AgriFrance Review

Agri France, a BNP Paribas Private Banking subsidiary specialized in rural property investments, publishes its annual review giving a market analysis and the outlook for 2007.

> A country property market experiencing very disparate development depending on the sector.

In the course of 2006, the main trends - already observed in the different country property sectors in previous years – strengthened. Residential country properties thus tailed the rise in urban property prices, particularly in peri-urban regions where an increasing number of city dwellers sought out their main home. It may be noted that the up-market properties remained slightly apart from this surge in prices.
The wine-growing property market continued to correct. The fall in property prices experienced by almost all vineyards has the merit of making the market healthier. Investments are therefore approaching the sector’s profitability level.

With respect to productive farmland, the property market seems to be close to fundamentals, apart from the significant fact that a simplification of regulations would give farmland its competitive value back in terms of investment.

Regarding woodland, the relatively gradual increase in land prices indicates a reasonable market, with the return of a good economic context for wood. As for woodland with buildings, this is once again being swept along by the trend of rising second home prices.


> Mixed attractiveness for each sector

These very different evolutions, according to the sectors, are particularly highlighted by a relatively paradoxical observation: the value of land in each sector is completely uncorrelated from the surface area it represents. Thus, residential country properties represent 50% of the overall market value but only 10% of the surface area. At the other end of the scale, farmland transactions provided 23% of the market value for 64% of the surface area.
We can therefore calculate the attractiveness of each land sector by its % value/% surface area ratio: first come residential country properties (5) followed by land with a new non-agricultural use (3) then vineyards (1.5); far behind come farmland (0.3) and woodland (0.3).

> Country properties: increasing the value of the investment

Whilst the appeal of residential country properties has never been so great, investors may be very keen to optimize their economic potential. In order to generate supplementary revenue, three solutions can be examined:
- Renting: accommodation, functions, fishing, hunting
- Restaurant business
- Horse keeping.

Depending on the location of the estate and the layout of its buildings, several types of activity may be envisaged from tables d’hôte to gîtes to campsites.
Such activities require specific authorizations in the majority of cases and may prove to be time-consuming.
They nonetheless constitute a source of income to offset the costs often entailed by a country property. Bear in mind that, depending on the activity, the revenue generated is subject to specific tax regimes.

The different legal and tax information is given in accordance with the legislation in force as of 01.01.2007

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