The number of property transactions carried out by foreign-based buyers fell by 13% last year
French property seems to have a lost a little gloss in the international markets. According to the 6th report by BNP-Paribas International Buyers entitled “Investing and Leaving Abroad”, there are less foreign buyers active in the French property market. The number of transactions concluded in 2013 showed a 13% fall compared to the previous year. 12,930 sales were concluded last year compared 14,901 for 2012; a year where the number was already down by 1% from 2011 (15,073).
Amongst the favourite regions chosen by the diminishing market of non-French origin is the Côte d’Azur – an area that saw a drop of 16% for foreign purchases between 2012 and 2013. But there were other areas too: Brittany is also a much-sought-after spot by the foreign market where the drop was even more pronounced (down 19%) and in the Limousin, the figures were down by 30%. The Poitou-Charentes and the Rhône-Alpes regions also saw double-digit falls. The only area in the country where there was virtual stability in terms of foreign interest, in fact, was the Île-de-France (essentially greater Paris), where there was only 1% decline in the number of foreign purchases, according to the BNP report.
According to the report, the fall hasn’t been localised to any one nationality or group of nationalities. Although it’s (unsurprisingly) the British who lead the way, representing almost a quarter (24.5%) of all foreign property purchases in France, the Belgians are still the second-most enthusiastic foreign buyers, representing 16,7%. In 2012, they were 17.6% of the foreign sector. The stable Swiss maintained their market share at 11% but the Italians – who constituted 15.4% of the foreign market in 2011 only counted for 8.4% of all foreign purchases in France in 2013. The study also confirms the arrival of purchasers from the United States and Oceania.Aside from the general economic crisis, the movement of cash goes a long way to explaining the reticence of foreign buyers. Previous studies carried out at the beginning of the year by luxury property specialists Barnes and Daniel Féau denounced the impact of the aggressive French fiscal policy on the market, claiming that even expensive cities like London, New York, Hong Kong, Miami and Singapour had become better investment options for foreigners.
And yet, France doesn’t deserve to be stigmatised. In support of their study, BNP-Paribas International Buyers refer to a study carried out last April concerning the main worries of potential foreign buyers. Their preoccupations were dominated by capital gains tax, the amount of taxes and charges payable on purchase and also the amount of property tax and other local taxes that owning a property in France would entail.
However, amongst the eight countries analysed in the study, France is not the most tax-hungry country for the foreign property investor. Acquisition charges, property tax, local tax and taxes to the environment and capital gains tax were all higher in Portugal, Italy and especially in the United States, where the taxes were more than double the French rates. Moreover, the study points out that the French tax rebate system that comes into play on resale means that the tax rate is lower again than might initially seem. In terms of taxation, however, the United Kingdom remains particularly investor-friendly, similar to Belgium, Holland and Switzerland.
As an interesting footnote to the study, the average price being paid by foreign buyers on property in France has actually increased slightly by 1% from €351,119 in 2012 €353,925 in 2013. In the Île-de-France region, the average price in the foreign market was €584,000, compared to €330,000 in the provinces. The Russians remain the biggest spenders amongst foreign property investors in France, forking out an average of almost €627,000, followed by the Norwegians (€566,000) and the Americans (€475,000).