Friday Chronicle #10: Casino Royal – How France is selling the country away.

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Money makes the world turn around. Money goes, money comes and when you have a lot, you can do a lot. We tend to say that money does not bring happiness but frankly, it helps. And when you are desperate seeking money, you would be tempted to accept any proposition, including the indecent ones (sometimes). It is a sensitive situation for any person, but imagine that at a country level! In this Friday Chronicle, check how France is getting rid of its historical, cultural and lifestyle heritage. Welcome to Casino Royal.

France is like a black jack table for foreigners. Play it well and you can win a lot

The country is not going on well and it does not seem to get better. Since the 2008 crisis, the number of foreign buyers of luxury real estate increases by 0.7% in France every year. This capital change happened because of several reasons.
France sells the country away

Ownership in France is more than a luxury, it is a Casino robbery

Why people in France are massively selling amazing properties to foreigners? Economic crisis definitely pushed people to financial difficulties, which unavoidably brought them to sell their belongings in order to cash in. But more than this, owning luxury real estate can be a big money eater. First there are several residential taxes in France that depending on how big your property is, you might end up paying a lot every year. Then, when it comes to heritage transmission, there are some transmission costs that sometimes can block people to inherit. It can be up to 50% of the value. Last but not least, if you are very wealthy, you will pay a lot of taxes on your income. François Hollande’s project to tax rich people up to 75% was the trigger for people to leave the country. Basically, for every million you would earn, 750K would go to the government. Today, this measure was not implemented as according to legislation, it would have been anti-constitutional. Nevertheless, many wealthy people decided to move, which leaded to some severe Real Estate activities.
At the same time, most of residences, buildings or luxury properties belong most of the time to companies rather than personal individuals. It is a way of paying less taxes and avoid the mentioned problems above. At the same time, those properties become easier to be purchased. As amazing fortunes are formed in South Asia, USA, India, Brazil or Middle-East, many people have a lot of money to invest and real estate is always a great longterm investment. Here are some examples of how France sold its heritage to foreign buyers.

Hotels and Palaces to Middle East. Keep it low profile James Bond style

In terms of luxury hotels, all Parisian Palaces are not French anymore. When you are booking a room in that romantic, amazing Parisian hotel, actually your host is from Middle-East. Here is the list of the major luxury hotels in Paris and their owners.
Hotel Le Crillon Royal Family Saudi Arabia

  • Marriot Champs Elysées – HongKong
  • Plaza Athenée – Brunai Sultan Haji Hassanal Bolkiah
  • Le Meurice – Dorchester collection Brunai Sultan Haji Hassanal Bolkiah
  • Le Royal Monceau : investment Founds from Qatar
  • Le Ritz – Al-Fayed Family
  • Georges V – Prince Al-Walid
  • Le Crillon – Royal Family of Saudi-Arabia
  • Le Lutecia – Israelian Family Alrov
  • Le Prince de Galles – Saudi Family Moussalem

French Palaces
And these are only a few examples in how the entire hotels in Paris are trusted by foreign buyers. French luxury and vie-à-la-française are treated by foreigners. Even culture is little by little sold to foreign companies, like the Theatre du Mogador that is Dutch now (property of Stage Entertainment). And I am not even mentioning the crazy idea of selling the famous Leonardo Da Vinci painting, Mona Lisa, to pay the debts of the country (see full review here).

French Vineyards go to Chinese buyers

Something part of the French cultural patrimony is the French Wine business and culture. The Vineyard landscape has been little by little sold as well to Chinese, Russian or wealthy buyers from Middle-East.
French vineyard
When a private Chinese buyer acquire the domain Gevrey-Chambertin for € 8 Million, something is happening in French lands. Another example is German Karl-Friedrich Scheufele (President of Chopard) who purchased Château Monestier La Tour, in Bergerac in 2012. According to Michael Baynes, from the Bordeaux specialized agency Maxwell-Storrie-Baynes, foreign buyers start by purchasing a first Vineyard for 2 to 7 million euros. After a while they buy something big.
The biggest current buyer today, a Chinese from Hong Kong, has a total budget of 50 million euros. A very prestigious Chateau, would be in average worth 100 million euros, only to initiate discussions. So for the moment, certain labels will be still protected. Prices are very high. From €11’000 the Acre in Languedoc-Roussillon to €280’000 in the Champagne region as starting price (source: Bilan.ch 2012).
We could imagine that there are not so many transactions in the wine business in terms of Real Estate, but actually there are a lot. It is just very discreet. Michel Veyrier, from Vinéa Transactions, estimate around 20’000 acres of vineyard that are sold every year on a total surface in France of 770’000 acres. For a prestigious “appelation” like L’Hermitage a buyer will need to pay around €700’000 per acre!
In terms of nationality, 70% of foreign investors in the Bordelais are Chinese. British buyers have a preference for the Loire valley and final but not least Swiss investors love Bourgogne (source: LesEchos).
Is all of this really a problem? Not necessary as it allowed to save jobs and more than that, to keep a tradition and the know-how alive. The only problem is the transmission. All this cultural and lifestyle heritage is on the hands of foreign people that will not perpetuate a certain respect of tradition in the country. Next generations might loose their roots, as easy as if you would loose a dollar in a Casino.

LA

France to sell the country away

Info sourced at LesEchos, Bilan.ch, wikipedia, Vinea Transactions and Maxwell-Storrie-Baynes. All content is copyrighted with no reproduction rights available.

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