It is difficult to identify how this will evolve in the future, “as prices vary according to numerous parameters such as the resort, the type of home, the location and even the altitude!” added Charlotte from Sextant Properties.

There can be a huge gap in prices between the resorts. The most expensive location in the French Alps remains Courchevel with an average price of 9,735 euro per square metre as of December 2011, which equates to  an 11% increase compared to one year earlier. However, it is worth pointing out that in Courchevel it is not unknown for it to reach 25,000 euros per square metre! After Courchevel the next most expensive resorts are Val d’Isère, Méribel and Megève.

However, on the opposite side of the spectrum, the Emile Allais resort saw a large price correction between 2010 and 2011. According to ubiquitous notaires, this is due to a higher number of sales of smaller properties such as studio apartments for instance, as they tend to be cheaper per the square metre.

Likewise, it is also possible to find cut price homes just by being flexible in terms of your requirements. By not being too precise about the altitude, it is possible to find real bargains. It is the same for the property’s condition; the prices tend to be lower when its condition is not quite habitable or in need of heavy renovation work. Moreover, the studio apartments -which are often overlooked by buyers-, are generally a profitable investment. Indeed, “the studio apartments are rented quite easily as holidaymakers prefer to stay in these” said Charlotte from Sextant Properties. Besides, certain town councils are searching to redevelop their housing stock by attracting tourism residences and encouraging the owners to redevelop their property. Tignes has been one of the most active resorts in this way.

In any case, the whole market still remains mixed in terms of prices. According to the resorts, the prices are affordable to very different budgets. Compared to Courchevel where the price have soared under the pressure of the international buyers, you can find a studio apartment from about €55,000 in the heart of the resorts of Les Arcs or Tignes.

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Price per sqm of resale apartments at the end of December 2011 in ski resorts from Savoie and Haute Savoie (source Le Figaro):

• Courchevel €9,735
• Val d’Isere €9,103
• Meribel €8,011
• Megeve €6,094
• Chamonix – Mont Blanc €5,287
• La Clusaz €5,189
• Tignes €4,614
• Morzine €4,560
• Le Grand Bornand €4,426
• Valloire €4,099

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1.    What type of investment should you make?

There are three possible types of buying in the French Alps:

- The purchase of a holiday home for personal purposes exclusively
- A purely financial investment
- A mixed investment with profitability (by letting) and personal occupancy

2.   How would you use the apartment?

If you want immediate profit coupled with long term investment you should buy with a Leaseback scheme! It is the purchase of an accommodation in a new touristic residence, that is to say a residence with fully equipped apartments (kitchen and bathroom), ready to live in, usually offering recreational facilities such as sauna, swimming pool, fitness rooms, etc. The buyer signs a commercial lease with the residence manager for a minimum length of 9 years (renewable). During this time, the management company collects the rents, is in charge of the usual maintenance and everything that concerns marketing to find tenants. A share of the rents is then paid to the owner, according to the purchase agreement he chose: either a purely financial purchase (the owner receives therefore the maximum profitability for the accommodation) or a mixed purchase (the manager deducts the number of weeks the owner used for his own leisure from the rent he should have received with a pure investment option). The maximum occupancy rate is usually 8 weeks (but can be up to 6 months), but it is advised not to exceed too many weeks, otherwise the profitability become too low. These terms (number of week and their distribution) must be determined in the contract with the agent and the management company. It is important to note that there is a possibility at the contract renewal (after 9 or 11 years) to modify the personal occupancy and the rent paid accordingly.

With this type of purchase (LMNP), the property is financially depreciated because the leaseback enables to collect rents which will not be taxed for the next 20 years (it uses complex French tax calculation which is taken care of by a French accountant for €280/year).

With a French leaseback LMNP scheme, the owner can use his property up to 6 months per year.

3.   Which return do you expect from your investment?

Usually, the profitability fluctuates between 3.5 and 4.5% according to the development, the location and the potential future capital appreciation. The difference between the yields comes from the price of the lands, not the rents, which are roughly equivalents for the same types of estate with equivalent locations.

4.   Where to invest in priority ?

Be careful not to buy anywhere! Pay attention to investments in ski resorts where the prices rose sharply recently and are now at the “maximum of the maximum”. On the contrary, it is advised to look around alpine resorts at high altitude, where the prices haven’t reached their maximum potential yet, such as Les Arcs, Tignes, and Les Ménuires. Or the resorts linked to a major ski domain.

You should notably favour the resorts located at least 1,800m high. All the consulted experts agreed on this: it is necessary to give priority to the high altitude resorts, which will offer – a priori – a good snow cover for a long time again. Some prefer the North Alps (Haute Savoie), offering a better snow covering rate considering their aspect. The director of the Pierre-Simon Laplace Institute considers that if the weather becomes warmer, the average snow cover rate will raise from 100 to 150 metres every 1°C. According to him, 2°C temperature increase will be overtaken in 30 years.

Think about alternatives to ski. « People’s habits have completely changed » says Pascale Jallet. People skiing all day long become scarce. Consequently, you should better choose a resort which diversifies its activities.

5.   Finally, will your investment be as interesting as a seaside investment?

Despite the crisis, the resorts occupancies in the Alps are always close to 100%. Besides, as the buildable lands in the mountain become rare, mountain properties promise a good price resistance to economic fluctuations. It is possible to make interesting investment profits in ski resorts which are relatively preserved from the global warming: numerous tourists go there, and as a consequence, rents will rise in the future. It could be profitable as well to avoid some resorts in a too low altitude. Jim Beattie favours an investment combining pleasure and profitability, so that the owners also enjoy their holiday home.

Source : www.challenges.fr

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Century 21 predicts a decline in the number of transactions by 10% to 15% over the year. According to Fnaim, the activity of the real estate market could fall by about 15% to 700,000 transactions in 2012.

Tightening of lending criteria by banks, reform of the taxation of capital gains on real estate rental property and second homes from the 1st  February 2012, found wait before each French presidential election (due in May 2012)… These factors combined create a rather gloomy year for French property buyers (giving opportunities to overseas buyers).

Difficult prognostic
In 2012, “there will be fewer intentions of sale, as households postpone their projects, especially if a sale of convenience, being necessitated by either a birth or a death, divorce or job transfer “, says the president of Century 21 France.
There is no indication that prices will actually decline. Also it is difficult to make predictions, even for professionals. Strong demand by those who can still purchase and supply shortages could lead to new price pressures, resulting in an increase of 2% to 3% for the year 2012, according to Century 21.

On the Fnaim side, they think that prices could decrease by 5% in 2012, because of tighter lending criteria, the shortening of the duration of debt, rising unemployment and declining consumer confidence , and the difficulties of French first-time buyers who cannot get financial help from their parents to secure the deposit.

However, the year 2011 was exceptional; the Ministry of Housing reported 832,000 transactions between October 2010 and September 2011. A record compared to previous years (784,000 in 2010, 585,000 in 2009 and 673,000 in 2008), which competes with the transaction level before the worldwide crisis (810,000 in December 2007).

Prices have also risen sharply: + 7.3% over the 2011 year on the whole of France, according to Fnaim, + 6% according to Century 21. “We returned to the same price level as in 2007,” says Mr. Pallincourt (Fnaim). In Paris, the annual increase reached 22.7%, depending on Fnaim, and 12.57%, according to Century 21.

This price increase has excluded some purchasers’ social groups. “The increase in interest rates – from an average of 3.65% to 4.2% in one year – the tightening of credit conditions, coupled with rising house prices has excluded an entire population from the market, according to Century 21. In 2011, at the national level, they recorded 11% of buyers from middle class and less, and 16% of buyers under 40 and less, while the group of senior citizens has increased by 20%. This population often has a property and can sell it to finance a purchase.

By looking in detail, the market started to decrease from the third quarter 2011, prices throughout France were down 2.2% compared to the first half year, according to Century 21. In the fourth quarter, prices were unchanged from the third, according to Fnaim.

According to Matthieu Cany from Sextant French Properties; “In 2011, 50% of Sextant’s buyers bought a main residence, 30% a holiday home and 20% an investment property which is most of the time a French leaseback. Thanks to our independent French mortgage department we are also able to work around banks criteria and have successfully secured 82 French mortgages in 2011.

At Sextant we believe that 2012 will be a good opportunity for overseas buyers to buy a holiday or permanent home with more buying power than ever. Our forecast projection for 2012 is for an increase of international buyers choosing to invest in France because of the financial stability accompanied with its solid property market.”

Source: lemonde.fr

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• Private banks holding Greek debt accepting a 50% loss
• The Euopean Financial Stability Fund (EFSF) [a fund used to provide financial backing to struggling European countries] to be boosted to €1trillion
• Banks told to recapitalize by €106bn

This package was debated over a number of days and despite being agreed is still not seen as the final answer to the European’s problem. What is known though is that with so much uncertainty in the market the movement we are seeing in the currency market is significant. In fact, last month we saw a difference between the high and the low of the month of €8,200 on a £200,000 currency transfer!

Will China come to the rescue?
Following on from the new rescue package the head of the European Financial Stability Facility (Klaus Regling) met Chinese ministers to discuss the possibilities of borrowing money to rescue them from the current debt crisis. China’s Vice-Finance Minister Zhu Guangyao said China is open to all options and is willing to discuss.’ When first created the EFSF was set up with €440bn and has recently been increased to €1 trillion as mentioned above but according to the IMF the EFSF might need twice that amount to avoid further problems. With China ready for talks but not fully committed we could see further Euro instability.

New Leader of the European Central Bank
November sees the end of Jean Claude-Trichet’s 8 year reign as president of the European Central Bank (ECB). In his place comes the Italian Mario Draghi who is taking control at a time when Italy is in the headlines with a spiralling debt level and in a recent poll released on Sunday the Dutch public remain overwhelmingly pessimistic about the prospects of the Euro and fear that Italy or Spain will be the next in need of a bailout.

It appears that Mr Drahi will have his work cut out for him!

Euro Outlook
The outlook for this month on Euro exchange rates remains unclear and it is likely that developments in Europe will have a big impact on exchange rates. So, if you need to transfer funds internationally make sure you speak to a specialist currency broker who will be able to keep you informed of all the market movement and ensure you get the best rates available in the markets.

	What next? Call +44 (0)1494 725353 (Open 8:30am – 6pm (UK Time) > Open a Currency account today > Request a call back > Ask questions about Currency Exchange

Foreign Currency Direct plc (FCD) are Sextant Properties preferred currency partner and have been selected due to their award winning exchange rates having topped the exchange rate tables in The Sunday Times for three consecutive years. FCD also offer a number of different contract options for Sextant clients including a forward contract where you can fix a rate of exchange for a period in the future using just a small deposit, perfect to help take the risk out of the currency markets and budget for your property purchase.

If you would like to discuss your currency requirements and all the options open to you including the forward contracts please contact our preferred currency partners Foreign Currency Direct plc on 01494 725353 or visit their website: www.currencies.co.uk

Call Foreign Currency Direct on +44 (0)1494 725353 or 0800 328 5884 from 8:30am – 6pm (UK Time) Monday to Thursday and 8:30am – 5pm (UK Time) on Friday’s.

> Open a Currency account today

> Request a call back

> Ask questions about Currency Exchange

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What is a leaseback re-sale?

A leaseback re-sale is a French new build investment property with a guaranteed income in a development that the current owners are keen on selling on. With the introduction of an addendum to one of the laws governing leaseback re-sales which was put into force in January 2007, when doing so, the seller is no longer required to pay back any of the VAT initially saved. The only condition is that the residence has to be classified with an official tourism star rating, and that the lease and conditions remain in place. As long as the purchaser retains the existing lease, and the associated terms and conditions, there is no ‘TVA Immobilière’ to pay by the seller.

Opting out- exit strategy

Opting out is generally not a good idea, as the leaseback development can only be a viable financial operation for the rental management company when around 70% of units are available for rent. If you decide to stop the lease once the first term (or the following ones) has ended, according to French law the management company can seek compensation.

Good deals

Leaseback re-sales often offer very good deals for buyers- sellers are often in a hurry to sell meaning the price can be negotiable, and in order to attract clients, high rental yields are key, with can mean sellers having to put their prices down a little.

We’re seeing a lot of re-sales coming in, as people come into financial difficulties or due to circumstances decide that the leaseback scheme is no longer for them. Now is the time to make your move, whether you’re seeking to start up a portfolio of investment properties, or simply want to purchase one solid investment with the possibility of a few weeks stay and good rental returns. For example we have a studio apartment  in a 4 star residence right on the famous Promenade des Anglais in Nice, for 135,000€. The yield is 3.81% so a good return. If you are looking to invest near Paris, we have a 1 bed apartment in a modern residence near La Defense, with 4.72% return, on the market for 104,760€.

We thus offer a selection of properties throughout France, from apartments in the Alps to the French Riviera, Golf resorts and business residences near Paris, there’s something to suit every investor.

You can also have a look at our list of French resale leasebacks

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On Tuesday the general manager of the INSEE, Jean Philippe Cotis explained that the surge in housing prices in France over the last few years seems predominantly linked to the lack of offer rather than to financial speculation, unlike the situation in Anglo- Saxon countries or Spain.

This opinion of the National Institute for Statistics is very different to that of the Centre for Strategic Analysis who announced some days ago the creation of a property “bubble” in France which is likely to go down to terrible effect.

According to a new study called « prices and rents of old properties between 2000 and 2010 » published on Tuesday by the INSEE, old property prices in France had increased by 141% over the period 1998-2010, that is to say 3 times faster than incomes (+43%). At the same time, controlled rents were increasing by 33%, that is to say an average of 2.4% per year, a rate higher than inflation.

No excessive investments

Thus, the property price curve in France had a relatively similar course to the United States until 2007. And in 2009, whereas old property prices were decreasing sharply over in the US to reach a level quasi equal to the one at the beginning of the noughties, the correction in France has been limited (-7% in 2009) and prices quickly went up again (+6.3% in 2010), as well as the volume of transactions, practically back to its level pre- crisis. However, there is no investment surge and French property prices do not result from an excess of investment in housing which could have justified the property price rise as in Anglo- Saxon countries and Spain.

According to statistics of the FPI (Federation des Promoteurs Immobiliers) property put on sale in France decreased by 11% in the first quarter compared to the same period of the previous year.

Housing weight more and more on budget

According to the INSEE, because of the explosion in property prices which increased much faster than their incomes, the French are dedicating more and more their budget to housing. And according to a study called “Being cold or spending too much money to warm oneself up” published in 2008, 3.8 million households (14% in total) are in a situation of “energy precariousness” because they dedicate more than 10% of their income to pay their energy bills in order to have heating and electric lightning.

30% of French people have to reimburse a mortgage. In seven cases out of ten, the mortgage is used to buy a main home or another property and in other cases, it is used to finance renovation works.

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It appears everywhere, with new build developers, house builders, renovators… Even the PTZ+ (new interest free loan) welcomes it honourably… In short, the energy efficient label (BBC) which will become incontrovertible by the 1^st of January 2013 has become an essential stage.

What form does the BBC Effinergie label take?

Building a new accommodation involves respecting thermal regulations (RT). In the meantime and before the RT 2012 for residential housing takes effect, it is the RT 2005 that prevails. But the BBC label in new build has further requirements, on the basis of a frame of reference established by the Effinergie Association. At national level, a BBC building has to meet a certain threshold of air permeability and consume a maximum of 50kWh/sqm/year of primary energy (80kWh/sqm/year for the renovation, according to the decree of September 29^th 2009). However, this value is modulated according to climate areas and altitude. A coefficient which varies from 0.8 to 1.3 according to regions is applied at the value of 50kWh/sqm/year. If the building is located in the Yonne department, for example, its primary energy consumption will be calculated according to a coefficient of 1.3. It will respect an energy efficiency of 65kWh/sqm/year. In southern France, this coefficient is reduced to 0.8, which means 40kWh/sqm/year. It is the same if the building is situated at altitude (coefficient from 0 to 0.2).

What is primary energy?

It is the energy available in nature before any transformation. For BBC new builds the average of 50kWh/sqm/year of primary energy is based on heating, hot water, cooling, ventilation and lighting consumption. It does not represent the final energy consumption, that is to say the one including other home equipment (household appliances, hi-fi, TV etc.) which increases the energy consumption from 50 to 60kWh/sqm/year.

What does the BBC label offer?

It offers a higher comfort level energy savings. Compared to accommodation built according to the RT 2005 which consumes an average of 150kWh/sqm/year, BBC buildings reduce the bill of primary energy by a third. A significant sum when energy prices keep increasing. However a damper on proceedings: the average consumption of BBC buildings is based on conventional use (19˚ C in the daytime, 16˚C at nighttime in bedrooms). Without respecting certain criteria (if you open windows even when the heating is on or if you are not satisfied with 19˚ C as a daytime temperature for example) the bill may increase noticeably.

Other precision: the BBC label is allocated to buildings and not to apartments, whereas between an apartment situated on the ground floor and another on the top floor, there are inevitably differences. Another advantage, the possibility for first time buyers to obtain an amount of PTZ+ that is much higher for a BBC than a non-BBC. Regarding rental investments, the Scellier operation also privileges the labeling, meaning new BBC buildings benefit from a tax reduction of 22% compared to 13% for others, that is to say a difference of 9 points.

What price:

A new build trademarked BBC costs on average 5 to 6% more than classic accommodation. This is explained by the necessity of improving the building insulation, increasing air tightness, and installing more efficient heating, hot water and ventilation systems.

Who deliver it?

Three organisations certify residential housing: Cerqual (new or renovation), Promotelec and Cequami, the last one only working with individual properties.

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The conception of an eco-friendly district is twice as long in France than in other countries, and a period of 4 to 5 years is needed between the planning of a city centre redevelopment and groundbreaking: our town planning rules make us waste a lot of time. Add to that unwelcome surcosts when today France lacks housing.

There has been a strong command from the President on urban planning reforms. He mentioned it again at Le Havre some days ago, highlighted Benoist Apparu.  His working parties have been working on it for several months.

And yesterday, the four working parties created for the occasion and composed of housing professionals and local councillors, announced their suggestions in front of Nathalie Kosciusko-Morizet, the Minister for the Environment, and Benoist Apparu.  The last arbitrations will be given late May so the rulings go to the council of Ministers before summer and are applied after the summer break.

First constituent of the reform: building permits. “Working parties advocate that the registration of a building permit only becomes obligatory from 40 sqm compared to 20 sqm currently.  Benoist Apparu added: “It is necessary for French people to be able to expand their home easily”. Also, the time frame for building permits may be reduced. Thus, in a conservation area, households may only wait 5 or 6 months instead of more than a year.

To boost the construction industry, the government also wants to play on tax reductions. At present it is in the interests of those owning a plot of land that hasn’t been built on to keep it for as long as possible. Indeed, in the course of time, prices keep increasing and taxes get lighter.

Capital gains tax should see a 10% reduction in five years, meaning tax exemption after 15 years. “For a plot of buildable land that hasn’t been built on yet -and only in this case- we want these reductions to be removed.

Benoist Apparu explains that the capital gains tax will be the same for a plot of land sold after a year or after 15 years in order to fight against the retention of ground rent.

An evolution which adds to the overhaul of building permit taxes which was voted late 2010 and reduces from 17 to 5 the number of taxes to pay for the issuing of building permits. This will make buyers lives easier without however reducing their bill (the amount of the 5 taxes being the same as that of the 17).

“We are also trying to change the way we calculate property surfaces so it becomes more in keeping with the Environment round table. Nowadays, in the administrative count, a household that installs insulation panels on the walls of their accommodation undergoes a surface decrease. This should not anymore,” details Benoist Apparu. A precaution that could increase prescribed surfaces of apartments and houses by 10%.

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