Seed Development Finance
French Private Finance acts as a broker for investors seeking a safe and secure return on investment and developers seeking the requisite funds to kick start projects in the most heavily demanded areas of France, such as the French Alps, Paris and the Cote d’Azur.
The main type of French property investment we work on is where a suitable piece of land or an existing property has been identified as a suitable investment proposition. The initial groundwork is carried out to ensure that planning permission would be attainable and that there would be a market for the development once completed. The market could be for either classic freehold property, or if it is located in a prime tourism area it is sometimes possible to extend the remit to a Residence de Tourisme (Leaseback Development).
The projects we make available to our investor network have varying entry levels for individuals and but on average each investor typically funds 2-5% of the overall development cost with a target return of 100% on their original investment within 12 months.
The capital is secure throughout the investment, with the only tangible risk being that if the project does not go ahead as no end-buyer(s) can be found. Of course, in this case each investor’s money is returned in full. In the case that the project does go ahead exit fees are charged in the region of 5% of the gross funds leaving the investment.
Off market property and distressed asset finance
In the course of our work with developers and agents, we often come across assets, which are available at serious discounts. The nature of these investments means than funds have to be available to make purchases quickly. More capital is at risk during the investment period, though commensurately returns are often more substantial.
With off market opportunities we will show these to our investor network as they arise.
French property funds (SCPI)
Many French banks will lend against shares held in French property unit trusts called Sociétés civiles de placement immobilier (SCPI).
These professionally managed SCPI funds are the French equivalent of Real Estate Investment Trusts (REITS). There are over 200 SCPIs in France with many containing 100s of properties and more than 10 with over €1 Billion in assets under management, invested mainly in prime office space rented out to larger corporations and government bodies.
As the quality of the underlying portfolio is so strong, French banks will lend up to 80% of the value of the shares meaning you can further leverage your investment in these secure and high performing funds which have been generating an average of 5% gross for a generation.
The returns are mainly derived from rents coming into the portfolio and non-residents will be most interested in the SCPI “de rendement” type as there are also SCPIs which target tax breaks for French residents.
In terms of tax for non-residents, such investments are put against your personal tax return at a rate of 15.5% in France and are counted as rental income so any interest on loans can be deducted against that part. Capital gains tax is due when you sell the shares but is subject to taper relief over 22 years, eventually reducing to a 0% rate.
Shares in an SCPI can also be purchased in a life assurance wrapper to further optimise the tax situation.
In the past 5 years interest has grown in this form of investment with the total capitalisation of these companies rising by 50% in that timeframe to approximately €30 Billion.
Investments in French SCPI are controlled by the French equivalent of the Financial conduct Authority called the AMF or “Authorité des marches financeres”
Please see below for details of some of the best performing French funds.
- Elysées Pierre
- Accès Valeur Pierre
- Rivoli Avenir Patrimoine
- Selectinvest 1
- Crédit Mutuel Pierre 1
Charges for entry to an SCPI vary from 5% to 15% of the rental with further registration and management charges from fund to fund. Usually the net return is still in the region of 5%