Chamonix Market Update – August 2017

The last 12 months have seen many challenges, from the Brexit vote to Trump’s success to the French election and 2nd UK election, but perhaps the biggest dent to the local market has been the devaluation of Sterling.  Although the Brits are not as dominant as they once were, they are still important and many have held back their plans to purchase because of the unfavourable exchange rate.  This has affected the lower budget end of the market rather than the top end where clients may have already had assets in Euros, or have the collateral to raise Euros without transferring the funds from Sterling.

Market Report (Aug-17)

On the positive side, interest rates remain low with 15 year fixed rates still below 2.0% and marginally over for 20 years.  The banks have proved very slow to process applications due to the sheer volume, but lending is strong and very attractive to potential owners and investors alike.  Equally, where one currency falters, another strengthens and the US dollar is one to pick out, bringing a growing number of American buyers at all levels of the market.

Although it’s anyone’s guess what the UK’s withdrawal from the EU will mean for British buyers, the uncertainty has led many to bring forward their plans to buy in France, particularly those who are looking to make the move a permanent one.  As one client commented, his knees may have packed up by the time there is any meaningful certainty in the market, which nicely describes the general sentiment.  Clients are buying with their hearts rather than necessarily their heads.

Although wisdom suggests investors should turn to bricks and mortar at a time of uncertainty, it must make financial sense so buyers are showing increased interest in the potential rental performance of the properties, even if it is not their intention to rent.  After three poor winters in terms of snowfall, the reliance on a strong ski season cannot be taken for granted and buyers must be careful with their rental forecasts.  The summer season is key and can make the difference between a good return and a poor one – the “summer” is increasingly popular and increasingly long, extending from May through to October.  This can be explained by an ever-growing interest in activity-based holidays, but also the explosion in trail running and the Tourist Office’s focus on new markets such as Asia.

The final challenge comes from a partial planning “freeze”, where the town hall are refusing applications that don’t meet the previous requirements restricting the amount of habitable area permitted on any particular plot of land, as opposed to the national rules which restrict only by footprint.  This uncertainty will continue until the new Local Plan comes into effect, expected by 2018.

However, despite the challenges, it has been a very good year for sales and we have seen a very positive growth in business year on year.  This is due in large part to an increased number of sales at higher budgets, but the sense is that the market is robust and many buyers are looking to invest here.  The caveat is that the demand is focused on the traditional core areas – central Chamonix for apartments, walkable to town for chalets as well as les Moussoux, les Praz and les Bois.  Other areas have remained relatively static, particularly les Bossons, Taconnaz and les Houches, although they do represent much better value for money.

In conclusion, we remain positive about the next 12 months.  Emmanuel Macron’s election appears to have brought increased optimism and we hope that his pro-business, pro-Europe policies will give an additional boost to the French property market.

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New arrivals on the Place du Mont-Blanc

Marguerite, Louise and Emily aren’t mountain cows (as their names might suggest) but three cars which make up a new car-sharing fleet which has just been launched in the heart of Chamonix. Named “Les Ponettes” (the ponies), the two-seater, electric cars are on trial during August and September and available for short trips around the Valley to anyone with a driving license (issued at least 3 years ago).

ponettesPhoto from Chamonix.com

To use the cars you just need to download the oneblip app and sign up to the “Les Ponettes” group and for €7 per hour (billed by the minute after the first hour) you can travel up to 100km (at speeds of up to 100 kmh) at your leisure.

The “Ponettes” are part of a program run by Transdev which is backing projects aiming to combat mobility and air quality issues in the mountains.

Tip: use the code TROPBIEN when you book your first outing for a 70% discount. For further information take a look at the “Les Ponettes” Facebook page – https://www.facebook.com/Les-Ponettes-104656016878475/.

Ponettes 2Photo from Chamonix.com

Changes coming for Route des Pélérins

A presentation was made last night to local residents about changes to the circulation on Route des Pélérins, linking Chamonix centre to les Pélérins. The issue has been the levels of “transit” traffic, heading between the Mont Blanc tunnel roundabout and the town centre, as well as a lack of pavements along most of its length.

Pelerins Map annotated

The new proposals will be tested between September and October with a consultation/review shortly thereafter. These actions will be:

1. The addition of a 1.5m wide pavement between Avenue du Courmayeur (main bus stop) and the Medical Centre (former hospital) on the northern side (the right as you head away from town). The road will narrow but will remain two-way, with “chicanes” added in various positions to break up the traffic flow.

2. From Chemin de la Forêt, just after the Medical Centre, up to Descente Joseph Marie Couttet, the road will become one-way, heading away from town. A pavement will continue on the southern (left) side of the road, with a cycle land heading into town in the opposite direction. The purpose of this is to interrupt transit traffic to encourage vehicles onto Promenade Marie Paradis (along the River Arve), which is full width with a full pavement already.

3. For the final part of Route des Pélérins up to Route Benoit Couttet, nothing will change so as to allow easy access to the shopping arcade in les Pélérins and the Ecole Jacques Balmat.

Angry meeting

Mountain Base directors, Matt and Andy, who both live in the area, have welcomed the changes which will undoubtedly reduce traffic in the area and enhance the quality of life in an increasingly popular sector.

TENNIS ‘OPEN DE CHAMONIX’ 1-15 August 2017

For the next 2 weeks all levels will compete in the ‘Open de Chamonix’ Tennis Tournament 2017.  It attracts beginners as well as top national men and women from France and neighbouring countries. The tournament will be hosted as always by the Chamonix Tennis Club next to the swimming pool, just 5 mins walk from Place Mont-Blanc (540 Promenade du Fori).

TennisPhoto courtesy of chamonix.com

As you may know the tennis club restaurant has suffered a serious blow in the last few weeks with a devastating fire with Bruno, the chef suffering severe burns. Elise and her team have done an incredible job to get back to business so hats off to her and Bruno is making steady progress in his recovery. They have constructed a temporary ‘buvette’ serving drinks, snacks and ice creams so it’s almost business as usual.

It’s certainly worth popping down with friends and family to enjoy the stunning surroundings whilst watching the tennis, enjoying an ice cream, drinking an Aperol (or beer) and spotting the paragliders passing overhead. A unique experience.

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The club was founded in 1938 and has over 300 members with the tournament now running for 37 years. There are 8 clay courts, 2 synthetic, 3 outdoor hard and 2 indoor hard courts and the setting is beautiful. There is a excellent ‘ProShopTennis’ to buy sports clothes, racquets and balls as well as many other things.

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We are delighted to say Mountain Base are supporting the tournament and have become one of its main sponsors….also Matt will be hoping to progress through a few rounds himself!!

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Hopefully see you there…

Emmanuel Macron and the French Property Market.

MacronIn an environment of low interest rates, global instability and low returns on investments, investments in French property have increased over the last few years.  Will this continue following the election of our new president?

Key tenets of Macron’s property policy

  • Exoneration from 80% of the population will be exonerated from paying Taxe d’Habitation

A key policy for Macron.  From 2020, households earning less than €5.000 per month will be exempt from paying this tax.  As this is one of the primary sources of income for local government, he has promised to pay €10 billion per annum to local authorities, which is likely to be raised by increasing other taxes.

  • Reform of Impot sur La Fortune (ISF)

This tax is currently payable by those with assets valued at over €1.3m on both investments and property.  Macron will replace this with a tax on property assets alone with the aim of improving market liquidity and encouraging investment.   The value of a main residence will be reduced by 30% for calculation purposes.

  • Build new homes in areas of need

These areas include Ile de France, Aix-Marseille, the Swiss border and Toulouse.  The state will be able to use national interest in order to grant building permits in these areas.

  • Improve access to housing for young people

Macron has pledged to build 60.000 homes for students and 20.000 homes for working young people.  He also aims to create a further 30.000 council homes for young people.

  • Creation of a professional mobility lease (bail mobilité professionnelle)

The president intends to create a short term lease of between three months and one year for young people on short term contracts to improve social mobility in areas of high demand.

  • Capital Gains

No change is proposed in relation to Capital Gains.  The 22 year limit will be maintained.

  • Encouraging buy-to-let investment

The president intends to prolong the Loi Pinel which promotes private investment in property, and prêts à taux zéro (zero interest loans) in order to maintain investment in the sector.

  • Introduction of measures to renovate homes

France has a large stock of old housing which is poorly insulated.  Tax credits and grants will be introduced to assist with the energy efficiency of these homes with the aim of renovating half of the energy inefficient housing stock by 2022.

Effects of these policies on the property market

Macron’s property policy has the intention of invigorating the new-build market, improving the energy efficiency of the housing stock and encouraging access to the market.

The replacement of the Impot sur la Fortune (ISF) by the Impot sur la fortune immobilier (ISI) in 2019 is the policy which is expected to have the greatest effect on the property market.  Although the level of this tax is low, starting at 0.5% per annum calculated from €800.000 of total property assets valued at €1.3 million or more, it is likely to have two effects:

  • Existing second home owners and some investors may choose to diversify their portfolios, and sell property assets in order to invest in more liquid investments
  • Those looking to purchase investment property may choose to take out a mortgage rather than purchasing in cash.

We feel that Macron’s policy will not lead to a downturn in the market, especially given continuing global uncertainty which tends to lead to a flight to safety, in other words bricks and mortar.

Of course all of these policies will need to be voted by parliament, so until the results of the legislative elections are known on 18 June, we cannot guarantee that they will come into effect.

Lights, Camera, Action!

cinema_vox_0Photograph from Chamonix.net

Sometimes even Chamonix’s most avid skiers and keenest mountain climbers need some downtime and for families, residents and visitors alike a trip to the cinema can make for an enjoyable evening and provide welcome respite on a rainy afternoon.

There has been a cinema in Chamonix since 1908 and since 1958 it has been the family-run, independent Cinema Vox. However despite its managements best efforts and the support of the association “Les amis du cinema” (whose main aim since its creation eight years ago has been to try and boost the cinema’s popularity and profits), change is afoot and Cinema Vox is due to close when the current lease expires at the end of 2018.

The council is now advertising for investors to fund and run a new 4 room multiplex, which it wants to be ready to open in 2019. The chosen site for the new cinema is certainly original, occupying two of the infamous ‘coupole’ buildings built in the 1970s, not far from the town centre.

Here’s hoping the right people will come along and make sure that Chamonix’s film lovers continue to have a cinema on their doorstep which will offer as wide a range of films as possible, with a good mix of subtitled and dubbed versions to suit all tastes and preferences.

If it could keep some of the charm and originality of the existing cinema but add modern day seating, sound and snacks then that would be the cherry on the cake (or rather the caramel-coating on the popcorn!).

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New Clowns: Same Old Circus?

Trumpeted – forgive the pun – as the sequel to Brexit and the US Presidential Elections, to what extent could the French Elections this Spring change the property market in the Alps?

Before the race has even started, there is debate as to who is still left in. The French TV channel ‘TF1’ electoral debates in March will only include those with more than a 10% stake in the polls, which rules out all but five hopefuls: François Fillon, Benoît Hamon, Marine Le Pen, Emmanuel Macron and Jean-Luc Mélenchon.

The media has so far tended to concentrate on which of these candidates are the more left or right wing, but to do so is both unhelpful, and a little simplistic. Marine Le Pen’s policies on immigration may be predictable enough, and they include, for example, an extra tax on the employment of all foreign nationals, but she is also keen to assist small businesses and to reduce the tax burden overall.

From the left, Benoît Hamon and Jean Luc Mélanchon share an anti-austerity platform, and both wish to reduce the infamous 35 hour working week. But the younger of the two, Hamon, would also like to legalise cannabis, whereas Mélanchon would rather concentrate on a new 100% tax on any earnings over 360,000€ and a 20% hike in the minimum wage.

If it weren’t for his Welsh wife apparently dipping her hands in the till, François Fillon would perhaps have been ahead in the polls, offering, as he does, an antidote to a succession of largely socialist governments of recent years. His policies will resound sympathetically on foreign ears: slashing taxes; cutting benefits; axing 600,000 state-paid functionaries and reducing taxes on all companies, both large and small. But credibility also matters in this election, and he has largely lost face with even the most sympathetic French voter.

This leaves the maverick of the group: Emmanuel Macron – just 38 years old. He rose to the political forefront as Economic Minister in François Hollande’s government, but unable to secure a party mandate, he invented his own political movement, ‘En Marche!’ – or ‘Moving Forward’, which describes itself in terms of ‘compassionate liberalism’. The policies are mixed: from scrapping the 35 hour working week and making it easier to fire employees to offering employment benefits to the self-employed.

At this point in the hustings, few candidates have put forward policies that specifically impact on the property market. However, François Fillon will abolish the wealth tax (ISF), which may help to encourage high worth individuals to invest in France. More than this, it is the policies that impact more generally on the economy as a whole that will determine how the property market develops.

Zooming in to foreign ownership in the alpine region of France, it is true to say that there are very specific influences on the property market here that rise over and above the presidential elections. They include the strength of the Swiss economy and the influx of foreign nationals across the world, whose wealth is largely immune to the vagaries of the French political system.

Following Brexit, there has been a good deal of speculation on a potential referendum on French EU membership, particularly if Marine Le Pen is successful at the polls. But let’s not forget that the French have been here before. On 29th May 2005, they voted ‘no’ to the EU constitution with a majority vote of 55%. The result? The government of Jacques Chirac simply chose to ignore the mandate (or lack of it), and pressed on with closer European integration regardless.

And it’s important not to forget that the presidency of Nicholas Sarkozy (one of the few right-wing Presidents of recent years) in 2007 was heralded as a step-change from the past. Like some of the presidential hopefuls ten years on, he had sort to unburden business and lift the economy out of its flat-line state. But he found himself strangled by political manoeuvrings, an unfriendly parliament and down-right hostile unions. He ended his term in the doldrums, and was unable to rekindle any support for a political come-back.

Will a similar fate await the next batch of candidates? For all their dynamic policies, will whoever is elected manage to see their dreams come to fruition, or will the French talent for political inertia override?