The market for second homes in Europe has been in a holding pattern ever since the Covid-19 pandemic forced countries from Italy to Austria and Greece to the U.K. to impose nationwide lockdowns in March. Though brokers say prospective buyers have continued to search and view listings online, they have been unable to travel for viewings.
Now, lockdown restrictions in much of continental Europe are beginning to ease up, and non-essential travel is set to reopen between many countries next week. France, Germany, Switzerland and Austria are set to reopen their shared borders for tourists on Monday, while Spain and Italy’s borders with neighboring countries will begin to reopen in the coming weeks. Most travel will be by road and rail at first, but some regional airlines will begin to fill their schedules again throughout the summer.
But even as the situation in Europe inches back to normal, the pandemic could have lasting effects on investor behavior, leading to a shift toward more conservative decision-making for investors in the second-home market.
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Staying Close to Home
For many, the pandemic-induced lockdown highlighted the benefits of owning a second home, said Zoltan Szelyes, a global residential real estate researcher.
“Having the opportunity to leave the small apartments in the city for a more remote place with less density certainly had its benefits,” he said.
Throughout Europe, many city-dwellers fled to country homes when the lockdowns were announced. Villages in southern Italy were flooded with Milanese who had left the north. In France, one million Parisians are thought to have fled the capital, and coastal regions such as Brittany saw a surge in visitors. Many, who may have been in temporary rentals or parents’ homes for the pandemic, are now looking to invest.
But, Mr. Szelyes said, there is an important distinction to be made when assessing the second-home market in Europe.
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“We need to distinguish between cross-border second home investment and domestic investments,” he said.
“Cross-border investments probably will encounter more skepticism in the current environment [and] those countries most dependent on cross-border second home buyers are probably more negatively impacted over the short term,” he said.
Those could include Italy and its Mediterranean neighbors such as Spain, Portugal, Cyprus and Malta. Instead, wealthier Brits and northern Europeans may want to invest closer to home, at least in the near term.
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England on the Upswing
Harry Gladwin, Knight Frank’s head of the Cotswolds region in the U.K., said on a recent podcast there has been a spike in interest in that area over the last few months.
« In addition to the normal flow of buyers who are moving to the Cotswolds, we have seen some new entrants to the market,” he said on Knight Frank’s “Intelligence Talks” podcast. “Many of them have been spurred on by having been locked down for a few months with very little outside space.”
Knight Frank has seen a similar trend in the southeast of England, where more people are looking to make second-home purchases since the pandemic.
“A lot of what we are seeing at the moment is additional home purchases, so someone who is keeping their London base, but financially, they are able to purchase a country property as well,” said Julia Robotham, a southeast associate, speaking on the same program.
Brits have been especially interested in the southwest of England, said Richard Speedy, head of waterside and regional director of the southwest for Strutt & Parker, a Christie’s affiliate.
« Over the lockdown period, we had a huge number of enquiries, especially from people in London and the southeast looking for not just waterside but also countryside properties, » he said.
Mr. Speedy said some of the prospective British buyers he has worked with had previously been looking in places such as Mallorca in Spain, the Greek Islands, or the south of France.
« Some have said to me, ‘We were looking at buying on the continent, but we don’t know how long Covid’s going to be around for … so we would feel more comfortable just being able to get in the car and drive down to St. Ives or Croyde,’” he said.
He added that, normally, he receives inquiries from German and French buyers in addition to the British, but that interest also has decreased since the pandemic.
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It Comes Down to Sentiment
Though much of continental Europe will soon see a return to quarantine-free travel, not all countries are lifting their lockdowns yet. The U.K. announced a mandatory 14-day quarantine for international travelers in late May, and there is also the chance that a second wave of the pandemic forces other countries to restrict movement once again.
With that in mind, luxury real estate investors may not be so quick to return to their pre-pandemic lifestyles.
Kate Everett-Allen, head of international residential research at Knight Frank, said that the deciding factor will likely be human behavior, even if travel restrictions are lifted this summer.
“So much of this will come down to consumer sentiment,” she said, “whether people are moving or starting to move around and getting some sense of normal life back again.”
For the time being, Ms. Everett-Allen said, domestic buyers will likely lead the markets in countries like France and Spain, with Madrilenians looking at Marbeya or the Costa Brava and Parisians interested in Provence or the Alps.
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More About Air Travel Than Borders
Europe has a long history of intra-continental travel, and eventually that will start to come back too. Northern Europeans will begin to crave the heat, and ski lovers will still want to get to the Alps in winter.
The key, according to Hugo Thistlethwayte, head of international residential at Savills, will be doing so without taking on too much risk. That is why he believes second-home buyers will be more interested in accessibility by road than staying within national borders.
“The fear of getting locked into a city again I think is quite strong, so the ability to not get stuck somewhere—to get there by car with reasonable convenience—is another trend,” Mr. Thistlethwayte said. “And that’s true across Europe.”
But that does not mean people will only ever vacation domestically.
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“From the U.K., I’m looking at what I’m doing with the family for the summer, and I think we’ll drive to the south of France,” he said. “Being able to drive gives us the opportunity to not get stuck.”
He pointed to Germany and Austria as another example. Bavarians have long spent their vacations in places like Kitzburg in Austria’s Tyrol region.
“It is technically across the border but it’s German-speaking and they are very close communities,” Mr. Thistlethwayte said.
For Londoners, he said, that might mean Hampshire, Cornwall, Sussex, or other locations that do not require a flight.
“A lot of these buyers are between 50 and 70, quite wealthy, and they don’t want to put their health at risk,” said Strutt & Parker’s Mr. Speedy.
He said many prospective home buyers would rather sit in their own car for a few hours than get in a plane with 300 other people. Even if only one or two passengers have Covid-10, he said, “you do stand a real risk.”
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A Return to Regionalism
Mr. Szelyes agreed that while domestic demand could outpace international interest in the interim, European second-home buyers would eventually begin to consider cross-border purchases again.
“I can imagine there will be regional demand—French people buying in Switzerland, or Germans in Italy or Spain,” he said.
“What you see in terms of the mindset is people going back to regionalization—re-regionalization or re-nationalization,” he said.
Likewise, Ms. Everett-Allen noted that much of the cross-border demand Knight Frank has been seeing is regional, such as German and Swiss interest in northern Italy, or Swiss and Dutch investors looking in the south of France.
“The appetite for a second home will still be there, maybe stronger than before,” she said. “What will change is the type of home, the location they want to be in, and how accessible it is.”
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