The commercial sector of French real estate has been seeing an upward trend since 2010, after 2 years of negative trend. The recovery recorded a 4% growth with rebound in values that has led to a total return of 10% as stated by the latest IPD France Annual Property Index. This increase has come after a cumulative decline in values over 2008 and 2009 of -12.7%, and although the recovery is going on, the return levels are below than what was before 2008. The reason for this is thought to be the attitude of Europe being location and asset specific. As a result investors show a preference for assets that are secure with good income and in a location that is central and stable. Hence there has been an emergence of a system that is two tiered in which the demand for the assets increases their value while the rest of the market is behind.
The highest returns for the year were delivered by retails and offices that were 11.0% and 9.9% respectively. The major cause of this was the significant turnaround in capital growth. An increase of 4.7% was recorded in retails while offices were at 3.6%. The industrials however continued to underperform as compared with other sectors with a capital depreciation of -0.7% although the total returns stayed positive at 6.8%. As a result of this upward trend, it is quite likely that the activities of sales and leasing will increase. Here are some guidelines you should keep in mind before buying commercial real estate in France.
1. Legal Process – You should get guidance notes that consider the legal process of buying real estate in France that includes different types of French sale/purchase property contracts ( promesse de vente or a compromis de vente) , the use of real estate agents in France, notaries (notaries) and legal advisors. French property surveys should also be considered that needs to be undertaken. The notaire you have will be required to take up a local planning search in order to provide you with a copy of the “plan cadastral” that will consider the pre-emption rights of the local council and SAFER which is the French land agency.
2. Buying at a French property auction – You can consider the process of buying at French property auctions that includes the different types of French property auctions, advertising of French property auctions, the reserve price (mise a prix) the auction particulars (cahier des charge) and the French property auction procedure (vente a la bougie)
3. Buying an off-plan French property – You can even buy off-plan French property known as vente sur plan. You need to consider the preliminary contract for an off-plan French property (contrat de réservation) and the deposit that you have to pay (dépôt de garantie). You then need to review the main contract known as Vente en l’état futur d’achèvement (VEFA) for an off-plan French property. You would also need to consider the financial guarantees (garantie de remboursement or a garantie d'achèvement) and building guarantees (la responsabilité décennale) that are to be provided to you.
Thus you should buy French commercial property by keeping these points in mind.
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