PL 85

PROPERTY LETTER 16th November 2009.

Dear All,

This is likely to be my last Property Letter in 2009, so I take this opportunity to wish you all a very Happy Christmas, and health, happiness and prosperity in 2010.

TO INVEST OR NOT TO INVEST

There are “extra issues” surrounding people’s already difficult decisions as to whether and when to invest in property in France, how much to invest, how much to borrow, and over how long a period. They are issues that are out of our control – and they change all the time. So one might say that judgements are required, and these can be wrong, slightly wrong, slightly right, or very right, either by accident or through financial brilliance, a faculty that we don’t all possess!

These “extra issues” are such things as relative strengths of currencies, changing rates of interest, and foreign currency restrictions (especially in South Africa).

Many of us don’t feel knowledgeable or confident enough to make these big decisions, so we act on what we can see before us or “know”, especially if the alternative is to lapse into paralysis.

What do we know today?

• The market on the Cote d’Azur bottomed last winter and is slowly recovering. It didn’t fall anywhere near as hard as in the rest of France, and France in turn didn’t fall as hard as the UK and the USA for example. Together with Germany it was able to emerge from recession fairly quickly and return to growth. The property market is moving upwards again too.
• Finance is being offered and interest rates are attractively below 4%.
• One does not need to “cash in” ones US$ or sterling (both remain low against a strong Euro) in order to borrow in Euros. There are alternatives to this and these alternatives may be worth investigating. (If you are interested I will supply you with information and reliable and professional contacts for further discussion).
• The South African Rand remains strong and seems unlikely to get stronger (most predict that it will weaken over the next couple of years). Add to this the fact that the South African government has just increased the “once in a lifetime” allowance from R2m to R4m, the annual allowance per person from R500 000 to R750 000, and the business allowance for external investment from R50m to R500m (as I understand it) and one has a situation that for South African investors abroad looks very much brighter. (This regulatory change, welcome as it is, might be partly aimed at weakening the Rand to help exporters?)

With all things considered, is it a good time to invest? I think so. There are some very good properties coming onto the market.

NEW BUILDS

We have visited some very interesting sites for future new builds recently, some with work underway and some yet to start. I don’t normally feature these programmes in my Property Letters but I feel that there are some who might be interested, and I invite you to contact me directly if you are.

We have access to apartments in buildings under construction and off plan by some of the most well respected developers nationally, at constructors’ prices, in Cannes and in Juan les Pins.

• Excellent positions.
• Guaranteed delivery dates in 2010 and 2011.
• Finance options available.
• Staged payments.
• Rental options (if required).
• A choice of price and size options still available.
• Sophistication inside and out.
• Materials with a touch of charm.
• High quality amenities.

Prices are fairly predictable for this type of investment, and a rule of thumb says that the price upon completion is normally better than that paid (and often a lot better). Transfer and notary charges are about 2 - 3% instead of 7%, and there is by law a 10 year constructor’s guarantee on the building.

Please contact me for much more detail on specific projects if you are interested.

INFORMATION SNIPPETS

Credit Cards in France.
In recent Property Letters I have pointed out that “the French do not have a culture of credit” which has helped them weather the storm of our current recession better than most. Yesterday Vicky was at the bank enquiring on behalf of an owner as to whether he might be able to have a French credit card, and the answer is that “yes, he can, but interest is charged from the day of the transaction at 18% – 20%”. No wonder the French don’t do much credit! All French people carry their “Carte Bleu”, as we do, but it is a debit card. Credit cards are still largely unknown in France.

Long term visas for non-EU citizens.
Another owner recently took the trouble to attempt to clarify their position in respect of long term visas with a senior Consul. We are so often asked for our advice on this issue that I thought it worth relating what they discovered.

The longest visa one can apply for is 5 years, and that is issued at the discretion of the Consul. It would be influenced by whether one has had a French visa previously and for how long. If the previous visa was for 6 months then the next visa might be for a year, and if the previous one was for a year, the next might be for two years and so on. In essence one has to prove to the French that ones intention is not to stay permanently in France. At the end of the day though – it’s at the Consul’s discretion.

With kind regards,

Guy.