Making a Corsican Dream Come True (Plus Paris Prices and New Tax Reforms)

Beach in CorsicaA port in Corsica

Every year that I take a beach vacation in Corsica, I am tempted to consider owning a “pied-à-terre” or “villa” somewhere on this beautiful island I’ve come to cherish.

One of the reasons Corsica is so unique is its mixed heritage of French and Italian. Once under the ownership of the Republic of Genoa, the French island lays claim to Emperor Napoléon Bonaparte who was born in 1769 in the capital of Ajaccio and the explorer Christopher Columbus who is thought to have been born in Calvi.

The constitution was written in Italian, but the native language is Corsican. If you speak French, Italian, Corsican or English and even German, and you won’t have any problems…the natives are friendly to tourists as tourism is a major economic force for the coastline. The mix in flavor is a perfect blend of French perfection with the Italian robust spirit for life. In the course of the week, no one was rude or argumentative as were the Parisians immediately upon re-entry! (Did you see Liz Alderman’s article “A Quest to Make Gruff Service in France More Gracious” in the New York Times?)

Surprisingly, the island is still largely underdeveloped and unspoiled as most tourism is concentrated around Porto Vecchio,  Bonifacio and Calvi. Other economic industries include chestnut, olive, fig and mulberry tree products (bread made from chestnut flour keeps fresh for as long as three weeks), wine (the rosés are divine), “charcuterie” (sausages and cured ham products), cheeses (sheep and goat) and honey (of which there are six official varieties and is certified as to its origin by the French National Institute of Origin and Quality.

It is also surprising that the fishing industry is almost nil, particularly compared to Greece. According to the “Fisheries Centre Research Report of 2011,” “Despite its potential attractiveness for fishers, the waters around Corsica have never experienced heavy industrial fishing pressure, and the history of Corsican resource extraction was shaped more by land-based than maritime activities. Therefore, there is almost no export of seafood out of Corsica, and a substantial fraction of the seafood consumed locally by Corsicans is imported from the French mainland or other Mediterranean countries.”

There are lots of ways to get to Corsica. You can fly into any one of the five airports (Ajaccio Napoléon Bonaparte Airport, Bastia Poretta Airport, Calvi Sainte-Catherine Airport, Figari Sud-Corse Airport and Ghisonaccia Alzitone Airport) or ferry between French and Italian port towns to all the major Corsican ports. This trip we flew to Bastia from Paris, rented a car and drove down the coast on route 198 (which is bumper-to-bumper in high season, so one must have lots of patience and a strong left foot for riding the clutch — unless you pay more for an automatic).

If one were to own a property in Corsica, the dilemma would be in making it available for rental to tourists during high season (May through September), meaning you wouldn’t have it for your own purposes. I have the same dilemma in Nice — but that’s a good problem to have!

According to the latest statistics published by the Chambre de Notaires, and recently reported by L’Express, the price of property in Corsica has increased over the last year(April 1, 2012-March 31, 2013) with the per square meter price averaging under 3,000€.

Corsican property prices

Property prices in Paris

About one year ago, journalist Alison Gregor’s article about an 18th-century Corsican palace with seven bedrooms near Ajaccio worth $3.6 MILLION (2,750,000€) was published in the New York Times Great Homes and Destinations section. While the villa is a stunning example of what is possible on the French island, she had some words of wisdom about the market in Corsica I share with you now:

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MARKET OVERVIEW
By Alison Gregor for the New York Times

Corsica, a 3,350-square-mile Mediterranean island between southern France and Italy, has some of the finest beaches in Europe, yet home prices can be 30 to 40 percent less expensive than on the French Riviera, depending on the property, said Alexandra Connolly, director of Alexandra Lloyd Properties, a real estate firm based in Nice that specializes in properties along France’s coast and Corsica.

Also, while Corsica has contemporary apartments and villas, many of the homes tend to be stone farmhouses, with few examples of the Belle-Epoque and Art Deco style buildings found on the Riviera. “Corsica in the early 1900s really wasn’t developed,” Ms. Connolly said. “There are grand properties in Corsica, but they typically aren’t as grand as those along the French Riviera.”

Because Corsica is a small market, with large estates handed down inside families from generation to generation, the impact of the global financial crisis has been hard to gauge, brokers said.

“As everywhere in France, the top houses didn’t drop in price, but dropped in sales volume,” said Laurent Molinari, a broker with Lmolinari Immobilier de Provence, a real estate firm that specializes in the South of France and Corsica and has this listing.

As for the middle and lower ends of the market, prices fell by at least 10 percent in the housing crash, he said. They have since recovered, with an increase of 7 percent in 2010. The market is stable enough that pressure has increased to develop along Corsica’s coastline, which is currently protected by strict regulations.

While 1.5 million euros will buy an attractive four-bedroom vacation home in Corsica, most foreign buyers are seeking a home with a sea view that is also within walking distance of the sea — a rare commodity, Ms. Connolly said.

The average price for a mid-market home in Corsica is about 2,900€ per square meter, and a high-end home costs about 6,400€ per square meter, Mr. Molinari said. This palace is priced at 5,500€ per square meter, a particularly good deal given the scarcity of such properties on the island, Mr. Mela said.

“In addition, this palace is near the sea, which is very rare, because back then, most palaces were built inland to protect them from invasions by sea,” he said.

WHO BUYS IN CORSICA

More than half of the real estate sales in Corsica involve buyers who are not residents of the island, Mr. Molinari said. Most of those buyers are residents of mainland France, but some are from other European countries, including Italy, Britain and Belgium. Ms. Connolly also mentioned Russian buyers.

The most developed resort area in Corsica is Porto-Vecchio on the southeastern coast, often called the “Saint-Tropez of Corsica.” It is especially popular with Italians, said Janet Rankin, managing director of DirectCorsica Ltd., a British travel company.

BUYING BASICS

Corsica is one of France’s 27 administrative regions, and the process of buying a home on the island is the same as for mainland France. There are no restrictions on foreign buyers. However, just as in mainland France, the government reserves the right to meet a buyer’s bid and purchase a property that is particularly large or culturally significant, Ms. Rankin said.

A notary conducts all home sales in Corsica, and buyers pay a lump sum of roughly 10 percent of the sale price to cover the notary fee, stamp duty, land registration and other administrative fees, Ms. Connolly said. The fees of the real estate agent are typically built into the sales price of the home, she said. Foreign buyers face no difficulty obtaining a mortgage, brokers said.
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L’EXPRESS SPECIAL IMMOBILIER PARIS:
Issue #3242 of August 21-27, 2013 Reports on the Most Recent Statistics

See “Paris ne flambe plus” (Paris No Longer Burning)

And other articles (in French):

* Des crédits taillés sur mesure
* Le bonheur est sur la Toile
* Tous les prix de l’immobilier à Paris et en régions
* Les bons côtés du “Duflot”
* C’est le moment de faire de bonnes affaires!
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CAPITAL GAINS TAX REFORMS
Translated by Bing with Editing by Adrian Leeds

Published on August 27, 2013 by the Chambre de Notaires

A reform of the taxation of real estate capital gains was presented on July 18th by the Government in order to “streamline the housing market, to support redevelopment activity in the housing sector and thus promote lower prices favorable to buyers and tenants.

This reform will be effective September 1, 2013 for transfers of currently taxable properties, namely residences other than the principal residence of the taxpayer and rented housing.

The terms will be made public in a tax statement which will be published shortly. They will be included in the finance laws for 2014.

The reform is based on several axes:

• The deadline to qualify for a full exemption from capital gains in respect to income tax will be reduced from 30 to 22 years; for the same reason, the exemption in respect of social security contributions (CSG and CRDS) will now be progressively reduced each year to be completed at the end of 30 years.

• An additional exceptional allowance of 25% will apply to the sales carried out between September 1, 2013 and August 31, 2014.

• In addition, the abatements for duration of detention on the land will be removed.

New rules for determining capital gains on the disposal of real estate other than land will be carried out effective September 1, 2013 -See more at: paris.notaires.fr/.

A bientôt,

Adrian Leeds

Director of The Adrian Leeds Group, LLC

(in Corsica)

Respond to Adrian: [email protected]

 

 

 

 

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