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Investment in France: Real Estate, Equities and Other Sectors to Watch

France has not been mentioned in the financial news much lately, and for good reason. The country is still stable and fundamentals still strong, as most analysts seem to take the position that the recent election of Socialist President Francois Hollande does not portend significant changes in the economic outlook for France. Any presumed uncertainty about the French financial infrastructure has already been factored into the market, and an opportunity may well be worth serious consideration.

As the world’s third largest beneficiary of foreign investments, the country boasts of the presence of 23,000 foreign companies operating on its soil. The attractive investment environment of France was substantiated in 2011 with the confirmation of 698 foreign investment projects.

France has always been high on the list of preferred tourist destinations, and investors can easily combine business with pleasure without the guilt.

Administrative restrictions are minimal and formalities have been streamlined to the point that registering a company online may only take a few hours and the business can be up and running in no time.

Sectors Of Interest When Thinking of an Investment In France

  • Real Estate: Residential properties are still fairly priced and strict purchasing laws are designed to protect buyers against unscrupulous sellers and property financing for foreigners is readily available and easy to obtain. The capital gains rate recently dropped to 16%, whereas exemptions exist for properties that have been owned for 15 years or more.
  • On the commercial side, Cushman & Wakefield reported a 43% jump in investments in the first three quarters of 2011 to 9.9 Billion euros and supply is furthermore expected to fall in the near future. The region comprising of Paris and the Ile de France, which accounts for 20% of the population and 30% of GDP, also received more than two thirds of total commercial investments, with Paris still only second to London in terms of desirability in 2011. Hence, the increasing attractiveness of provinces is being recognized.
  • Equities: Morningstar reports that the benchmark CAC-40 index still sports a 9.9 times forward earnings ratio, among the lowest in Europe. Caveat: some mutual funds and ETFs may still be loaded with European bank exposure, therefore individual stocks may be preferred, especially those paying decent dividends, and the credit default swap market can give informational insight into the risk of default or bankruptcy, with $90 to protect $10,000 a solid benchmark.
  • Venture Capital: All 80 of France’s universities have a startup incubator to facilitate the transfer of research and technology into spin off startups, with each incubator assisting roughly 100 technology startups in all critical academic and scientific fields, such as chemical, physical, or pharmaceutical. Strong support from academic resources and facilities remains a vital key feature of this setup. Nevertheless, startup investment in France is still in its infancy and lags far behind its U.S. counterpart. French venture capitalists concentrate mainly on later stage companies, and therefore, startup valuation is kept at a very low level, enabling savvy angel investors to pick up the best and latest technologies at the lowest price possible.

Overall. When searching for an investment in France, investors can always look forward to leisurely reviewing business proposals at their local favorite café.

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