French Riviera Real Estate Market Predictions
Updated: May 13, 2021
The French Riviera is a very unique housing market, and there’s a lot to learn if you’re interested in owning a villa here. Nearly 30% of the villas on the French Riviera are second homes, and nearly 8% are “unoccupied” (most of those are used exclusively for vacation rentals). Only 62% are primary residences. The French government is actively trying to make real estate more affordable by adding cumbersome taxes for second homes and thinking up ways to disincentivize house-flipping, investment purchases, AirBnb rentals, and vacation homes. You can 100% expect more of this in the future.
Given these efforts and a range of other factors, the French Riviera is not a good place to buy real estate for an investment. Prices have been flat-lined for more than a decade and are on a downward trajectory, so don’t expect to make money (in fact, count on losing money) when you buy on the Côte d’Azur. That said, this area is unlike any other on Earth, and if you love the French lifestyle and want to purchase a villa knowing these facts, then there’s a lot to learn before you sign the deed. First, we’ll explain the pricing trends for villas on the French Riviera, then you can continue on to our real estate buying tips and warnings.
Here’s everything you need to know about the pricing trends in the French Riviera real estate market:
Trends in the Real Estate Market in France
According to reports, market analysis, and the economists, agents, buyers, and notaires we consulted, the majority of French Riviera villa properties between €1 million and €6 million are listed at unrealistic prices and are sitting on the market until the seller lowers the price to be much lower than others on the market, with the average selling price being around 40% under original asking.
In 2021, the French Riviera is a buyer’s market, and will become even more so throughout 2021 (and for many years to come), as foreign buyers instead purchase homes in their domicile countries, and as COVID-19 continues to harm the economy and restrict travel.
As you can see in the below chart, aside from Paris, real estate in France has been struggling for more than a decade. That’s especially true for villas along the French Riviera (seen as Green/Rural in the chart below). It’s predicted to swing downward and continue to be a seller’s market for the next decade or more due to factors described below.
Expert Market Predictions for 2021 & 2022
We consulted a number of top economists, investment advisors, and (honest) real estate agents and notaires, as well as recent buyers, and these were our findings (this applies to villas on the French Riviera only):
In the very high-end market (€6 million+), villa values will likely continue to slowly increase, pulling the market higher than it otherwise would be. Despite this, villas that are overpriced are not selling, even if they are famous villas. (Sean Connery’s villa is a great example of this — its price was just cut in half after a year on the market). We’ve seen other highly desirable villas that have recently sold for 60% off original list price (for example, a renovated sea-view villa in Beaulieu with two large guest houses that was listed at €10 million just sold for €4 million). This is because in-the-know advisors of wealthy buyers are predicting that the market is on a long-term downward pricing trend.
In the mid-upper range of the market (€3 million to €6 million), villas have been selling for 30% to 65% less than the original asking price from mid 2020 until the current date, with the average discount being around 40%. While some of the below factors may affect owners in this bracket, in this price range, about half of the owners tend not to need to rent / AirBnb their villas. About half of the owners in this bracket also have enough savings to weather the COVID-19 economic issues without needing to downsize. Many Brits have vacation villas in this range and plan to sell in 2021 or 2022, due to Brexit.
The low and mid-range market (€3 million to €1 million) have seen a large dip in selling prices, with many more sellers than serious buyers, and sale prices between 30% and 65% lower than asking. These owners are often elderly and/or relying on vacation rental / tourism or other income that has been significantly disrupted. Expect to see an increase in distressed sales in this segment due to the aging Baby Boomers, the economy, and Brexit.
Most of the activity has been in the lowest-priced bracket (€700,000 to €1 million), where villas are selling quickly, as COVID-19 has increased sales in this bracket by pushing local families to consider buying a villa instead of (or in addition to) their apartment. The primary buyers in this bracket are French families. The French do like to bargain and you can expect to get about 10% to 20% discount on the list price.
Slow to grasp reality: Despite these facts, many stubborn or misinformed villa owners are still listing their villas at unrealistic prices, often two to three times what they will eventually sell for. These villas have been sitting on the market for years until the prices are lowered. One of the problems in this area is that agents frequently lie about the value of the villas so they can secure the listings, as owners generally choose the agents who tell them they can get more for their villa (who would you list with — the agent who says your villa is only worth €1.7 million, or the one who promises to get you €4 million?)
Reasons Real Estate Prices Will Get Cheaper in 2021 & 2022
- The French government is cracking down on vacation homes and rentals, in an attempt to make real estate more affordable. They’ve introduced new tax laws that went into effect this year which increased rental income tax from the old rate of 17% to the new rate of 40% for people who have annual income from furnished rentals exceeding €23,000, or whose rental income is greater than the sum of their other activity income. This makes vacation renting much less lucrative.
- Because of Brexit, British people (a primary foreign buyer / owner on the French Riviera) will have the amount of time they can spend in the EU (including France) reduced to only 90 days, and they will have to pay a lot more tax on rental income, as well as other new taxes. Mortgages are now more expensive and harder to get for UK residents, and the currency conversion is unfavorable, both making it more expensive than ever to buy outside of the UK. These factors are keeping British people from buying new properties on the French Riviera, and at the same time prompting many to consider selling their French Riviera vacation homes.
- COVID-19 will cause an influx of vacation homes on the market because of: job and business income losses, lowered income, deaths, and a decrease in high-spending tourists and AirBnb bookings. These factors will force many people to sell their vacation homes or downsize their primary residence. These issues will continue into 2022 and beyond because some countries (like India, Mexico, and Brazil, etc.) are many years away from vaccinating their population, causing variants that may be vaccine-resistant.
- Baby Boomers, who are the majority of villa owners on the French Riviera, are getting up there in age and are getting too old or sick to maintain villas (or, sadly, dying of COVID-19), therefore selling their villas and moving into assisted living or apartments. There are not enough wealthy Millennials to pick up the slack (based on the lack of population and wealth in this demographic), and Millennials tend to prefer the sharing economy (AirBnb versus owning).
- The long-term economic debt cycle is due for downswing, which is very likely to cause a major global recession in the near future, which is likely to lower real estate prices (because credit will be much harder to get, among other factors) for about a decade.
- Foreign buyers are now buying houses closer to home (within maximum two hours driving distance) and selling their villas in the South of France. This is due to several factors, including: working from home several days of the week, Brexit, and COVID-19.
- Once a major buyer, Parisian buyers are now opting to buy villas within driving distance from Paris so they can work from home in comfort, but easily drive to their office.
Often, when buying activity slows, it takes some time for homeowners and real estate agents to adjust their expectations and lower pricing. In the meantime, realistically-priced properties may sell, but properties that do not adjust their pricing will remain on the market, often for years, until they adjust their expectations and lower the price to be in-line with the market (find out how to determine the correct pricing, below).
Many buyers predict a drop in the prices of prestigious properties. According to the results of a study carried out in June 2020 by a large French real estate company, 63% of potential buyers are betting on a drop in prices. Conversely, this figure was 32% in 2019 when the majority of buyers bet on the stabilization of property prices (41%) or even an increase (27%).
Henry Buzy-Cazaux, founding president of the Institut du Management des Services Immobiliers, in a recent interview with Le Revenu magazine, said that “a fall in prices of 10% [in vacation markets such as the French Riviera] seems inevitable”, and speaking about the effects of the economy in France, he also predicted an overall real estate market decline of 30%.
Keep in mind that statistics that include the entirety of France are misleading as they include big cities like Paris and Marseille, where demand remains strong and prices are increasing. Rural and vacation-home areas like the French Riviera are, conversely, on a downward trajectory.
Real estate agents and notaires get paid when you complete the purchase, and the more you spend, the more they make. So, naturally, they tend to be very optimistic about the market. They are incentivized to tell you that it’s a super-hot market and prices are going up, as this pressures buyers into feeling like they should buy sooner and for more money, and it incentivizes sellers to list their homes. Even in obviously soft or declining markets, many agents and notaires will often tell you that it’s a hot market.
Real Estate Market Historic Pricing Trends
The easiest way to see the historic trends in pricing (and the recent sales prices) in a specific area of the French Riviera is on the websites listed below. Keep in mind the time period that the estimation is based on, as data that includes 2019 and early 2020 will skew higher than post-Covid19 pricing from mid-2020 to current.
- Check this notaire statistics website and this one (both will give the same pricing). You can learn the historic high, low and average sale prices over time. You can select a time period for the price estimation, and see which towns / areas are more or less expensive, and how many sales there have been in that time period. It also lets you specify new or resale house or apartment, the property size, and the area or town.
- The JDN website and the Drimki website both show trends of real estate prices per town or area over time (see screenshots above), including the high and low price per m2. These sites show lower prices than the notaires website, but it gives you an idea of the demand over time.
- Your agent might tell you to look at SeLoger to find the average m2 of the town. When compared with the local m2 sale prices released by the notaires, SeLoger slants much higher than the real sales prices (which, not surprisingly, benefits real estate agents), as their estimations are based on selectively-picked 3+ year-old sales data.
Buying a Villa? Read This First!
When you’re ready to look for a property, make sure you know all the scams and pitfalls. Our complete guide to buying real estate in France explains how to estimate a property’s real value, how to get the best price and avoid over-pricing, what to look out for, how to avoid getting scammed, and more.