Follow the smart money

Property prices in fashionable second-home destinations from the Cote d’Azur to Tuscany to St Barts remain annoyingly stable for those in search of a bargain. However, anyone who ventures beyond the traditional destinations will be able to take their pick of some serious bargains.

The reason that many high-end holiday bolt holes have held their values is that wealthy second-home owners haven’t needed to sell. Mallorca is a good example. Well-heeled pleasure-seekers bought property on the Mediterranean island in the mid-20th century after the poet Robert Graves, followed by droves of bohemians, made the place fashionable. Nowadays a quick ferry across to the sister Balearic island of Ibiza reveals an equally lovely place – without such high prices.

“Ibiza is a classic example where buyers can get more for their money than for the equivalent property in Mallorca,” explains Joanna Leverett, head of Savills’ resale network.

Agents say the growing attraction of Ibiza is a good example of how the second-home market has changed in recent years. The type of buyer is changing from older, wealthy people to younger bargain-hunters prepared to cast their net wider. “What we are seeing across the board is smart money looking for good value homes in fairly liquid markets,” says Mark Harvey of Knight Frank, the upmarket property agent.

For example, a villa in Porroig in the south of Ibiza with panoramic sea views is currently on the market for €2.7m (£2.29m) through Savills. The equivalent in Mallorca would typically cost twice that, says Leverett.

However, Spain is one country that has seen property prices fall in every category, with prices about 40 per cent down on their high in 2007 in some areas. Even certain top-end destinations have seen price falls, and this includes Mallorca, where a couple of properties have had spectacular price cuts.

Savills is currently marketing a six-bedroom waterfront villa in the exclusive location of Formentor Bay, Mallorca. The property has been reduced from €17.5m before the downturn to €10.75m now. This modernist home has a glass façade, providing incredible views of the Mediterranean. The main living area opens on to a deck with a heated infinity pool, Jacuzzi, built-in barbecue and wet bar area.

Chesterton Humberts International has a spacious five-bedroom villa in Santa Ponsa, Mallorca, recently reduced from €5.5m to €4.5m. The property has a swimming pool, covered barbecue and dining terrace. The new super-port of Puerto Adriano, where owners could park their superyacht for a quick getaway, is 2km along the coast.

For those interested in buying a second home in Italy, the Lunigiana area of Tuscany is the bargain area for anyone with deep pockets. Leverett says it is a relatively unknown area, away from the expensive and popular region known as Chiantishire but just as beautiful, with great access and a beautiful coastline as well as mountains. For €2.5m, buyers can purchase a castle complete with turrets and gardens bordering a picturesque river. Villa Poderetto is based within easy reach of several airports; the coast and a local ski area are approximately 30 minutes’ drive away.

Demand for holiday homes in Lake Como is beginning to move away from exclusive Bellagio, where property prices are high and you pay for the name, to other areas on the north shore. According to Paul Belcher, managing director of Ultissimo, a buying agent for Lake Como, buyers can find good value properties in areas including Laglio, Ossuccio, Sala Comacina, Colonno, Argegno and Dizzasco.

Villa Peduzzi in Lake Como, for instance, is a redevelopment of a Liberty Villa – an art nouveau architectural style from the early 1900s – that was built in 1909. Once it is restored, there will be two five-bedroom private apartments, each offering views of Lake Como. The ground- and first-floor duplex is on the market for €4.47m, while the second- and top-floor duplex costs €3.88m. The villa is a 10-minute walk from the village of Pigra. There, a cable car ride whisks you down to the village of Argegno, which sits by Lake Como, in just four minutes. Residents will have the option of buying private moorings in Argegno.

Ultissimo also has a modern development in Argegno with prices starting at €740,000 for a first-floor apartment with a garden. Two two-bedroom apartments remain for sale in the Vista Marina development.

Barbados can never be accused of being a bargain destination but, in certain areas, high-end properties are looking especially attractive. Harvey of Knight Frank says that certain prime location properties have fallen by up to 30 per cent in two years. “We also think it’s a good time to buy on the dollar as we’re probably going to see an upswing in the currency from now on,” he adds.

For instance, Savills’ biggest discount in Royal Westmoreland resort is the four-bedroom Palm Ridge Golf villa, reduced from $4.5m (£2.76m) to its current price of $2.95m – a discount of 34 per cent over the past year. It has a private swimming pool, Jacuzzi and gazebo overlooking an ornamental pond and waterfall.

In France, buyers are turning away from the popular Riviera towns such as Cannes, Nice, St Tropez and Cap Ferrat, and moving inland and west to Provence, Languedoc and Dordogne.

“The market in prime locations such as Cannes, Cap Ferrat and Cap d’Antibes has not been seriously affected by the financial global crisis,” says Jonathan Gray, head of Beauchamp Estates’ Cannes office. “While some interesting deals were done in the two months following September 2008, since then property owners have not been willing to lower prices.”

Stuart Baldock of buying agency Property Vision France believes the ultra-wealthy destinations such as Cannes and St Tropez are now less sought-after. “They became overbought and the advantages of buying there are outweighed by the noise, traffic and expense,” he explains.

While prices in the prime locations have not fallen, property values elsewhere in France have – and it is in these areas where buyers can pick up a bargain. Prices are down from 2008 levels by as much as 30 per cent in some cities and regions, according to Baydonhill FX, a Knightsbridge-based international mortgage broker.

“We’re finding that people from the Riviera are selling up and buying in south-west France, in areas such as the Dordogne, because they can get so much more for their money. You can buy a chateau for about €1m, while you would struggle to get anything for that in the Riviera,” explains Savills’ Leverett.

Savills is currently marketing a 15th-century country farmhouse in the Périgueux area of the Dordogne for €3.5m. The property is in 40 hectares of beautiful gardens, encompassing an elevated position with far-reaching countrywide views. It has already attracted interest from wealthy buyers from the UK and the US. According to Savills, the equivalent property in the Côte d’Azur would cost about €8m more.

Both the Languedoc region and Provence are also catching the attention of the wealthy. “Provence has always been popular with well-heeled French nationals and a growing international elite looking for a lower key but more authentic experience away from the overcrowded Côte d’Azur,” says Harvey.

While towns such as St Rémy and Gordes made all the headlines in recent years, Harvey says the picturesque village of Lourmarin is attracting increasing interest due to its competitive values and proximity to Marseilles and Aix-en-Provence.

The demand for these newer locations is not driven by buyers with less money to spend but rather by a growing number of second-home purchasers recognising that these areas provide better value for their money and a bigger holiday home.

Other major destinations for the wealthy have also seen massive reductions in the cost of luxury property. Aylesford International has a beautifully modernised chalet located just a few minutes out of Gstaad in Switzerland. The property has been reduced from SFr10m (£6.6m) to SFr7.9m.

But agents warn that prices will not remain low for long. “I really think it is the best time to buy this year,” says Harvey. “Although all the international markets are slightly different, our feeling is that now is the time to buy, certainly for Italy, France and Switzerland, as we’ve already started to see a recovery in prices.”