French property back in vogue with Gulf

Whether it is a chic apartment with views of the Eiffel Tower or a manor in Brittany, it is clear la belle vie has enduring appeal and is attracting increasing numbers of Gulf buyers.

From elegant apartments in Paris, above, to wooden chalets in the French Alps, France is regaining investors' favour as the place to buy second homes. Thomas Coex / AFP

From elegant apartments off the grand boulevards of Paris to villas close to the shores of the Mediterranean, there are signs France has re-established itself as a favoured location for those able to afford a second home.

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Whether the buyer lives in a neighbouring European country or - as agents say is increasingly the case at the higher end of the market - the Gulf, including the UAE, the lure of the City of Light and the French Riviera have remained strong even in troubled times.

Recent research by Savills International and HomeAway.co.uk shows France has replaced Spain as the favourite destination for second-home buyers to invest. The findings reflect some degree of recovery since the sector suffered a downturn after peaking in the middle of the last decade.

While observers may find it hard to suppress a wry smile when thinking of the current turmoil throughout the euro zone, from which France is not exempt, it is the "perception of stability", along with limited house price decline, that makes buying French property seem a safe bet.

There is a darker side to this perception, at least for British buyers. Many who bought homes in France, often in western areas such as Brittany and Dordogne, saw the dream of finding la belle vie turn to a nightmare when the euro's value rose sharply against sterling. The difficulty of selling in France, and rising property prices in the UK, made a return impossible while currency changes slashed any income or pensions derived from Britain.

But there remains ample evidence people are still eyeing France as a country where, if they are flexible about the area in which they wish to settle, the proceeds of any home they sell in the UK will go a lot further. A second recent study, for Lloyds TSB International, found that of 5.5 million Britons living abroad, an estimated seven in 10 intended to stay away permanently, saying Britain is "more expensive, less safe and offers a lower quality of life".

The large number of expatriates cited by the research includes people who have emigrated to the UAE, Australasia, the US, Canada, South Africa and Hong Kong as well as the closer European destinations. Seventy per cent described their quality of life abroad as better, 64 per cent felt wealthier and more than 800,000, based on the sample, had decided within the past year to cancel plans to return.

The bank says 11.2 per cent of the total numbers questioned had homes in the UK for personal use, a proportion that rose to just under half among those living in the UAE but taking part in the survey.

A majority of clients buying through Savills have properties in their main countries of residence. And among such purchasers, with no need to raise capital by selling existing homes, there is the confidence that accompanies affluence.

"Traditional prime property hotspots which attract wealthy, lifestyle buyers have been more resilient to the downturn," says Rebecca Gill', a research analyst at Savills International.

This translates, in France, as not only the capital and selected areas of southern France - especially the Cote d'Azur - but also the Alps. Outside France, Savills says the Algarve region of Portugal, northern Italy and high-end locations in Spanish islands such as Mallorca and Ibiza have also weathered the financial storm, with the kind of property that appeals to "cash-rich, high-spend buyers" maintaining robust values.

But against a background of dramatically falling house prices in Spain, Savills found more than twice as many properties were bought by Britons in France than in Spain during the past two years.

The research also shows even if the buyers are well off, they are still happy to recoup part of the cost of keeping second homes with the proceeds of holiday rentals. More than half (55 per cent) of respondents in the survey said income generated by letting their properties covered a proportion of running costs, helping to protect them against the consequences of tough global economic conditions. As many as one in three reported holiday rents enabled them to cover costs completely, while 13 per cent made a comfortable profit.

Rental values vary according to the size and location of the properties. But one second-home owner in 20 told Savills lettings income exceeded €35,000 (Dh171,738) a year.

Among properties handled by Savills, a home in more popular areas of the south of France, from Saint-Tropez to the Italian border, would probably cost at least €500,000 for a small apartment in a serviced development with a pool and other facilities.

A Provencal-style mansion near Cannes, offering five bedrooms, five bathrooms, designer garden and a heated pool with spa, is for sale at £10,843,900 (Dh61.6 million), but the agency has more expensive properties elsewhere on the Riviera and in the Alps.

Ms Gill says buyers are commonly influenced by such factors as proximity to airports, restaurants and beaches and typically expect a highly developed local tourist infrastructure. Outdoor living is a significant draw, making homes with balconies and terraces more popular - and also more expensive.

Paris is a more specific market, with flats dominating the range of available homes, although rental potential is enormous in the world's most visited city.

The FrenchEntrée.com property website, which claims 200,000 international visitors a month, currently carries an advertisement for a two-bedroom apartment in the shadow of the Eiffel Tower, with an asking price of €2.09m, while a much more modest one-bedroom flat at Oberkampf, 11th arrondissement, is on the market at €335,000.

When people do not wish or cannot afford to buy an overseas property, but wish to rent, their choices broadly follow those made by buyers, with France and Spain again the favoured locations followed by the UK, Italy, Portugal, the US, Cyprus, Greece, Turkey and Ireland

"Clearly, holiday-home owners and tourists share similar preferences for overseas properties," Ms Gill says. "Strong underlying lifestyle demand for a property helps to support an investment case. It is these fundamentals that drive longer-term capital appreciation and attract rental income."

One British charity, however, has raised a cautionary note. Elizabeth Finn Care, which provides help to people who end up in financial need after buying abroad, warns a "rose-tinted image of life in the sun" is far from the reality for some.

Bryan Clover, Finn Care's grants director, says nearly everyone the charity supports moved abroad for a better quality of life.

"Due in large part to the fall of the pound against the euro over the past few years, many of our beneficiaries, particularly in France, have lost 30 per cent of their income at a time of rising fuel and food bills. They have gone from living a modest but comfortable existence to life on the breadline."

But Mr Clover says his charity never attempts to advise people on how to go about making the move. And no one with a realisable asset, such as a house in country of origin, would qualify for assistance.

The clear message may be only those with a relatively secure financial base, or property to fall back on, should contemplate buying overseas.

The equally clear suggestion from the research by Savills is there are still plenty of people around the world with resources that enable them to do so without fear, even in a recession.

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