Foreign Buyers Forgo France

International interest in French residential real estate is waning, according to the French bank BNP Paribas. The majority of regions are experiencing a drop in foreign investment, although …

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International interest in French residential real estate is waning, according to the French bank BNP Paribas. The majority of regions are experiencing a drop in foreign investment, although places like Aquitaine and Brittany, which saw foreign sales fall off 48% and 44% respectively, are getting hit harder than most. Of those still buying, the Russians are leading the pack and even growing in number. Sales to the Brits, a usual favorite in the standings, have fallen off 31% between 2010 and 2012. Some experts believe things are set to improve, though, with the introduction of favorable changes to the French tax code. For more on this continue reading the following article from Property Wire.

Overseas buyers bought fewer homes in France last year with all parts of the country apart from Poitou Charentes seeing a substantial fall in the number of foreign buyers.

The data, from a survey by the international section of French bank BNP Paribas, found that over there was a fall of 29% in the number of non residents buying in France in 2012 compared with the previous year.

But the amount does vary according to location. For example, taken in its own the Ile de France, the region around Paris saw a 4% fall whereas Aquitaine saw a 48% drop and Brittany a 44% fall.

Poitou Charentes was the only region seeing an increase in foreign buyers, up 4% and the region is particularly popular with British and Belgian buyers.

PACA (Provence, Alpes, Cote d’Azur) is still the most popular region with foreign buyers who are attracted by the quality of the life and the climate, according to the report. But even in this sought after area the number of overseas buyers is down 31%.

Rhone Alps and Ile de France and Paris are the next two most attractive locations and they have seen demand from overseas fall by 40% and 4% respectively.

The top nations buying in France, the British Belgians and Italians, significantly reduced their acquisitions in French market, down 31%, 24% and 46% respectively. But the number of Russian buyers grew, up 27% accounting for 4.6% of the non-resident transactions in 2012 compared with 2.4% in 2010.

Despite a drop off in sales to British buyers they still a significant share of non-resident buyers at 19.1%, versus 24.5% in 2010, together with the Belgians at 16.4%, the Italians at 12.8% and the Swiss at 10.6%.

But foreign buyers are spending more, with prices paid up by 5% at €384,000 last year compared with €365,000 in 2011. This follows a sharp increase from the 2010 average of €320,000. The Russians spend the most, buying at an average of €700,000.

The survey found that 53% of foreign buyers are considering making another purchase but fewer think now is a good time to buy, 45% compared with 50% last year. Another 45% think it is better to wait as they believe prices will continue to fall.

However, according to one groups of estate agents with properties for sale all over France the favorable changes in capital gains tax currently going through the system could help boost sales to overseas buyers.
 
Leggett Immobilier says that the reduction of the exoneration period going down from 30 years to 22 years for properties where the acte de vente was signed after 01 September makes property more attractive for overseas buyers.

There is also a special reduction to ‘aid the fluidity of the property market’ which is effectively a tax allowance of 25% that has been introduced for one year only which will apply to sales between 01 September 2013 and 31 August 2014. This allowance will be taken off once all other reductions have been taken into account.

CGT is known in France as ‘impôt sur les plus values’ and is made up of two parts; 19% for the tax element and 15.5% for the social charges and the change to the exoneration period applies only to the former part.

As with many things related to the French taxation system there are a few exemptions and the calculations are not at all straightforward so it is most important to seek specialist advice.

‘It is great news that these changes are now in place and just the kind of kick start that the market wanted going into the Autumn. Many of our clients have mentioned these changes while looking at properties and we have certainly seen an upturn in both general inquiries and offers made,’ said Trevor Leggett, chief executive of Leggett Immobilier.

He predicts that 2013 will be a record year in terms of sales for the firm. ‘These beneficial changes to the CGT calculations are a positive step forward for the market as a whole,’ he added.

This article was republished with permission from Property Wire.

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