Champ-du-Boult is a little village in Normandy, France, that’s recently hit the headlines. That’s because it was offering four pieces of land for sale for just one euro per square meter (i.e., about $4,500 per acre). Since announcing the offer last month, the village council has been inundated with emails and inquiries from prospective buyers. In one day alone, they got more than 100 emails.
If you’re thinking of checking out these deals (should they still be available at the time of press), be advised: There’s a catch. Though this pretty village of stone houses with colorful wood shutters sits between a forest and a lake, and boasts a golf course nearby and some great local foods, the town’s population is in decline. Currently it’s estimated at only 388 people.
Younger people, looking for work, move away once they’re old enough to do so. Today, a quarter of the village’s houses are British-owned, and many properties are used only as vacation homes. That’s why the mayor is offering this deal. He hopes to inject new life – and money – into the village. To do that, the town needs more residents. So buyers of these lots can’t sit on the land or build a vacation home. They need to commit to building a house on the lot and living in the village year-round.
The mayor has also said that they will give priority to families with children. The four lots on offer are 900 to 1,000 square meters. At $1.14 per square meter, buyers would pay $1,020 to $1,140 per lot. To build a house would cost around $1,485 per square meter ($137 per square foot).
According to news sources, other villages in France with declining populations are considering similar schemes. I’m keeping a close eye on these kinds of opportunities as they become more commonplace in attracting new life to towns.
That was how, initially, I heard about a recent deal in the picturesque hill town of Gangi in Sicily. In that case, the 14th-century town, home to a friendly population of 7,000, was offering to give you a home for $1.14. All you had to do to qualify was promise to renovate it. The mayor even gave you five years to do the renovations.
I estimated at the time that with $65,000, you could renovate one of the historic properties on offer to a top-class quality.
But population-starved towns are not the only places to find distressed European real estate. I’m paying very close attention to a variety of other opportunities all over the continent.
One of those is the situation with Portugal’s Banco Espírito Santo. An Old World family bank with a strong reputation, this institution dramatically imploded in August 2014. Like many worldwide, the bank had some bad real estate loans on its books, but that wasn’t what brought it down. It was a number of bad loans to family businesses that did it.
So the Bank of Portugal was forced to step in with a 4.9 billion-euro bailout. So-called nontoxic real estate loans were quickly separated out and hived off into a new “good” bank called Novo Banco.
The new Novo Banco board members came with extensive big banking experience. They found their “good” bank wasn’t so good after all. Word on the ground is that they was shocked by the volume of delinquent mortgages and unrepaid developer financing on Novo Banco’s books.
But then Novo Banco rolled up its sleeves and started cleaning up its balance sheet. It…
- Put pressure on slow-paying developers
- Repossessed real estate assets where payments weren’t being met
- Liquidated its repossessed real estate at discounts of 15% to 30% below previous distressed pricing
- Provided financing at high loan-to-value levels and at low interest rates.
Novo Banco’s aggressive cleanup operation was the trigger for competitive fire sales coming to Portugal. The other banks followed. They had no choice.
I’m keeping a close eye on this opportunity – as well as a number of deals and opportunities in Spain, Ireland and elsewhere in Europe – for readers of my Real Estate Trend Alert group.
Stay tuned!
Ronan McMahon
Editor, Real Estate Trend Alert
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