We are experiencing an unprecedented energy crisis, affecting all social and professional sectors. At a time when the building sector accounts for 44% of energy consumption in France, it’s legitimate to wonder what impact this crisis will have on real estate, and more specifically on the sale of heritage properties such as castle or manor houses, which have a reputation for being energy-hungry? When the Salon International du Patrimoine Culturel, to be held in Paris from October 27 to 30, 2022, the Mercure real estate group, a specialist in heritage real estate, looks back at the effects of the energy crisis on this market.
The investment property market: confirmed growth
While the energy crisis is hitting France hard, the Mercure real estate group, which specializes in the sale of heritage properties, continues to see a growing demand for heritage properties. While 82% of its customers are looking for authentic properties, and 87% are looking for a quiet, spacious property, the Mercure real estate group is seeing an 18% increase in the sale of castle at the start of this year compared with 2021, with 64 sales recorded in the first half of 2022. It also notes a 5% increase in sales of listed properties.
The energy crisis and energy retrofits: a particular focus for the Mercure Forbes Global Properties Group
However, the rising price of energy is a context that the Mercure group is taking very seriously to support its customers. After a study of the properties and castles it offers for sale, the Mercure real estate group found that 44% of its properties use oil-fired heating. Since the start of the crisis, the price of this type of energy has risen sharply from €876 per 1,000L in September 2021 to €1,692 per 1,000L in October 2022 (+93%).
So, while the Mercure real estate group has not, for the time being, seen any aborted sales due to overly extensive renovations, its agents remain attentive to the inflationary context of energy and the shortage of materials, which can have an impact on property prices.
Some of the Group’s agents have also noticed a new interest in these issues on the part of Group customers. This is notably the case for Éric Louvet, manager of the Mercure Bourgogne Franche Comté agency in Dijon: “Since the beginning of the year, I’ve observed a heightened interest in energy issues among the customers I’ve accompanied, which wasn’t the case before the start of the crisis. Our customers are aware of the renovation work they would have to do to change their heating system, or of the potentially high energy bills involved. This is an argument they consider when negotiating the price”.
Energy renovation: a project requiring assessment and information
For the Mercure real estate group, being cold in a castle doesn’t have to be inevitable. Energy renovation work is entirely feasible, and financial assistance is available. However, a study by Demeures Historiques found that 72% of financing projects for this type of work in heritage properties are not supported. The main reason for this is a lack of information. The Mercure real estate group is therefore keen to provide its customers with expert advice on their renovation projects.
To begin with, it wishes to distinguish between two types of energy renovation work:
- Insulation work, particularly on openings (doors, windows) and roofs, to keep the heat in.
- And work on energies, which allows properties to be heated differently. The objectives of these works are as follows:
- Continue to reduce the use of fuel oil, despite its logistical and user advantages.
- Work on wood energy.
- Complement with renewable energies (geothermal, Canadian wells, wind power and photovoltaics).
- Design an energy mix for the property.
What’s more, the Mercure Group’s experts would like to inform their customers about the financing of their projects: these investments are important, but they can be financed and subsidized.
Possible subsidies for energy renovation work:
- Agence Nationale de l’Habitat (ANAH): encourages renovation work on a means-tested basis,
- Certificat d’économie d’énergie (CEE): obliges suppliers to support improvement solutions with a bonus or subsidized loan,
- The zero-rate eco-loan: means-tested,
- Work eligible for reduced 5.5% vat rate,
- The Maprimerenov scheme, accessible to all, which enables several forms of assistance to be combined.
Energy renovation: a wise investment
The Mercure real estate group also emphasizes the return on investment of energy renovation work.
Energy-related work is indeed costly:
- You need to budget between €80 and €200 per m. to work on a property’s geothermal system,
- Between €50 and €80 per m. for Canadian wells with an operating output of 100 to 2,000 Kw,
- 20,000 to 50,000 for domestic wind turbines.
However, these investments can quickly pay for themselves as energy prices rise. In particular, the Mercure real estate group has two examples of renovated castles that can serve as references for customers interested in this type of project:
- Energy-efficiency renovation of a Castle Monument Historique in the Oise region of France:
- Investment of €439,000 with 50% subsidy
- Reduced energy bills from €55,000 to €7,000 per year.
- This represents a return on investment of between 5 and 10 years.
- Renovation of a castle in the Sarthe region:
- Non-subitizable investment of €100k (non-classified building)
- Went from an energy bill of €35,000 (fuel) to €4,000 per year.
- This equates to amortization in 4 years.
The energy crisis: between constraints and opportunities
For Olivier de Chabot, Managing Director of the Mercure real estate group, the energy crisis is not a foregone conclusion. “The world of castles knows how to adapt. The problems associated with heating in heritage properties are not new, and many owners had anticipated a rise in energy prices. The market remains dynamic, and this crisis may ultimately be an opportunity to make the market more liquid, with fewer obstacles to sales”.
About Mercure Forbes Global Properties
Since 1936, Mercure Forbes Global Properties has been offering the most comprehensive selection of French real estate. From charming houses and castles to country estates, urban and contemporary real estate, the Mercure Forbes Global Properties group offers more than 1,000 authentic or exceptional properties for sale throughout France, including 200 castles. With 20 locations throughout France and an international team, the group is committed to Properties of Excellence, meeting the demands of high-end French and foreign customers.
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