BUILDING THE RESIDENCES
Within this section there are a number of steps involved and we will go through each of them below.
Defining the concept (3 months):
The first step is defining the concept of what it is the market is after both from a sale but also a rental perspective. The tastes of holiday makers evolves all the time so it is important to keep on top of these trends and even see where they are headed. Right now there is a clear shift towards more luxurious, larger accommodation with concierge services. In the past a typical property on a managed residence in France would be fairly basic and small and the quality and breadth of these services provided would be very limited. Today however more and more people are expecting a similar service to that which they would get at a hotel. So if you are a luxury managed residence people now also expect luxury services with it that includes concierge and hotel services. In addition people also like having facilities on site particularly in family orientated residences so sports facilities, pools and games are also important. Currently there are very few residences in France that meet these demands (both from international and French clientele) and we plan to fill that niche.
Finding the plot (6 months to 24 months):
Once the concept has been clearly defined we then fix the criteria required for a potential plot. These criteria will involve defining the following:
1) Size: the plot needs to be big enough to accommodate a minimum number of properties in order to make the residence financially viable from a rental management point of view. This will need to include sufficient green spaces but also facilities for the residents such as tennis, petanque, volleyball etc. Typically our residences will contain a minimum of 20 large villas or 50 apartments.
2) Location: Our residences need to fit a number of different location criterion:
a. Be within easy access of the beach. This means within 3km so you can easily walk, cycle or drive to it.
b. Be within 1km of the nearest village with at least basic amenities such as a bakery, post office, supermarket and restaurants/bars. Ideally also shops, Doctors, Dentists and interesting attractions.
c. Be in an area with lots of local activities and attractions such as local markets, festivals, vineyards, sites of historical/cultural interest, outdoor activities (golf, sailing, surfing, mountain biking etc) and access to personal services (chefs, beauty and well-being services, nannies etc)
d. Be in an area that experiences a good climate and reasonable sea water temperatures.
e. Be in an area which experiences a high flux of tourists due to its natural beauty and attractions indicated above in order to be able to reach a high occupancy rate at a good price which in turn will deliver solid rental returns for investors.
3) Architectural restrictions: every district in France has its own set of planning rules and restrictions and we study these carefully to ensure that we can build stylish and attractive housing that appeals to the tastes of discerning international clients.
The feasibility study (2 months):
Once we have found a potentially suitable plot we will conduct a detailed feasibility study on both the sales and rental potential of the residence. The foundations for our studies are based on the investment potential for the investor and the key factor here is the rental potential. The rental potential forms the basis for all other aspects of the project. Our team will carefully study the short term rental prices in the area to take into account their quality, types, sizes and facilities and from that perform a forecast for the properties that we plan to develop. We then look at the typical occupancy rates in the area of not only managed residences but also hotels and individual properties and from that extrapolate the expected occupancy rates for our envisaged residence. We then need to look at the potential sales price of the properties within our residence. This will involve studying the sales prices in the area, the type of properties available at those prices and their quality and from there we can work out a competitive price for the properties that we will sell. With the rental prices and occupancy rates to hand we calculate a conservative forecast for the amount of rental income that each property will expect to generate and subtract the running costs. We can then compare this income with the expected sales prices of the properties and forecast an expected yield for the properties. Typically we will only proceed with projects that have a NET rental return after costs of 5%.
Design, plans & technical studies (2 months):
If the development passes these criteria we then need to look in detail at the design and plans for the properties and the residence in order to forecast the cost of the build. This will initially involve technical studies on the plot such as conducting soil and water tests to discern the depth/type of foundations and the rainwater collection requirements. From there our architect can create detailed plans together with the design team to match the specifications for the project and from there generate a total cost for the build. If we can see that there is a sufficient margin between the cost and the sales price then we can move to the next stage.
The planning application (3 months):
In France the planning application for a new residence is very detailed with many different local authority bodies involved. All these bodies need to be consulted together with the town hall and mayor to ensure everyone the planning application to be submitted complies with every local authority and even regional authorities when necessary. Local residents are also consulted to ensure the local population can air their views and adjustments made to deal with any issues. There are often many consultations involved before a planning application is submitted to ensure that it has the best chance not to be rejected at any stage. It usually takes 2 to 3 months to get a decision to receive the planning permission once the application is submitted so any planning rejection or legal action taken by residents can be very costly. It is therefore incredibly important to get it right the first time.
The build (18 months):
Having the right team in place to execute the build is as you’d expect the most important part of the whole build process. A team that makes mistakes, does shoddy work or is unreliable can result not only in a poor final product but also end up being very costly for the developer. We like to work with sub-contractors (roofers, carpenters, electricians etc) that we have worked with before and that we know do excellent work and who are reliable. These teams are usually the most sought after within a particular region so they may cost a little more but are worth it in the long run.
Our properties comply with the RT2012 law which requires all new constructions in France to reach a high level of energy efficiency at a rating of A or B. Properties built on or before 2012 are typically much less efficient and therefore cost significantly more in energy bills. This new law requires much better forms of insulation but also more efficient heating mechanisms for the house and boiler. Heat pumps are also often required along with solar panels for example.
The interior design (3 months but part of build period)
As the majority of our clients purchase the property from us off-plan it means that they can personalise their property according to the tastes and requirements. Our design team already has some suggested designs to offer and can decide for the owner if required but many people like the idea of selecting the floor tiles, bathroom tiles, paint colour, kitchen work tops, types of sinks, washbasins, bath tubs, showers, heated towel rails, door handles etc. Our team then selects the appliances, furniture, decorations and all fixtures and fittings according to the selections made by the purchaser within the furniture & equipment budget. The properties are then fully kitted out which usually takes 4 to 5 days per property and this is included in the total cost of the property.