Cannes, a blue chip property market
It is in sensitive situations that one can fully measure a market’s fundamental strength. At a time when all sectors of activity are showing their limits, real estate in Cannes is displaying enviable resistance. The secrets of a sustainable, long-term investment...
Some places need no introduction. France’s second city after Paris for congress activities enjoys an idyllic environment and a mild climate, just 30 minutes from Nice Cote d’Azur International Airport. Barely a year ago, wealthy clients from around the world were scrambling to get on the Croisette, probably the seafront with the most media coverage in the world. Luxury boutiques rub shoulders here with 4-star hotels. Even the realty sector lavishes care on its looks. To the extent of coming sixth in ratings compiled by Knight Frank and Citi Private Bank. Leading the field, we find four mega-cities, London, New York, Tokyo and Hong-Kong, and a Principality with an extremely enticing tax structure : Monaco. The report gives an average price of 15,000 €/m2 in the exclusive neighbourhoods of Cannes. But already, professionals are wondering. Long accustomed to cyclical phenomena, they had anticipated a downturn. In January 2008, low- and medium-end realty was begining to tremble all over France. But it was not until September, the nose-dive on the American front and disruption of financial marketplaces, that the shockwaves caught up with the Festival City.
Jean-Christophe Hym of the Europa agency acknowledges a decline in transactions. “Sellers, still greedy, and buyers, already opportunistic, no longer see eye-to-eye. The result : both sides watch and wait. The British, coping with bad results in the City and the collapse in London’s property market, are thinner on the ground. The Russians, still present, are confronted by the fall of property prices in Moscow and the 65 % drop on the stock market. Even those we were waiting for impatiently, ie. the Chinese, are now far less prosperous, according to Forbes magazine.” Far from sinking into the catastrophe syndrome, currently very fashionable in the media, our specialist is quite serene about middle-range properties : in other words, apartments between 500,000 and 2 million €, villas from 1 to 3 million €. In the coming months, even if demand weakens and prices see a slight correction, Cannes will find salvation in its investment value. Abel Karim from Croisette Properties warns of the danger of too hasty conclusions. “Historically, autumn is always the quietest season, this one inevitably so. A review in spring 2009 will be more revealing.”
Given the overall situation, some offers that would not have been proposed to owners in December 2007 are now being accepted. But there is always a gap between what one hears and grass-roots reality. Local agencies have not yet, for example, experienced refusals from banks nor total disappearance of any particular category of purchasers. While not expecting 2009 to be a great vintage, some people will certainly scale down their stock positions to invest in real estate. Nothing is less sure than an outright drop in prices. Over time, optimism is the only stance to be taken : wealthy clients, who still have many examples for comparison, are full of praise for the excellent compromise that Cannes represents. The town in fact offers political stability, a quality life-style and proximity to major capitals. The situation does not surprise Sylvain Boichut of the John Taylor agency, who notes the keenness of negotiations and the tendency for dealings in cash. “We’ve been waiting for this for the past two years. It’s just harder to digest because it coincides with a worsening international economic climate. We are, in fact, witnessing the end of a speculative cycle, the demise of opportunism and bankruptcy of share holdings.” Beyond these parameters, very closely linked to the current business climate, the attributes of this gem on the Riviera should be emphasized : “The market’s variety and diversity open up many different perspectives. A particular kind of property or clientèle may face certain difficulties, others take up the torch. For instance, the hills above Golfe-Juan, in the Cannes Eden neighbourhood, and Le Cannet, home to two-thirds of the famous Chemin des Collines, contribute to the richness of what’s available.
“Buoyed by scarcity, the square meter on the Croisette is negotiated between 15,000 and 35,000 €. The average is around 25,000 €/m2. The town centre, known as the “Banana”, ranges from 4,000 to 10,000 €/m2. As in other large cities, it is attracting renewed interest,” says Jean-Christophe Hym. “Especially as considerable effort has just been spent on renovation of facades, for example, the enlargement of the pedestrian area and enhancement of shops. The Rue des Etats-Unis and Place du Commandant Maria attest to this municipal dynamism,” adds John Taylor’s Sales Manager. Pressure is more apparent in the case of apartment blocks in La Californie (10,000 to 15,000 €/m2) and residential neighbourhoods overlooking the bay of Cannes, like La Croix-des-Gardes and Avenue de Lattre de Tassigny (5,000 to 10,000 €/m2). Inevitably less expensive, apartments are doing better than villas, especially in the case of budgets of 1.5 million € or less. “Fans of houses have a choice between the townhouse, with living space of 70 to 300 m2 with a garden, priced between 1 and 2 million €, a villa with a pool but no particular view, ranging from 2.3 to 2.8 million €, a residence opening out to the Mediterranean, from 3 to 6 million €, and a property above 6 million €,” says the manager of the Europa agency. In concrete terms, this segment is stable up to 3 million €.
More than ever, the real estate agent has a role to play. He must bring his expertise to the joint project. Moreover, he has no real interest, other than the ensuing commission, in endorsing an undervalued sale. By adopting this attitude, he simply risks accentuating the downward spiral and the crisis in confidence.
By Laetitia Rossi
