A study from Savills Research and Holiday-Rentals.co.uk indicates that property values in France continue to rise and rental incomes are also high, providing investors in second homes across the channel good returns on their investments. Although many investors have been tempted by lower prices and high capital gains in emerging markets, the study revealed the highest rents are still achieved in France, Italy and Greece.
Respondents’ properties had increased in value by an average of 19% per year over the past decade in France and the majority successfully rent their properties for at least 17 weeks annually, providing average rental income of around £16,000 per year. This shows it is still possible to achieve a level of rental income that makes a significant contribution towards the ongoing costs of ownership.
The South of France in particular remains a top choice with investors and holidaymakers alike. Greg Grant, UK Country Manager, Holiday-Rentals.co.uk says the biggest proportion of properties is in the Riviera, followed closely by Provence, then Languedoc-Roussillon. He says “Riviera apartments experience the highest rental demand, followed by villas in Provence and houses in Languedoc-Roussillon”.
Grant adds “While Languedoc-Roussillon is not as in-demand as the other two regions, it’s popularity is increasing and it has frequently featured in the travel press this year, so there is a good chance holiday home owners here could see an increase in demand in future. The property press have also touted it as a good place to invest, so it definitely still represents a great opportunity for investors.”
In terms of the rental income property owners in the Med can expect that generally properties in these areas achieve a higher level of bookings than the national average. The majority achieving 20 to 25 weeks, due to the longer season and the abundance of low cost flights year-round. Below is an indication of the average weekly rates for the most typical property types in the Med:
Cote d’Azur Riviera:
- 2 bedroom apartment: £750 per week
- 3 bedroom villa: £2,000 per week
Provence:
- 2 bedroom apartment: £600 per week
- 3 bedroom villa: £1,500 per week
Languedoc Roussillon:
- 2 bedroom apartment: £600 per week
- 3 bedroom house: £850 per week
- 3 bedroom villa: £1,000 per week
Cote d’Azur Riviera Case Study:
Eamon McCullough from Meath in Ireland bought his two bedroom apartment in Villefranche-sur-Mer on the Cote d’Azur in 2003 for €550,000 (c. £394,000). Eamon says, “We chose a holiday home in the Nice area as it’s easily accessible from Ireland, plus it’s a popular holiday destination and we wanted to rent the property out when we weren’t there ourselves.” Apartments are one of the most popular property types on the Cote d’Azur as they’re easier to manage and more convenient for tourists than a remote hillside villa or house.
When investing in a ‘fly-to-let’, Eamon stresses it’s important to bear in mind seasonality. Just because the weather is nice year-round, doesn’t mean your property will rent year-round, especially if flights are reduced and local amenities and attractions are shut. This is precisely one of the reasons Eamon chose Villefranche-sur-Mer.
He comments, “Flights to Nice are year-round and everything stays open too, so our season runs from April to October. Last year these months were fully booked, as well as 50% of the rest of the year.” When deciding how to market the property, Eamon says he put himself in the place of the traveller: “I simply went online and searched for holiday rentals on the Cote d’Azur. A variety of websites came up, from which I finally selected Holiday-Rentals.co.uk”.
Eamon finds that internet advertising alone is sufficient to book out his property and uses a local friend and cleaner to manage things on the ground. In terms of return on investment, Eamon estimates that he receives around 7% per year from rental income and that the property has increased in value by nearly 50% over the last few years. So his Mediterranean bolt-hole has proved to be quite a nice little earner too!
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Nice Blog.
It does appear that many countries are beginning to come out of the recession and property prices are starting to rise once again. We will have to wait to see if certain economies recover fully from the activities of the last 18 months.