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Growth in Montpellier’s new build sector may herald overall recovery
While most of Montpellier’s real estate sector remains lethargic for the third consecutive year, increased sales in new property could lead to more generalized improvement.
Montpellier’s high prices have been driving away buyers of second homes and primary residences alike. Despite a slight decrease, most houses are still advertised for excessive amounts, leading to sales volumes having become increasingly rare for the third year running.
In this southern French city on the Mediterranean coast, students comprise over a third of the population. With median prices per square meter hovering at 2,750 euros — reaching an average of 3,500 euros in the older parts of town, such as the historical center or Port Marianne — it is no wonder that rental investors are not flooding Montpellier’s real estate agencies.
However, this isn’t the case where new built property is concerned. The new Pinel law has made rental investment in this sector increasingly attractive. During the third quarter of 2015, sales of new property increased by 54%, with investors responsible for 76% of purchases.
Additionally, notaire fees are cheaper for new builds — 2.5% against 8.8% for other property — and investing in new construction offers the possibility of energy savings, with most of being BBC — bâtiment à basse consummation, i.e: buildings with low energy consumption — or otherwise certified.
New buildings are regularly erected in and around the city, with real estate developments being numerous and varied. Property in concerted development zones (ZAC) comprise 41% of sales in new construction, but many luxury projects are also in the works, such as the 45 Faubourg development. This high-end new build will enjoy a prized location — replacing the Saint-Roch clinic — reflected by its price per square meter: between 4,500 and 6,000 euros.
According to InspectImmo, the positive growth experienced by the new built sector in the second half of 2015 indicates better things to come for the montpelliérain real estate market as a whole.
Photo credit: Wikimedia /Wolfgang Staudt