Azur is a world apart where different rules apply.
During visits this summer to luxury villas on the Cote d’Azur in a price range above 2 million, we discuss a possible home offer with the customer (if the house is to the taste). A few years ago, on average, there was always something to negotiate: about 5 to 7 per cent of the asking price. That is close to the amount you have to pay to the notary and taxes to purchase an existing home.
Asking price and selling price during recession
However, nowadays in eight out of ten cases, the asking price is the selling price. Sometimes some furniture is taken over; this reduces the net sales price and the tax you pay.
The price elasticity is minimized due to low-quality supply and high demand. There are more buyers than houses, making the southern French market an actual seller’s market for two years.
Mortgage rates in France also fluctuate between 1.7 and 2 per cent. European banks are increasingly giving negative interest on your savings. So investing in bricks is the most stable investment. Provided, of course, that those stones are in an economically stable environment and together form a beautiful villa.
Buying a cheap home on the French Riviera? Sorry.
Some home buyers who have invested their money in stocks, crypto, NFT or bitcoins are looking at the price of real estate on the Cote d’Azur with an extra sharp eye this year.
Due to the recession, they hope the market and the price per square meter will plummet. A luxury villa in the higher price range would then be sold for a much lower price. The arguments for a shallow offer are always the same: ‘the banks are going to crash’ and ‘people are going to be forced to sell their villas’.
But it doesn’t happen.
In the sixteen years that I have lived and worked here, I have experienced two economic crises, in 2009 and 2015, causing real estate value in other countries to plummet. “Buy for the lowest price and sell when the price rises again” was the motto. And that worked well in Dubai, Spain and Italy. But not on the Cote d’Azur.
The powerful secret of the Côte d’Azur
There is something special about the French Riviera and why a recession does not hurt that bad. Most property owners have enough money to get through a crisis. The down-to-earth French mentality plays a significant role in this. Trouble in the world? War? Do banks go bankrupt? Are governments falling? One shrugs their shoulders, opens another bottle of wine, and knows all misery will pass one day. In the meantime, people prefer to sell nothing than forcibly sell for a lower price. That’s too close to the French honour!
Because if you don’t sell your house, you can always rent it out. More than thirty million people came this summer alone to the PACA region (Var and Alpes Maritimes)! The majority rented a room in a hotel or B&B, an apartment or a luxury villa for the whole family.
A simple villa with a pool and four bedrooms will quickly earn the owner between 3 and 5,000 euros per week. And the more exclusive the location, the higher the rent; rental prices of 50,000 euros per week are no exception.
In short, there is to be a turning point in the world’s prosperity—a period of uncertainty for many. But life on the French Riviera continues in a champagne bubble with fixed real estate prices. That is why everyone is so eager to buy here, and that is why there is no better investment than real estate on the Cote d’Azur.
Worst case scenario: the real estate market freezes, and you rent out the property for a reasonable price. Or, more likely, you see the property value increase: this year, the value of real estate along the coast has increased by an average of 13%. Welcome to the Cote d’Azur!
//
