5% return promised on new leaseback

Bordeaux/from € 122,618: An aparthotel building near the football stadium in Bordeaux is for sale off plans, writes Kate McMorrow

"Add Antwerp to Versailles and you have Bordeaux". This description by Victor Hugo captures the blend of romance, wine and commerce that epitomises this southern city on the Garonne.

Gunne New Homes Overseas and Palmer Property Advisors are jointly handling Appart'City Cap Affaires Bordeaux Centre, a new leaseback development being sold off plans with a 5 per cent rental return guaranteed for 11 years.

The location is in the suburb of Mériadeck, near the Stade Chaban-Delmas football stadium, and a 15-minute walk from the Hôtel de Ville and Bordeaux's elegant city centre district. A Holiday Inn hotel is a couple of blocks down from the site.

Appart'City Cap Affaires Bordeaux Centre will be run as a three-star aparthotel residence and interest is expected from businesses who travel regularly to Bordeaux. Prices start at €122,618 for fully furnished and equipped studio units of 20sq m (215.4sq ft), inclusive of Vat at €19,054.

One-bed apartments of 29sq m (312.3sq ft) cost from €165,903 including Vat of €28,539. Prices include furniture, notary fees and mortgage arrangement fee.

French developer Groupe France Epargne is offering 100 per cent mortgages on this deal. Under the government-controlled leaseback scheme, Vat is normally returned to the purchaser.

In this case, if a buyer avails of the 100 per cent mortgage offer, the lender will retain the Vat as a guarantee.

This sum will earn 4.5 per cent compound interest over the loan period, creating a nest egg to be returned when the loan is completed.

The apartments will come fully furnished for letting, with residential management on the premises, a cleaning and linen service, full breakfast for occupants on request, and a reception lounge.

There will be a fully equipped kitchenette, with appliances, laundry room and office services.

Some investors will be tempted by France's historically strong equity growth and the profit in selling on once the 11-year leaseback period is over. Others will take a long-term view with regard to their pension portfolio.

Tax write-offs during the loan term will greatly reduce income tax liability.

The Appart'City Cap Affaires Bordeaux Centre project is strictly an investment opportunity, one which takes advantage of the city's strong business ethos. The capital of Aquitaine, Bordeaux is not only the wine hub of France but a centre for technology.

Because of its good transport links and rich architectural tradition, some of Europe's largest consumer exhibitions choose Bordeaux as a venue.

The apartments are scheduled for completion at the end of 2007. Car-parking is included in the price, but this will revert to the city council after the initial 11-year period.

Developer Groupe France Epargne (GFE) is part of the French-based Groupe Menguy Investissements, which has a turnover of €60 million.

It specialises in investment leaseback schemes in city locations.

Plans can be viewed at the Ballsbridge offices of Gunne New Homes Overseas and Palmer Property Advisors.

Another leaseback opportunity in the Bordeaux region can be viewed over the weekend at an exhibition taking place at the Radisson SAS St Helen's Hotel in Booterstown, Co Dublin, which starts tomorrow.

Springvale Overseas Properties will be showcasing a five-star holiday leaseback scheme in Talaris Marina on Lacanau Lake, 35 minutes from Bordeaux and 20 minutes from beaches.

Two and three-bedroom detached houses from €162,695, excluding Vat, come with a guaranteed index-linked rental return of 4.5-5 per cent. This phase will be ready for occupation by July 2007.