Also known as the “Venice of the Alps”, Annecy stands as a picturesque town, exuding a charm that captivates visitors from around the world. With its crystal-clear lake glistening against the backdrop of its surrounding mountains, this town is popular among tourists and real estate investors alike.
But, the central question remains: Is buying an apartment in Annecy a wise investment decision? In a word: YES, especially if the goal is to use it for rental purposes.
Join us as we delve into the reasons why investing in a rental property in Annecy can be a profitable venture…
The appeal of Annecy’s real estate
1. Location and scenic beauty
Annecy’s allure lies in its stunning natural surroundings. The pristine waters of the lake, cradled by the mountains, offer a postcard-worthy view. Furthermore, its proximity to Geneva and other major European cities makes it a convenient escape for both locals and international visitors. And it’s this strategic location which significantly adds value to real estate investments in the area.
2. Strong tourism industry
Annecy has a longstanding reputation for being a tourist hotspot in the Alps. Visitors flock here to partake in vibrant festivals, engage in water sports on the lake, and explore the town’s rich cultural attractions.
A robust tourism industry not only boosts property demand but also ensures a steady flow of potential rental guests, making Annecy an attractive destination for real estate investments.
3. Real estate market trends
When it comes to Annecy’s real estate market, it’s a story of potential. Apartment prices are competitive compared to other areas in the Alps and France as a whole, making it a favourable choice for investors. Additionally, global rental yields are promising, indicating the potential for property appreciation over time.
Key data
According to Meilleurs Agents, the average price of apartments in Annecy is 6261€/m² but varies between 4150€/m² and 8574€/m² depending on the building, location, size, etc. The average sales time in the Haute-Savoie region is 65 days.
For reference, the average cost of purchasing a house in Annecy is around 7231€/m². However, the majority of houses tend to be located further out from the centre of town.
The evolution of real estate prices in Annecy
As we can see from the graph above, the appreciation of real estate prices in Annecy over recent years is also an extremely promising trend. Average prices have increased by a huge 43% in the past five years, which is encouraging for potential investors.
4. Rental income potential
Annecy’s rental income potential is also substantial. With the town’s year-round appeal, property owners have the choice of short-term holiday rentals or long-term leasing options.
For example, the average monthly income for long-term rentals in Annecy is 15.9€/m² (source: Meilleurs Agents).
Conversely, the data for short-term holiday rentals is also extremely promising. For example: to AirDNA,
- The average annual revenue for a holiday property in Annecy is 28,600€;
- The average occupancy rate is 64%;
- The average daily rate stands at around 122.2€.
As you can see, the demand for luxury apartments in the region is on the rise, as exemplified by the impressive occupancy and average daily rates.
5. Legal and tax considerations
TVA (VAT) reclaims on new builds
With most newly built properties it is possible to reclaim the VAT (TVA in France) on the purchase price if the property is being commercialised – i.e. actively let. This can also apply to the cost of renovations.
This initiative is designed to incentivise property owners to support tourism, which in turn creates jobs and avoids the issue of resorts blighted by “cold beds”, i.e. second homes that are unused most of the time and not actively supporting the local economy.
In order to qualify, owners must provide some basic services to their guests, such as cleaning services, a meet and greet service and linen. Specific arrangements can be fairly flexible, but a property does need to be actively marketed and there are restrictions on how many days of the year an owner can occupy the property.
It is important to note that the 20% TVA refund is on the basis that the property is sold with services in place for twenty years. So, if an owner decided to take back the property for their own exclusive use after 10 years they would be liable for 50% of the TVA.
Download our free comprehensive guide to learn more about reclaiming TVA on your new-build property.
All investors should first be aware of any tax implications that come with owning a rental apartment in Annecy, or anywhere in France for that matter. Take a look at our following guides for more help:
- UK owners: A guide to taxation on holiday homes in France
- What taxes do Alpine chalet owners pay?
- A guide to the taxe de séjour in 2023
Risks, challenges and opportunities
1. The seasonal nature of tourism
Annecy’s tourism industry experiences seasonal fluctuations, with peak demand in the summer and winter months.
However, there are strategies which help you achieve year-round bookings. To mitigate income variations during the off-season, you can explore opportunities to attract cyclists, remote workers, wellness travellers, and couples, catering to different niches throughout the year.
2. Property management
Managing rental properties from a distance can be challenging and finding someone who can be there for your guests throughout their stay is key. That’s why it’s essential to find a company that can manage all aspects of your business in order to maximise your visibility, boost your bookings and optimise your revenue.
At OVO Network, we advise owners on property optimisation, pricing, interior design, marketing and more. We also provide insights on the complexities of the financial and legal requirements of holiday rentals.
In addition, we recommend guest management companies and concierge services that can oversee the physical aspects of property care, as well as offer on-the-ground guest support.
3. Market saturation
Despite excellent rental potential for apartments in Annecy, there’s also a risk of oversaturation in its real estate market, primarily driven by short-stay properties.
Therefore, it’s essential to stay informed about Airbnb and short-stay property regulations in the region and France in general. Conducting thorough research before investing is paramount to making a sound decision.
Short term rental regulations in Annecy
As of June 2023, there are additional restrictions in Annecy.
The town has been subdivided into three distinct zones, with the highest level of limitations applying to the historic old town, renowned as the central hub for tourists in Annecy.
Altogether, there will be a maximum limit of 2200 second homes permitted within the city’s furnished tourist accommodations. This marks a reduction from the current count, which exceeds 2800 units, representing approximately 3% of the overall housing inventory.
Before renting your home out to guests, you will, of course, need to register it as a commerical property at the local town hall.
Keep informed
If you’re looking for a source where you can stay informed about all the latest changes in the rental market in the Haute-Savoie and beyond, make sure to sign up for our Industry Insider Newsletter. We share the latest updates about renting your holiday home in the Alps, where to invest and current industry trends, all in one place.
In conclusion, Annecy apartments offer a promising investment opportunity, particularly for rental purposes. The town’s natural beauty, strong tourism industry, competitive real estate market, rental income potential, and the support of professionals like OVO Network make it an attractive prospect.
You need to be mindful of seasonal fluctuations and the risk of market saturation, but overall, buying an apartment in Annecy is a good idea, given the right opportunity, conditions, property, and project.
OVO Network can help you with all of these – get in touch today to explore the potential of Annecy’s real estate market or try our free rental income calculator to see how much you could earn. Plus, don’t forget to check out these properties for sale in Annecy to see what’s available on the market!
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