Why Invest in France
France is the second-largest consumer market in Europe after Germany and the fifth-largest
economy in the world.
Due to its diverse nature, France is the most popular tourist destination in the world
attracting 80 million tourists in 2008. A staggering 10 million of those tourists are from the
UK!
France has also been voted ‘The best place in the world to live’ 5 years in a row!
Getting to France is easy from the UK with low cost flights from budget airlines and the
Channel Tunnel. The combination of the Eurostar and the high speed TGV in France provides
a quick alternative to air travel. This mode of transport has increased the popularity of
investment property bought in areas of France that are close to the high speed routes.
France is already well established as a property investment location and investors will
receive stable and reliable returns as it is an established market unlike some of the new
risky emerging markets. French property offers stable growth and a safe, tried and tested
marketplace in which to invest.
France is the top location for Britons looking to move abroad, experts have revealed - Conti,
an overseas mortgage company, has revealed that 43% of the inquiries it has received so far
this year have been for France.
France accounts for twice as much interest for purchasing property than any other country and the
number of Britons crossing the channel has tripled since 2008!
Why Invest in Limousin
The Limousin is located in Central France. The Limousin has been the subject of much press
coverage in recent years, culminating in it being the 5th most desirable place in the World to
buy property by Channel 4’s “A Place in the Sun”.
Limousin is known as the ‘lake district of France’, due to it having over 1,000 lakes. It has
reportedly the best fishing in the world. Limousin is also known as the ‘food basket’ of
France as it is a thriving farming region.
This region is a playground for the richer Parisians who love the countryside as it’s a haven
for outdoor pursuits. They tend to own weekend cottages in the area. This desire to get a
better way of life has combined to make the Limousin one of the most desired areas of
France.
The location of The Limousin is perfect as it is equidistant from Paris, the coast and ski
resorts.
The area boasts a rich heritage and there are well preserved Abbeys, Roman Churches, and
fortified castles. The town of Limoges has many winding cobbled streets and quaint
architecture.
There are frequent flights from the UK directly to Limoges airport from the following 11
airports:
Birmingham, Bristol, Edinburgh, Leeds, Liverpool, Gatwick, Stansted, Manchester,
Newcastle, Nottingham, Southampton.
There is also a TGV station in Limoges and the journey from London to Paris is 2 hours 15
mins. Paris to Limoges is 2.30 mins.
Due to the areas popularity and potential for capital growth, the British have purchased
28.8% of properties in the Limousin region.
French Leaseback
The French government has given tax breaks to developers in order to encourage them to
build 'Residence de Tourisme' developments (properties suitable for touristic use).
The reason the government has provided tax breaks is because there is a great shortage of
holiday accommodation in France in the summer. Another reason is that France earns a
good percentage of its GNP from tourism.
Leaseback property is property suitable for rental use and buyers of leaseback property
benefit from the discount of VAT when they invest in these properties. On new
developments this amounts to a 19.6% discount off market price. In the case of Halcyon
Retreat, the VAT at 19.6% does not need to be paid as the properties will be used for rental
purposes* (this does not affect the 4 weeks free usage)
The leaseback term is 9 years, however if clients wish to take advantage of the guaranteed
buyback option, 5 years from completion, the properties will continue to be leased by the
developer and therefore will still be VAT exempt.
*Buyers can purchase in Halcyon Retreat and use the property year round, however buyers
will need to pay the VAT in this instance.
Capital Gains Tax: Leaseback property is treated in exactly the same way as other freehold
property in terms of French capital gains tax. Capital gains tax has recently halved to 16%.
However after 5 years this is reduced to 10% up to the 15th year when there will be no
capital gains tax at all.
French Mortgages
The French mortgage market has remained stable during the credit crisis, with banks and
lenders showing a strong appetite for lending to foreign investors.
Areas with the lowest capped and fixed rates include Bordeaux, Limousin and PoitouCharentes. Borrowers can secure a capped rate mortgage – where the rate cannot go higher
than 1 per cent over the pay rate – at 2.55 per cent for 15 years, available up to 80 per cent
loan-to-value
Halcyon Retreat
Located in La Souterraine, Halcyon Retreat will become a 5 star destination for the entire
family centred around the 19th century main chateau, built in the style of Louis thirteenth
The main features of the resort include the world class spa, golf course and children’s
adventure zone.
Set in 90 hectares, the main chateau will house the fine dining restaurant, lounge and bars.
The main restaurants kitchen will be adapted for cookery classes so guests can enjoy a
dedicated break focussing on learning to cook. The upstairs rooms in the main chateau will
be refurbished into 19 luxury hotel suites. These hotel suites are currently not released for
sale.
The Spa is a separate building in the grounds and will offer guests the opportunity to take a
dedicated spa break, as well as the indoor/outdoor pool and treatment rooms there will
also be a wellness restaurant/bar and beauty salon.
The nine hole golf course will meander around the grounds and lakes with the last hole at
the main chateau.
There are 2 fully stocked fishing lakes, the larger lake being one of the best fishing lakes in
the region.
The indoor children’s adventure zone will offer activities for children of all ages.
Summary of facilities:
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9 Hole Golf Course
Indulgent French Spa
Indoor swimming complex with waterslides, plumes, rapids
1,600m2 Children’s Adventure Zone
Mountain Bike tracks
Two fishing lakes on site
Fine dining restaurant in the main chateau
Wellness & Family restaurants
Boulangerie, Delicatessen
Boutique shops
Gym, fitness classes
19 Bedroom Chateau with professional training kitchen
Sommeliers wine bar
Conference facilities
French village
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Peaceful walks
Honeymoon Chateau
Equestrian facilities
The investment opportunity:
This is a brand new launch to the market and therefore the investment package will offer
the best returns.
The initial offer is only for the first 24 properties released prices are from only €125,000.
We are converting 4 existing properties in the grounds into 1, 2, 3 and 4 bedroom
apartments for the 1st phase. The investment package is as follows:
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Genuine €100,000 discount on this first phase!
50% deposit – Nothing more to pay until completion
5% cash back per annum, paid for 2 years until completion
Guaranteed non status mortgage on completion
6% NET rental guarantee for 5 years
50/50 split with hotel operator thereafter - predicted yields to be 15% ongoing
4 weeks free usage per annum
Optional 150% buyback guarantee, 5 years from completion!
French leaseback - therefore NO VAT to pay
Comparables
Purchase Price Comparables
Development
Property type
Beds
Size SM
Usage?
Price
Center Parcs Domaine De La Foret de Chambaran
Chateau De Vigiers
Domaine Du Lavagnac
Halcyon Retreat
Cottage
Apartment
Apartment
Apartment
2
2
2
2
57.4
80
76
80
1 week
None
4 weeks
4 weeks
€ 290,000
€ 290,000
€ 369,000
€ 150,000
The above table shows a comparison against similar developments selling off plan/built
properties. None of the developments used in this comparable are anywhere near the coast.
The average price per square meter of property in Halcyon Retreat is €1,926
The average price for property in France is €9,961 per square meter (Source - The Global
Property Guide)
Rental Comparables
Development
Property
type
Spa
Golf
Beds
Low /week
High/week
Center Parcs Domaine De La Foret de Chambaran
Cottage
Yes
No
2
€ 969
€ 1,999
Center Parcs Les Bois-Francs
Cottage
Yes
yes
2
€ 868
€ 1,237
Chateau Du Vigiers
Apartment
Yes
Yes
2
€ 3,290
€ 4,025
Les Dryades En Pays De George Sand
Apartment
Yes
yes
1
€ 903
€ 903
The average figure of the above rental fees is €1,774 per week
The annual return would be €92,248 for 100% occupancy
If we take 50% occupancy (Center Parcs has 80%) this would give a return of €46,124
Based on a 2 bed in Halcyon Retreat at €150,000 on a 50% occupancy, after the 50/50 split,
would provide an annual yield of 15.4%
Fractions
A selection of properties has been fractionalised. The properties are divided into quarters
and prices are between €35,000 for a 1 bed apartment and €60,000 for a 3 bed. There is 1
week’s free usage with each fraction that can be used at any time.
The returns are the same percentages as full ownership and the furnishing costs are divided
into 4.
The 150% buyback guarantee and guaranteed non status mortgage on completion also
applies to fractions.
150% Guaranteed Buyback
These first 26 properties have a guaranteed buyback of 150% of the purchase price. The
developer is putting the additional rental income into an escrow account for the 5 years
from completion to perform the buyback.
Purchase Procedure for Halcyon Retreat
Initially clients need to pay their fully refundable reservation fee of £500 for a fraction and
£1,000 for a full unit. They will then be sent a UK preliminary contract to review. Their funds
are then due 14 days from the contract date and the reservation fee is fully refundable until
this time.
Once the full plans are finalised (January 2011) clients will then be sent the full French
contract which needs to be notarised (Barrasford and Bird will pay for this) and we will assist
clients with this.
Clients can opt to put their money into a bonded escrow account until the French contracts
are signed or they can pay it into a separate client account where the 5% cash back can
begin immediately.
If clients opt for the escrow account then the 5% cash-back will commence when it is taken
out.
We are at the pre launch stage (due to plans being finalised) this is why there is a genuine
€100,000 discount in place for these initial 24 properties.
On completion buyers have 3 options on how to finance their investment:
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Take a mortgage, French Banks will lend 80% LTV (subject to status -rates currently
running at 2.55%)
Take the developer guaranteed non status mortgage (1% higher than the banks rate
at the time)
Take a full refund!
The furnishing costs can be included in both borrowing options.
On completion, the 6% NET rental guarantee begins for 5 years and on the 5th anniversary of
completion, owners can opt to take advantage of the 150% buyback.
If owners do not wish to take advantage of the buyback, they will receive a 50/50 split with
the hotel group ongoing. Yields based on just a 50% occupancy rate are predicted at 15%
(for a €150,000 property) the 4 weeks usage will still continue. The maintenance fee whilst
on the 50/50 split will be €20 per square meter per annum.