Thanks to uncertainty related to the ongoing eurozone crisis, high-end villas in Tuscany and Umbria, homes with guest houses on the French Riviera and 18th Century castles on the road to Brittany, are essentially on markdown, with prices off 5 percent to 20 percent or more from levels seen only a few years ago.
“Most markets are buyers’ markets,” says Philippe Rosy, chairman of the upmarket estate agent Engel & Völkers, France-Belux. “If you’ve got the money to do it, it’s the right time to buy.”
Austerity measures, rising debt levels and an oversupply of new construction have all weighed on Europe’s housing markets. As a result, not only are there fewer buyers looking to spend, the number of properties on the market has increased.
France’s second-home market is perhaps the best case in point. On the alluring Côte D’Azur, renowned for its scenic hills and luminous waters, the number of luxury villas and apartments on the market is up by 21 percent from last year, to more than 9,700, says Estate Net France, a real estate agent specializing in luxury properties in the area.
As a result, prices in the area – famous for the coastal resorts of Saint Tropez, Cannes and Cap Ferrat, and hilltop towns of St. Paul de Vence and Mougins – have plummeted. Last year alone, prices in the region declined by as much as 10 percent, according to luxury estate agent Knight frank in London.
So far this year, conditions have improved. In January, the average price for a luxury property on the French Riviera fell below €2 million for the first time in years, to €1.93 million, says Estate Net France. While it has since gone up slightly, to €2.03 million this past spring, it remains 9 percent below last year’s prices.
Likewise, in Italy’s Tuscany and Umbria, prices dropped by 5 percent last year, and should stay flat this year, says Knight Frank. The high end of the market appears to be holding up, however. Villas in the €2 million to €4 million price range have drawn buyers, as have those in the €5 million to €15 million range.
No Quick Profits
Areas that are always hot, such as the Chianti region around Siena and Florence, have retained interest due to nervous eurozone investors looking to sink their cash into hard assets and enjoy la dolce vita.
Prices may be low now, but don’t buy if thinking about turning an investment around for a quick profit. Given the questions hanging over the eurozone and its teetering banking sector, there’s no guarantee of being able to re-sell that second home right away. For investors in it for the longer term, opportunities abound.
“People buy properties here for the lifestyle – they want to enjoy their money,” says Fredrik Lilloe, chief executive of Estate Net Prestige, a Mougins- based portal for international second- home buyers.
Looking for a 350 square metre home at the top of a hill in Saint Tropez, with a guesthouse and a pool? Two years ago it was listed for €5.4 million; now it’s available for just €4.2 million, a 22 percent reduction. A 500 square metre villa on Cap d’Antibes with six bedrooms and six bathrooms, a pool, and a panoramic view of the sea, has recently been cut by 12 percent, to €16.7 million. Not all countries in Europe are ripe for buyers just yet. Spain is suffering a glut after speculators built too many holiday homes too quickly before the property bubble burst four years ago. The end of the boom not only led to prices collapsing, but it also wiped out many of the banks that financed the building spree.
Time to buy
Though prices dropped 11 percent last year, some experts, such as those at independent London think-tank Open Europe, believe prices still have far to fall, and are predicting another 35 percent drop
Still, outside of Spain, real estate agents report interest is beginning to pick up as long-term buyers in healthier economies are dipping their toes in. Scandinavians,Russians and increasingly China’s new rich have started to step up.
“From an expat’s point of view, it’s a better time to buy now than it was six months or a year ago,” says Matt Hodder, an associate at Knight frank in London. “You can get a lot more for your money, and ‘core Europe’ is a good place to buy.”