I regularly hear from tourists who come on holiday to Provence every year and who, despite having made a number of rental investments in France, continue to rent because buying a second home would not be profitable. After an in-depth study of the subject, it's perfectly possible to realise your dream of owning a property in Provence while making an intelligent financial investment! Here are the main tips for choosing, managing and making the most of a second home in this magnificent region.
Property market trends in Provence
Analysis of the property market in Provence
A market for second properties
Provence is a very popular region for second homes because of its pleasant climate, cultural heritage and Mediterranean lifestyle. The development of the TGV lines in recent years has only strengthened this demand, with prices in some areas rising steadily.
Upmarket property market
Provence generally attracts a wealthy clientele looking for luxury properties, such as villas with views or wine estates. Marseille airport, which provides a 1-hour flight to the Alpilles and Luberon regions, has boosted demand from an increasing number of international clients. Prices in this segment of the market can therefore be high, and are less sensitive to national economic fluctuations.
Increased demand
As elsewhere, the pandemic has had an impact on the property market in Provence. Some people sought to leave densely populated urban areas for more rural regions, which may have boosted demand in some parts of Provence.
The move to teleworking for many professionals has also influenced the property market. Potential buyers may be looking for properties that offer space for teleworking or additional amenities for more comfortable home living.
Tips for choosing the right location for your second home
The location of your second home in Provence is crucial to its profitability and your personal satisfaction. If you want to maximise your rental income, you need to make sure the season lasts as long as possible.
Criteria to take into account
It's a complex mix because, like you, most tourists come to Provence for its peace and quiet but also for its relaxed lifestyle. Take into account proximity to tourist attractions, accessibility to transport, and local amenities. Areas close to famous vineyards, Provençal markets and picturesque villages often offer an authentic experience. Finally, a town with shops that also open in winter attracts holidaymakers all year round.
The most sought-after regions
Although predominantly rural, Provence offers a diverse range of properties, from rustic farmhouses in the countryside to historic flats in town centres.
Rural market
The most sought-after regions are those that offer tranquillity while being well connected to train stations and airports. The Alpilles region, the Luberon and the Monts du Vaucluse are particularly popular. In the Alpilles, Eygalières, Les Baux-de-Provence and Maussane-les-Alpilles are the region's tourist centres. In the Luberon, there's the famous golden triangle between Gordes, Bonnieux and Oppède-le-vieux. On the Monts du Vaucluse side, the villages at the foot of the Ventoux are the most attractive tourist areas: Bédoin and Venasque to name but a few.
Urban market
Certain towns such as Aix-en-Provence, Saint-Rémy-de-Provence, Vaison-la-Romaine and Isle-sur-la-Sorgues are particularly attractive to investors because of their charm, history and tourist appeal. These are lively places all year round, with easy access by TGV or air.
Financial profitability and rental management
Maximising the profitability of your investment
To maximise the profitability of your property investment in Provence, it is essential to manage the occupancy rate of your property. The worst enemy of profitability is vacancies. To avoid this, here are a few tips:
Optimise rentals
To attract as many tourists as possible for as long as possible, you need a house that appeals to as many people as possible over as long a period as possible. To achieve this, start by offering quality services, because walls aren't everything. You also need to maintain your house and grounds regularly and replace anything that is no longer functional. This may seem basic, but we've all had bad experiences of disappointing rentals.
Air conditioning and a heated swimming pool will significantly increase your income. The former is a 'must' for many foreigners and the latter allows you to stretch your seasonality into cooler months.
As far as your pricing strategy is concerned, I sincerely believe that correct prices are much more appropriate than price ceilings, because you'll reach more potential customers and once again avoid any disappointment.
Optimising rental management
If there's one thing that's never taken into account in profitability calculations, it's the time you spend/lose doing things. And the result is always surprising. So ask yourself whether or not you should manage the rentals yourself. My advice is to delegate to a specialised regional agency, because even if it costs you a maximum of 25% of your income, it knows the distribution platforms, the prices, has incoming rental demand, filters interested parties according to your needs and has the tools to optimise your planning. Finally, these same agencies often offer concierge services to maintain your property and manage the service providers.
Example of a bastide in the Luberon
Let's take a property located near Isle-sur-la-Sorgue, a real tourist centre. The 170 m² house has four bedrooms, a swimming pool and a large 5,000 m² garden. No additional work is required.
Rental income
The house cost €800,000 plus notary fees of 7.5%, i.e. €60,000. It is rented all year round, except for 4 weeks in August when the owners like to take advantage of it. The house is rented at the following rates
1500€/week in low season (November, January and February)
3000€ in mid-season
5000€ in high season (July)
The average occupancy rate in this region is 40% in the low season, 65% in the mid season and 90% in July. The seasonal rental agency charges 25% commission on the rental income.
The family generates annual income (net of management fees) of €63,225, giving a gross return of 7.74% (63,225/860,000).
Charges and costs
Contribution: €215,000 (25%)
Amount borrowed: €645,000
20-year interest rate: 3.80
Loan application fees and deposit: €7,450 (€1,000 + 1% of the loan)
Annual interest of €14,000 (rounded up slightly).
Annual running costs: €16,000 (2% of the value of the property)
Property tax: €2,000
Chartered accountant: €500
The net return would therefore be 4%.
Note that in this example, the owners chose the 4 most profitable weeks to enjoy their home.
By way of comparison, the average net return on a rental investment in Paris is around 2%.
It should be noted, however, that every situation is different and the figures may vary depending on a number of factors, including seasonality, the quality of the property, local competition, market demand and the associated management costs.
Buying a second home in Provence is a smart property investment
Buying your second home in Provence gives you a long-term home in a beautiful, authentic region, while offering you undeniable financial advantages. If you choose the right location, optimise your income and the rental management of your property, you can make your dreams of owning a property in Provence come true.
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