Investing in the Pink City

Demographic pressure exerted over the past decade on the urban community of Toulouse (which grew from 762,000 inhabitants in 1999 to 850,900 in 2006) partly fuels today’s extremely buoyant rental market. Once again, investors demonstrate their confidence in bricks and mortar...

Between the Atlantic, Pyrenees and Mediterranean, France’s fourth largest city after Paris, Marseille and Lyon is home to 439,450 people. The technopolis on a European scale, the cradle of the Airbus, makes its living from fields as up-to-the-minute as aeronautics, the space industry and IT. Two-thirds of its activities fall into the service sector. Ten per cent of new arrivals are foreigners, though neighbouring “départements” - L’Ariège, L’Aude, L’Aveyron, La Corrèze, Le Lot, Le Tarn, Le Gers, Les Hautes-Pyrénées and Le Tarn-et-Garonne - account for a real windfall in terms of incoming clients. The number of students in university faculties or colleges is close on 96,500, placing Toulouse just behind Paris and Lyon, neck-to-neck with Lille in the national rankings of student towns. Le Capitole, Le Mirail and Paul-Sabatier are the main centres in the capital of Haute-Garonne, which constantly distinguishes itself for its quality life-style.

“The main targets for investors are students and small surface areas ; flat-sharing seems to have worked less successfully this year,” says Nicolas Deisieux of Era Deisieux. A distinction should be drawn between Saint-Michel and Rangueuil, and the hyper-centre. The first two neighbourhoods offer studios of 20 m2 (rented out at 400 €/month), priced at around 70,000 €, and 1-bedroom apartments of 35-40 m2 (550 €/month) costing 130,000 €. The immediate environment of Le Capitole sees prices of 110,000 and 180,000 € respectively, bringing monthly income of 500 and 700 €. Yield is about 4 %, versus 5-6 % in Saint-Michel and Rangueuil. On the other hand, the long-term soundness of the investment leaves no-one in any doubt. Large surface areas do not inspire much interest among these buyers. Potential tenants soon opt for buying their own homes. Some clients, including experienced private investors and property dealers, set their sights on entire buildings. Our estate-agent mentions such a property in Saint-Michel, comprised of 14 apartments with 1 or 2 main rooms, all leased, on offer at 2.3 million euros. The new owner can count on rental income of 8,000 € per month and a yield of 4.5 %. Generally speaking, rental investments, reassuring and with a long life to look forward to, are doing well.

Jean-David Pégot of Métro Immobilier, manager of four agencies in Toulouse, points to disparities between the various sectors. In Ozenne, a rather select enclave, the aim is clearly a long-term asset. Buyers often start by housing their children before benefiting from rental income from their acquisitions. Most pay cash. Stylish old buildings have frequently been renovated and are sometimes available furnished. Among his latest sales, Jean-David Pégot mentions a studio priced at 122,000 € and 1-bedroom apartments sold for as much as 200,000 €. Saint-Cyprien, Les Minimes, Saint-Michel and Bonnefoy are perfectly comparable in terms of prices and the type of accommodation on offer. They are all popular as long as they offer a practical location close to a tram or metro line. Saint-Cyprien and Les Minimes are likely to attract people working in the aeronautics industry, targeting 2-bedroom apartments leased for 650-800 €/month, and costing 200,000 €. Both old and new properties are looked upon as perfectly compatible and complementary when building a portfolio of assets. Residences built in La Vache or Borderouge at the beginning of the 21st century are currently coming to the end of their tax-incentive life-cycle and now offer good value for money. Highly profitable, parking places also have their fans. Offering easy maintenance and management, they cost from 6,000 to 40,000 € depending on their address and configuration, 15,000 to 20,000 € on average, and can be rented out from 60 to 200 € per month.

“Among recent developments, one should point to a change in tenants’ attitudes,” notes Dan Greuet. “They now tend to bargain on the amount of the rent, committing themselves in exchange to staying put over the medium term. This approach opens up new prospects for investors. And it is within this context that Novilis is setting its sights on building land on the outskirts of Toulouse, plots large enough to accommodate units with one, two or three main rooms, with adjoining gardens.” In 80 % of cases, young couples show an interest, with the buyers concerned carrying no risk. Recently, one such investor paid 180,000 € for a 2-bedroomed villa of 75 m2 in the second ring around the city, which he could rent out at 700 €/month. An equivalent home in the first ring, where small houses are also becoming more sought-after than apartments, costs an extra 30,000 €. The principle requires more involvement on the part of the buyers, given that a technical firm entrusted with the development enters on stage. On the other hand, the owner can choose his own builder. The obligation to obtain the BBC low energy consumption label, as from January 2013, will push up costs by 10-15 %. An increase that owners will not be able to tack on to the rent in this highly competitive market.

These articles might interest you :

Update on the borderline market

Whether in Le Pays de Gex or Upper Savoy, the real-estate market on the border with Switzerland is still in good shape. For both new and old properties, buyers have a wide choice. Possibly a little too wide ?…

 

Le Pays de Gex, a privileged location

At the gateway to Geneva with its airport and international institutions, Le Pays de Gex appeals for its natural, quiet and residential setting. Benefiting from efficient transport networks, shops and amenities, this area in the north-eastern part of...

 

Annemasse, a very buoyant market

An average-sized town with 32,000 residents, Annemasse offers the advantage of a convenient location on the Franco-Swiss border, 2 km from the canton of Geneva. Its very lively property market mainly revolves around acquisitions of year-round homes b...

 

Le Pays de Gex, a market in its own right

Lying in the midst of luxuriant landscapes between the Massif du Jura and Lake Geneva, Le Pays de Gex offers immediate proximity to the border with Switzerland as its N°1 feature. This strategic location endows its with a unique and persuasive argume...

 

The Franco-Swiss region known as “Le Pays de Gex”

Between the Jura mountains and Lake Geneva, the main assets of Le Pays de Gex are its magnificent green scenery and, above all, its immediate proximity to the cantons of Geneva and Vaud. A strategic position, boosted by very efficient transport netwo...

 

La Chautagne, an authentic region

At the north-western tip of the département of Savoy, La Chautagne consists of 8 communes on the banks of Lake Bourget, the largest natural lake in France.