Market Analysis

France is a country of great diversity. Traditionally more appealing for buyers wanting rural properties to renovate, there is a growing trend towards new builds, often available under leaseback deals guaranteeing rental income. Prices have been rising rapidly, with an average increase of 16% in 2004 (10% for new properties).

With as diverse a landscape as most countries four times the size, France has something to offer everyone, from chic Parisian pied-a-terres to Provencal hill-top village houses and rambling Breton farmhouses. Much of France is very sparsely populated and can feel isolated - which could be a good or bad thing depending on your perspective. Tourism is well-established in many areas, but in others earning solid rental income can be a struggle. The climate varies hugely between regions, with the weather in northern areas similar to that in southern England. Accessibility is good, with a great selection of cheap flights from low cost airlines, and ferry crossings, not to mention the Eurotunnel and Eurostar.

The highest priced properties in France are in Paris, the Cote d’Azur and the Alps, where tourism is also the most dynamic. Although established rental properties come at a premium, buyers on more limited budgets can look at the lower priced areas, such as the Southern Alps, which have great capital growth potential.

Impressive capital growth and rental yields can be achieved in many parts of France if you are prepared to put in the marketing effort. The longest rental seasons are on the Mediterranean coast, but the lowest prices are in the rural hinterland, where rentals are less easy to come by. Leaseback schemes offer guaranteed rental incomes and are zero-rated for VAT; they are common in the more obvious tourist destinations, including the Alps and Paris and are starting to spring up elsewhere - but make sure your lawyer checks the details carefully, especially what happens when the lease, often for nine years, runs out; in other areas long-term lets can be a lucrative option.