Cannes, a strong show of resistance
A survey carried out in 2007 by Knight Frank and Citi Private Bank as part of a report on wealth rated Cannes 6th in its worldwide rankings of the most prestigious and expensive locations, after London, New York, Tokyo, Hong-Kong and the Principality of Monaco. Our follow-up, six years later...
The 2007 ranking indicated an average price of 15,000 €/m2 for highly-prized neighbourhoods in Cannes. On the legendary seafront, palatial hotels rub shoulders with luxury boutiques and trendy restaurants. Over 30 hotels with at least four stars, three casinos and listed buildings, inherited from the days when the English aristocracy discovered the fishing village in the wake of Lord Brougham. France’s second most active town for congresses, and one of its most popular among tourists, Cannes is high on the list of retirees and buyers looking for holiday homes. Its annual agenda is a long series of trade fairs and festivals including the Midem, NRJ Music Awards, Mipim, Miptv, Mipcom and Yacht Show. And of course, each year in May, this seaside town is envied on screens in all four corners of the world on the occasion of the Cannes International Film Festival. The hills of Super-Cannes, La Croix-des-Gardes and Le Pezou form a kind of amphitheatre facing the bay, offering a choice of villas both spacious and varied in style.
“Overall, the volume of sales is declining,” admits Karim Abel of Croisette Properties. “However, Cannes is putting up a good show of resistance compared with both national and European performances, even more evident in the luxury sector which is supported by interest on the part of East European clients.” In residential neighbourhoods such as the Croisette and La Californie, prices are stable. There is even talk of a scarcity of quality properties - ie. in irreproachable condition. In fact, those requiring renovation take considerably longer to sell. Among the latest sales orchestrated by Croisette Properties, Karim Abel mentions a fully restored villa of 450 m2 in grounds of 2,000 m2 facing the Mediterranean, acquired by a Russian client for 8.5 M € following negotiations resulting in a reduction of 10 %, and an apartment of 250 m2 on a high floor in a recent luxury residence between the Martinez and Carlton Hotels, acquired for 8 M € by a Ukrainian client. East Europeans rarely part with their acquisitions. Still in the second home category, a French buyer treated himself to a renovated penthouse of 110 m2 prolonged by a terrace of 60 m2, in a residence in the centre with elevator, cellars and parking facilities, priced at 1.6 M €. Prices are often well beyond the reach of local buyers unless they are lucky enough to have a property to sell. French clients, either retired or looking for a holiday pied-à-terre which could bring in income from seasonal rentals, usually spend from 500,000 to 2.5 M €. Expectations are frequently not met by the properties on offer, with appointments well below the criteria demanded. The French, either local or from outside the region, represent 30 % of the agency’s clientele.
“Over the past century, 1998-2008 was undoubtedly the decade the most affected by inflation in property prices,” comments Jean-Christophe Hym of the Agence Europa. “Until the fall of 2008. Since then, we have witnessed a slowdown in activity and sluggishness in terms of prices. Buyers are now coherent and realistic, with sellers, a few exceptions aside, fully aware of market realities.” This estate-agent acknowledges an overall decline in sales volume of about 30 %, though he insists on the steadiness of prices. This sensitive response to the international economic context is even more pertinent as acquisitions of properties in Cannes also tend to be motivated by personal enjoyment. A buyer may therefore easily postpone his decision or simply rent a holiday home, whereas sellers, rarely in any urgent need of obtaining cash, may well prefer to hang on to their properties. They are both attentive to tax requirements, a heavy burden which affects the competitiveness of French destinations. Foreigners find it hard to accept excessive taxes on capital gains and the wealth tax. The 1.5-2.5 M € bracket for houses and 500,000-1.5 M € bracket for apartments are doing well, with these segments fuelled by local buyers, French and European buyers in search of a haven of peace and quiet in the South of France. Houses over and above 10 M €, and apartments from 3 M € are still finding takers, though certainly fewer than in the past. The middle market seems to be having more of a struggle : over the past three years, lead times for sales completions have more than doubled.
“Current tensions help to clean out stocks : the real value of properties tends to be reinstated,” agrees Jennifer Charbit of Beauchamp Estates. An investment in Cannes is seen as a sound long-term asset, an undeniably safe reserve. While buyers and estate-agents have to put up with heavy taxation, 2012 posted a perfectly acceptable cruising speed. In past weeks, buyers, until then adopting a wait-and-see attitude, seem to be in more of a hurry. Some budgets even exceed 20 M €. These clients are not merely treating themselves to a property in the Festival City, but also the French art of living and and a very appealing climate. It’s not rare that captains of industry move here with their families, ready to accept trips back and forth for their professional activities.
