as 2.75% on 100% loan-to-values, the numbers can stack up very nicely for investors looking for a low monthly cost investment on a repayment mortgage or self-financing and income producing investment on an interest-only basis. Rental returns are usually index-linked, which means they increase in line with the Dwellings and Construction Index of France, a guide for commercial rents, which increases typically at 2% a year – effectively inflation–proofing the returns. This is more than can be said for interest on a typical UK savings account. As a caveat, investors should be wary of overly generous rental guarantees from unknown companies as experience has shown, especially in recent tougher times, that guarantees are only as good as the company making them so a proven track record is essential. Pierre & Vacances, a stockmarket- listed company, is the market leader in leaseback sales, and doubles up as both a developer and a management company. It is Europe’s leading tourism company with over 250 resorts across France, 7.5 million tourist clients and an annual turnover of more than €1.5billion. The P&V Group owns eight brands including Center Parcs Europe and the luxury ski property company, MGM, so has a vested interest not just in the quality location and build of its properties but, just as importantly, in their ongoing management and maintenance.


current opportunities There is a new generation Center Parcs property in Isere near Lyons in a 200 hectare property, which offers two to four bedroom cottages for sale from €260,000 in a huge property including 32,000m2


of


indoor space including its famous climate controlled water park, spa and sports facilities.


Rental guarantees are up to 4.5% index-linked net of all charges. What makes this investment so compelling is that in addition to the 19.6% VAT rebate and the 4.5% rental guarantees there is an additional €7,000 local government subsidy for each property. This is provided because of the enormous job creation of this project and the sustainable development standards


used. Taking a 104% mortgage, investors only need to finance the mortgage costs (less the €7k subsidy), which means for €8k investors have a property that only costs them €270 a month on a repayment basis.


An interesting way to assess one of these investments is to consider that the income generated from the property once the mortgage is paid off is much more than an annuity of the same cost and that is without taking into account any capital gain.


P&V also have a new property in the ski


resort of Avoriaz in the Portes de Soleil – the second largest ski domain in the world and less than 90 minutes from Geneva. This is a €200 million project which not only includes leaseback properties built under three different brands (Maeva, P&V and the luxury MGM brand) but also includes the creation of an €11m climate controlled Aquariaz water park in the centre of the resort, improved roads to the resort and the expansion of the underground carpark – which is handy as Avoriaz is car-free. Rental guarantees are up to 3.5% and for the investors who like to ski there are usage options up to 20 weeks a year.


commission rates For straightforward referrals, Pierre & Vacances will pay brokers 2% of the purchase price of a property, which in itself can be quite significant. For actually closing the sale, it will pay a formidable


4%–5% of the purchase price. For example, for a typical £300k property, the client might only have to invest £5k-£10k of their own money (plus monthly top-ups), while the commission for the introducer could be as much as £12,500 (€15,000).


marketing material Brokers would have training on the leaseback product by a dedicated personal account manager. Once trained, brokers would have full access to a the P&V extranet which has exhaustive information on the current properties including all marketing materials, financial reports on the company, prices, images, videos and access to the live availability of properties. On top of this, they would have access to P&V’s French mortgage partner Athena Mortgages, a specialist mortgage provider, who can provide clients with bespoke French mortgage simulations based on the best deals in the market and in some cases exclusive to P&V clients. Further commission arrangements can be agreed with Athena as well. French sale and leaseback may not


have been on many brokers’ radars before the economic crisis, but the potentially large commissions to be made could well make it an attractive proposition in the future, particularly with clients disillusioned with traditional investment channels and looking for alternative, safe places to invest their hard earned money. n


mortgage introducer NOVEMBER 2010 41


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