How many people in the world can afford a 10,000,000 EUR property in Saint Tropez?

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Saint Tropez is a small village in the South of France which has established itself not only as an emblem of the UHNW jet-set lifestyle but also as an exclusive community for only the wealthiest of homeowners. Its perfect blend of local Provencal charm and modern luxury make this village very special to all those who visit. It is ideally located only 30 minutes drive from a local airport for the arrival of private jets, 15 minutes by helicopter from the Nice International Airport, and 20 minutes by helicopter from Monaco (the mecca of wealth and luxury).   

With a limited amount of properties available to purchase and a consistently high demand of investors interested in purchasing a piece of this exclusive haven, Saint Tropez remains on the top of many property investors list. In a world with surging global inflation rates, predicted to grow by 4.7% in 2022, Saint Tropez has become even more attractive thanks to its historically stable and ever increasing property values.  

From speaking in thousands to speaking in millions, the property market along the French Riviera has boomed in recent years, attracting a large number of investors from all over the world. In 2019 there were 3.4 million second homes in France while in 2020 there were already over 3.5 million! This trend is something which has greatly affected the real estate market along the Gulf of Saint Tropez.  In 2021 there was a record number of requests for villas for sale in St Tropez for a budget oscillating around the 10,000,000 EUR. More investors are moving towards securing their fortunes in properties. 

St Tropez House decided to take a deeper look into the realm of property investment in Saint Tropez and draw on expert formulas to provide insight into ultra high-value property sales and who can afford them.  

What do properties cost in St Tropez?  

Properties located in the heart of Saint Tropez begin at 3,000,000 EUR and go upwards to 50,000,000 EUR. Villages located around Saint Tropez, namely Gassin, Sainte Maxime, Cogolin and Grimaud will have lower prices.  In an effort to provide fact-based statistics for property sales in Saint Tropez, St Tropez House has launched a one-of-a-kind Sales Report which breaks new ground for investors. This report uses statistics provided by the French government to help potential investors draw important and tangible conclusions when searching for a property for sale in Saint Tropez. Such interesting information in this report includes the average sales price in 2018-2019, being 5,400,000 EUR (excluding commissions & charges). It also compares the average prices of the top 7 districts of Saint Tropez. The most expensive properties are found in the posh private domain Les Parcs de Saint Tropez. Only Luxe is listed at 13,400,000 EUR and the perfect example of a villa currently for sale in Les Parcs. When purchasing a property in Les Parcs, one should expect to pay a ‘premium’ for being in this prestigious location.  

Having specialised in high-value properties in Saint Tropez for over a decade, St Tropez House is proud to have only the finest of villas to propose to our clients. Our sales portfolio offers a large property selection with an average sales price of 10,000,000 EUR.  

Can you afford a 10M EUR property?  

Investors with this budget in Saint Tropez should have a healthy selection of villas to choose from. Les Marres Luxe, listed at 9,900,000 EUR, is a stunning 6 bedroom villa in Ramatuelle with several luxurious amenities, such as a private cinema, which provides insight into the type of properties this budget will afford.  

There are two principal ways to calculate if you can afford to purchase a luxury property of 10,000,000 EUR. Each of these simple methods can be used to provide quick insight into what you can afford based on your unique circumstance.  

The first approach was created by Barbara Cocoran and bases itself on calculation your yearly salary. The second approach uses instead your total net worth to calculate your property investment potential.  

First Approach: The “Corcoran formula”  

Real estate mogul and ‘Shark Tank’ celebrity Barbara Corcoran created a simple formula for those interested in purchasing a property anywhere in the world. The beauty of this formula is it applies to all budgets and can be used to assess the purchasing power of any investor. She explains this formula by stating: “Multiply your salary times four and that’s generally what you can qualify for.”  

Corcoran offers another simple rule for investors regarding housing costs, which cannot go unnoticed in any property purchase. She advises to aim to spend roughly 30% of take home income on housing costs, namely mortgage interest, insurance, taxes and any foreseen or unforeseen renovations needed. For luxury properties this will also include staff, grounds maintenance and domain fees (if applicable).  

By applying the simple ‘Corcoran formula’, we can conclude that by generating an annual income of 2,500,000 EUR, one can afford to purchase a 10,000,000 EUR property. This simple formula is of course only used as a general guideline however it does serve as an interesting tool for investors. 

The average down payment of 20% applies also to luxury properties therefore an initial payment of  2,000,000 EUR would be required and the remaining would apply to a mortgage loan. The monthly mortgage payment will depend largely on the profile of each individual however it is safe to assume it would be roughly 40,000 – 50,000 EUR per month. 

Second approach: What is your net worth?  

Another way to calculate what you can afford when investing in a luxury property is by looking at your total net worth. This allows for a more all encompassing outlook of one’s finances and investment power.  

The majority of new home owners in Saint Tropez invest in luxury properties as secondary/holiday residences. It is safe to assume that one would not be advised to spend more than 20% of their total net worth on a secondary home and therefore a net worth of over 50,000,000 EUR would be necessary to acquire a 10,000,000 EUR property.  

The definition of an UHNW is the person having at least 50,000,000 EUR total net worth value. According to the Global Wealth Report by Credit Suisse, there were 168,030 Ultra High Net Worth (UHNW) individuals with net worth’s above 50,000,000 USD in mid-2019. This represents 0,000022% of the global population.  

Among this UHNW group, 55,920 had net assets worth at least 100,000,000 USD and 4,830 had assets above 500,000,000 USD. 

When breaking down these statistics even further, one can see that North Americans dominate this group, representing 50% of the total, followed by Europeans at 20% and 14% in Asia-Pacific (excluding China and India). China, Germany and the United Kingdom also qualify as important countries with a high population of UHNWI.  

The nationality of this small percentage of the global population is very interesting but so too is the prominent industries from which they come. An independent 2021 study by Statista focused on the leading industries worldwide from which UHNWI derived in 2019. Their findings concluded that the primary industries of self-made UHNWI in 2019 were banking and finance which accounted for 27.6% of UHNWI. These industries were followed by business and consumer services at 11.7%, real estate and technology at 6.4% and hospitality and entertainment industries at 5.3%.  

When analysing UHNWI with inherited wealth, it is interesting to note that many of the similar industries reign supreme, only non-profit organizations and manufacturing are distinguishing differences within this category of UHNWI.  

Why do we advise our UHNW clients to get a mortgage? 

Although most UHNW investors have the capacity to pay for their properties outright, this is not the most attractive option in France for a multitude of reasons. There are a series of laws and taxes, most notably l’Impôt sur la Fortune which must be taken into consideration when purchasing a property in France. St Tropez House advises its clients to always consider getting a mortgage and speaking with an independent mortgage broker who will be able to advise them on the most advantageous mortgage solution.  

What expected & unexpected expenses are involved in purchasing a luxury property?  

Once a luxury property has been purchased, there is a list of additional expenses over and above the simple mortgage payment. Taxes, insurances, maintenance, and staff must all be taken into account when one becomes an owner. Luxury properties will require weekly maintenance of the grounds and regular staff (gardeners, pool men, cleaners) to ensure that the property remains in good condition. The installation and upkeep of security systems as well as ongoing charges such as electricity and water should also be taken into consideration.  Many new owners will also have some small or large renovations they will want to begin once a property is acquired.  It is important to remember that if a property is located in a gated domain of Saint Tropez, there are also domain fees to pay either monthly or annually.   

Acquiring a luxury property in Saint Tropez is a highly sought after endeavour which many investors have been doing and will continue to do for many years to come. Finding the perfect property is something which will require time, patience and the proper calculations to ensure your property investment is a growing success.  

To find out more information about buying a property in Saint Tropez, contact our team of qualified specialists.