As UK House prices climb further, France still offers the best investment opportunity in Europe

Property prices rising fastest in Upper Normandy say experts

Article by Pascal Molliere

Tuesday 24th April 2007, 23:07

The housing market in Great Britain has been steadily rising for almost 2 decades but experts are predicting a major slow-down which will see prices level off. So what next then for the hungry property developer who’s looking to make some fast cash?

While reports say that far flung European destinations such as Bulgaria, Croatia, Estonia and even Hungary are returning vast sums of profits for property developers, there still remains one consistent out-performer on the European housing marketplace and with it being on our own doorstep, it is no wonder why France is set to become the next reliable and long-standing property hotspot.

The news about surging house prices and rising interest rates is never out of the news. A plethora of home and property programmes swamp our daytime (and night time) tv schedule and there aren’t many of us who haven’t thought of how we can either climb onto the property ladder or improve our bricks and mortar assets to realise those ridiculous price levels that have been achieved time and time again.

It’s official, property is more reliable than our pensions, more reliable than gold and certainly more profitable than working for a living. But with the ever growing interest in property developing and refurbishing, it is no wonder that the market is becoming somewhat overcrowded. Not in France however, and a growing army of first time and experienced property developers are casting their nets across the English Channel to France and in particular Northern Normandy for their profit fix in the real estate business.

France as a property hotspot is not particularly a new thing. Indeed, property in France has shown a steady increase in value over the past 50 years and more importantly in the last 10 years. But it is in the last 6 months that have really shown a difference and is what leading market economist Jean-Luc Brouillet has been predicting.

“France is the new destination for long-term European growth” says Brouillet, managing director of one of France’s leading banks. “Last year we saw and increase of foreign investment into property of 3.5%, making a total of 7.9% of property being bought with foreign money. The year before it was 3% - but this year has seen the most significant jump yet of almost 11% year-on-year and it is climbing at a rate of 3% a month”.

In particular, areas such as Alsace, Massif Central and Seine et Marne have shown significant rises, but it is Normandy and in particular Upper Normandy that have shown the most interesting results. Jean-Luc Brouillet thinks he knows why. “Towns and  villages around the Upper Normandy Seine Valley have proved very popular with British buyers due to it’s proximity to Ports such as Le Havre, Dieppe and airports at Rouen.” He continues “Motorways linking Normandy to Paris is also an important factor”.  “Smaller villages such as Caudebec En Caux, St. Gilles De Cretot, Allouville Bellefosse are yet to be discovered and represent prime investment opportunities in this region” “These areas have attracted large increases in property values largely sparked by foreign buyers”.  He says “Because France offers an amazing quality of life, coupled with traditional family values and a strong market economy, we are ripe for investment. But it is factors such as our proximity to Britain, cheap property prices and affordable service prices that is encouraging the serious investor to this particular region”.

Property investors are practically guaranteed a return of at least 22% per annum across most regions in France, with some regions such as Normandy fetching more than a 30% increase.

A couple from Portsmouth who rented out their home in England in order to buy a property in Caudebec En Caux late last year have already made a €55,000 profit with just an €130,000 outlay. “We bought a property here in November last year” said John and Frieda Wright “We borrowed the entire amount from BNP (Banque Nationale De Paris) at an amazing rate of just 3% - our repayments were just £300 a month which we could easily afford as we were earning £1700 a month from the rental of our house in England. We sold the French property again only 4 months later for €190,000. All it needed was a new kitchen and bathroom which we bought from Ikea in France.

John met his German wife Frieda while on holiday in Turkey 3 years ago and got married in England in 2005. “We wanted to tap into the potential of property because it seemed a reliable and straight-forward way to make money work for you, but we quickly realised that for every one potential bargain in the UK there exists 30 – 40 cash buyers who are ready to pounce instantly to snap up the property”. Frieda, from Berlin said “This in turn forces prices higher and therefore profit margins are forever being squeezed”. “We did a little homework and discovered that Europe is changing dramatically with regards migration, property and market economies. We looked on some European property sites and then some French property sites such as 1st-for-french-property.co.uk  and we found that prices were very affordable”. Frieda added “I have friends in the region who were telling me that prices were moving up and up in Normandy very quickly, so we started looking there”.

2 months later, the couple had found their ideal project, a slightly run-down house in upper Normandy region in a town called Caudebec En Caux. A pretty historical town situated along the banks of the river Seine, a few miles inland from the large deep sea port of Le Havre.

The couple are typical of many young investors who are looking further afield to realise a better return on their investments or to live in and build a new life. “Many people are also looking to build businesses in France such as Café’s or Gites (Bed & Breakfast)” said Brouillet “Many foreign visitors are choosing a life in France because of the quality and the ease of life compared to that in the UK”.

With many major French towns and cities now within easy reach of UK shores thanks to the high-speed rail link, cheap airline deals and fast motorway links in France, many British investors are also choosing to live in France and maintain a house and/or business in the UK.   “Better transport systems, less cars on the road, lower taxes and higher quality education is tempting for many cash strapped British families” said Brouillet. So we decided to check out a few of these claims.

We took a look on one or two French property websites and found quite a few bargains. For example, this one property set in a National Park area in the Normandy countryside on the website1st-for-french-property.co.uk . The description reads -  “This half timbered detached residence, built in 1830, was once the village shop cum post office cum café, and has ample space to either keep as a large family home, or to be used as a B & B. A 5 bedroomed property priced at only £140,000, the listing goes on to say There is also a large barn on the property which could be converted to living space. The house stands on 800 sq metres of land. 

This particular find is typical of several in this region, however it represents an interesting prospect with it's own un-converted barn. Others included a 4 storey period house with a pool and 2 acres of land for £300,000, a riverside apartment priced at £80,000 and a converted bakery in the town centre for £180,000.

With interest rates set to rise in the UK by another quater of one percent and further still by the time summer is upon us, France is definitely offering something special for the serious and the first time property investor.

 

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