Although the market remains cautious, an improving tax environment for non-domestic buyers, coupled with a weak euro, now presents buying opportunities. For US dollar and Sterling denominated purchasers, a weak euro cheapens real estate. A €2m property cost US dollar buyers $2.18m in June 2015, compared to $2.72m a year before. In dollar terms, this is a reduction of 22%. The same €2m property to a British sterling buyer cost £1.44m in June 2015, compared to £1.65m the year prior, a reduction of 12%.
While the Riviera offers some world class ‘trophy’ properties, the prime properties of the region’s cities are growing in appeal for those seeking an investment opportunity. Cannes has a global reputation as a centre of film, culture and entertainment with its annual festivals. Prime property here is cheaper than the ‘Caps’ and short-term lettings are in high demand. Buyers can benefit from dual-use property with rental potential during events and festivals, or may seek to let out full time for an income stream.
The expansion of tourism, driven by improved connections across Europe via low-cost airlines and the new Eurostar rail services between London and Marseille, has had the effect of expanding the second home market into lower price points for non-domestic buyers in the region. Smaller, higher yielding units in Nice, for example, have gained favour with investors attracted by depressed sales prices but stable rents.
In the super-prime markets, yields are negligible, but there exists demand for short-term rentals in the best spots. It is possible to cover running costs by letting out such properties for just a few weeks of the year. The Middle East market, which favours the Riviera as a summer season destination, is an important driver here.
Unlike Spanish, Portuguese or even some Italian resorts, new development opportunities on the Riviera coast are extremely limited. This helps keep supply levels extremely low. Some developers have taken advantage of weaker market conditions to buy up existing properties on large plots and subdivide into smaller, multiple units where permitted.