A Window Has Cracked Open For Buyers Looking For Homes Along the French Riviera

As the French escape to the Mediterranean to beat the heat this summer, something else is cooling off along the Côte d’Azur—luxury home prices.

That has opened an opportunity for buyers looking to get good deals in a French region that’s seen as a safe long-term bet.

Prices along the French Riviera dipped slightly in 2023 from the year before dipping by 7% around Cannes and 5% in St. Jean Cap Ferrat. In Saint Tropez, which tends to be more resistant to the fluctuations in the market, prices remained steady from last year.

“We’re seeing prices coming down a small amount,” said Jack Harris, an agent with Knight Frank. “It’s by virtue of the fact that we’ve seen such growth over the last few years—it’s that wind coming out of the sails.”

Prices along the Mediterranean shot up during the peak pandemic years, as both domestic and international buyers flocked to the sun-drenched region with its expansive villas and outdoor space. During that time, prime prices increased by 14.8% on average across the Riviera, according to the Knight Frank report. In St. Tropez, prices increased 17.1% between 2019 and 2022.

An overheated market? Probably, argues Stephen Moroukian, head of product and proposition for real estate financing at Barclays Private Bank.

“During the pandemic, we saw a once-in-a-generation uplift in prices,” he said. “It’s right that some of that should come off proportionate to the increases that we saw.”

Stunted demand from buyers is in part to blame for the cooling prices.

Foreigners make up 70% of the total buyers in the prime sector, Knight Frank research shows. Those buyers in particular may be hesitant to invest during a major election year for both the U.S. and France, where president Emmanuel Macron last month held snap legislative elections in response to his party’s poor performance in the European elections.

“Global political and economic uncertainty has certainly had an impact on the market,” Harris said.

Beyond uncertainty, buyers have also hesitated at higher interest rates across Europe. Though the increased cost of borrowing may not directly impact the ultra-wealthy—many of the Riviera’s buyers make all-cash offers—it does impact buyers’ overall sentiment toward luxury purchases.

Despite the price deflation, buyers shouldn’t expect to get away with major price reductions—most agents are seeing the ability to negotiate 5% or 10% off the sales price, Harris said.

“A lot of people hear ‘softening market,’ and they think they can offer half the price and they’ll get a house,” he added. “Sellers don’t need to sell right now—it’s a question of selling at the right price, rather than desperation.”

New Development Pushes Down Prices

Also keeping prices low is a gradual increase in inventory.

Despite high building costs , the French Riviera has seen continued construction since the pandemic, when developers looked to capitalise on increased interest in the region. As a result, the Riviera has seen new subdivisions on vacant land, mostly around the Cannes area, as well as tear-downs of older apartment buildings in denser urban blocks.

In Nice, several luxury apartment buildings are going up near the marina and the Vielle Ville (or “Old Town”)—a posh area that has seen limited construction in recent years. And in Cannes, developers recently purchased the historic Palm Beach complex, which they are renovating into an exclusive members club and bar, a casino, and a luxury shopping mall, which has also attracted nearby luxury apartment developers .

“As those properties get delivered and the demand weakens, we are seeing a softening in prices,” Harris said.

The glut of supply may only be temporary. Some of the cities that approved ambitious developments in recent years are now seeing residents resist new housing. In Cannes, residents have expressed concerns about new housing blocking existing apartment’s views. And in Vence, northwest of Nice, the mayor recently blocked the second phase of a 220-unit project, saying that the project needed to be “reduced and revised,” according to French newspaper Nice-Matin .

Variation Across Housing Types and Location

Few sweeping generalizations can be made about the French Riviera market as a whole.

“This is an expansive stretch of coast, and the market is very diverse,” Harris said.

Don’t expect to find prices falling in the most sought-after neighbourhoods, though. In Saint Tropez, median home prices increased to €20,900 (US$22,598)  per square meter in May, an 18% increase year-over-year, while apartments increased in price by 1%, to €12,929 per square meter. In Saint-Jean-Cap Ferrat, home prices increased 13% to €23,431 per square meter while apartments increased 4% to €13,997 per square meter.

Meanwhile, prices in Monaco—whose geography severely constrains new construction—continue to blow nearly every other city out of the water. Prices there reached €51,500 per square metre in 2023. Of the 28 sales in the tiny tax haven last year, 17 were valued at more than €20 million.

“There’s been a flight to best-in-class assets,” Moroukian said. “These properties will always outperform other properties. It’s once in a generation that these come onto the market.”

Signs of Improving Prices

Despite a cooldown in prices over the last year, real estate experts say that the fundamentals around the French Riviera—its pristine beaches, the east access to international airports, its renowned film festival and the Monaco Grand Prix—continue to be a draw for buyers.

“There will always be lots of international buyers, as well as domestic interest,” Moroukian said. “It’s a place where many French think about retiring, but you also have many young people moving there.”

In the last decade, Nice has also positioned itself as a hub for tech, allowing the city to evolve from a retiree’s paradise into an employment centre as well.

“There’s now a much broader spectrum of people coming to the region,” Moroukian added. “All these things mean that demand will remain.”