Best rental yields in Bordeaux
Where to invest in Bordeaux?
Real estate investment in Bordeaux means an increase in the price per square metre in 5 years of:
- 27% for new flats,
- 26% for old apartments,
- 36% for houses.
In just 10 years, property owners in Bordeaux have seen the value of their properties increase by 58.2%. This dynamism speaks volumes about this real gem of the South West.
But where should you invest in Bordeaux to maximise your property return? Have you missed the real estate growth train or is it still time to buy to let in Bordeaux? Above all, why Bordeaux?
Table of contents
- Where to invest in Bordeaux?
- Is it still worth investing in real estate in Bordeaux?
- What is the rental yield in Bordeaux?
- Why invest in real estate in Bordeaux?
- What is the tax rate on rental income in Bordeaux?
- Is now the right time to buy a property in Bordeaux?
Learn everything you need to know to find the best rental yields in Bordeaux.
1. Where to invest in Bordeaux?
To choose in which district to invest in Bordeaux, 2 elements must be taken into account:
- The % annual return,
- The average price per square metre.
These are the elements that we will highlight for 6 districts in Bordeaux.
Caudéran is a district of 45 000 inhabitants, which is the chic suburb of the city. With its vineyard-fringed houses and old shops, Caudéran still looks like the village it was before it became part of the city of Bordeaux.
The average prices of the square meter go from 4,900€ up to 6.600€. Therefore, to calculate the annual return on a property purchase in Caudéran, we will take the averages.
Thus, a new 2-room apartment of 45m² (average surface area), at a price of €4,695 per m² (average cost for a T2 in Caudéran) will cost you €211,275.
However, to this figure you must add the notary’s fees which represent, on a transaction of this value, 0.799%. of the purchase price, i.e. €1,688.
However, we must not forget to add the DMTO (transfer duties). In the Gironde department, they were set at the legal maximum, i.e. 5.81%, which represents an additional €12,275.
This gives us a total of 225 238€.
To find out the gross annual return on this property, we must now take into account the rent. In Caudéran, the average rent per square metre is €14, or €630 per month for a 45m² one-bedroom apartment.
The formula for calculating the gross annual yield is as follows
Annual rent / Price of the apartment) X 100 = gross rental yield
The gross rental yield here is therefore 3.36% ((7,560 / 225,238) X 100).
Another of the city’s chic districts, Chartrons is distinguished by its wine merchants and second-hand goods dealers. It used to be one of the city’s suburbs. Nowadays, Chartrons is one of the high places of the Gironde capital’s bourgeoisie.
The average price per square metre is €5,391, with an average rent of €16/m². To compare, we will always keep the example of a 45 m² T2. Thus, the cost of such a property will be : 241 270€ (225 238€ + 1 938€ notary fees + 14 094€ DMTO).
With an average monthly rent of 720€, the gross annual yield is : 3.58%.
Rehabilitated industrial area, This former marshy area has been completely redeveloped. Located on the right bank of the Garonne, the Bastide has been integrated into the city centre of Bordeaux thanks to the construction of the Jacques Chaban-Delmas bridge.
The average price per square metre is €5,117 for a one-bedroom apartment, with an average rent of €14 per square metre. Therefore, after taking into account the usual charges (notary fees and taxes), the cost of buying a 45m² one-bedroom apartment is approximately €245,482 (€230,265 + €1,839 notary fees + €13,378 DMTO).
The gross rental yield in this district is on average 3.1%.
Built around the church of Saint-Augustin, this district shines with its manor houses which were home to the Bordeaux aristocracy during the Renaissance. Known in the region for having been an important employment area thanks to the Chabrat factory, Saint-Augustin is today the cultural epicentre of the city.
The average price per square metre in Saint-Augustin is 5,402€, with an average rent of 16€. A one-bedroom apartment will therefore cost you around €259,155 (€243,090 + €1942 notary fees + €14,123 DMTO).
The gross rental yield in Saint-Augustin is therefore 3.33%.
The Place de la Victoire is the heart of this student district. A stone’s throw from the University of Bordeaux, it includes the Saint-Jean train station, but also the largest church in the south of France: Saint-Michel, with its 114-metre high spire.
Bordeaux Sud is now at the heart of a major project: an international business centre, coupled with the arrival of a high-speed train line which puts Paris at only 2 hours from Bordeaux.
The average price per square metre is €5,517 for a one-bedroom apartment, and the average rent is €18 per square metre in Place de la Victoire. A one-bedroom apartment will therefore cost you approximately 265,265€ (248,265€ + 1,983€ notary fees + 15,017€).
The gross annual rental yield in this area is 3.66%.
This is a part of the City Hall district, which is surrounded by the Georges Clémenceau and Independence courtyards, as well as by the Tourny alleys. The whole forms a triangle, each point of which includes an important place in Bordeaux:
- The National Opera,
- Place Tourny,
- Place Gambetta.
The average price per square metre of a one-bedroom apartment here is €5,865for a rent per m² of 16€. Consequently, you will need to budget around €281,367 (€263,925 + €2,108 + €15,334) to buy this type of property in this area.
The gross rental yield is therefore approximately 3.1%.
2. Is it still worth investing in real estate in Bordeaux?
Yes, but the question is all the more important as the gross annual rental yields are low. When you have this 3% gross, you are still far from the net-net, which takes into account all your expenses.
That is, you add the cost of your mortgage, taxes on rental income, local taxes, co-ownership charges, etc.
Investing in Bordeaux is always interesting, provided you invest in rental property in the short and medium term. In other words, you rent out your property via platforms such as Airbnb.
To maximise your income, entrust your management to professionals in the sector, such as GuestReady. Why do you do this? Because tourist stays are subject to seasonality, city events, etc.
Therefore, the price per night increases and decreases according to these elements. This is why it is best to be assisted by professionals.
3. What is the rental yield in Bordeaux?
The rental yield that we have calculated for the six main areas of the city centre shows that the rental yield for a one bedroom apartment is approximately 3.4%.
Weighted according to whether your flat is a studio or a T5, you can assume that a property in Bordeaux will yield between 2.9% and 3.9% per year, gross.
4. Why invest in real estate in Bordeaux?
When looking to invest in a city, one must consider :
- Demographic development
- Major projects
- The evolution of the real estate market
1. Demographic development
It is very good. Investing in Bordeaux means setting your sights on a city of 260,000 inhabitants, which is the centre of a Gironde conurbation that is experiencing demographic growth of 1.3% per year.
According to INSEE projections, the Bordeaux conurbation should reach one million inhabitants in the near future, thanks in particular to the 2,900 additional inhabitants who move into the city each year.
2. Major projects in Bordeaux
The dynamism of a city is long term when its municipality shares a real vision for the development of new infrastructures. In Bordeaux, this is the case.
1: From the airport to the city centre by tram
A new extension of its tramway allows the city to be reached directly with the tram from Bordeaux-Mérignac airport. 5 kilometres of line have been built, with an engineering structure to cross the ring road.
2: Brazza, the new district
At the same time, a new district is literally being built: Brazza. This district will have a floor area of 313,000m² of new housing.
3: The sixth bridge over the Garonne
6 kilometres to the south, the city is being enlivened by the construction of the Simone Veil Bridge. The sixth crossing of the Garonne, it will provide a better link between the right and left banks of the city.
In total, for these three major projects alone, no less than 80 million euros have been budgeted by the city. This is a sign of a very good dynamism.
3. The evolution of the real estate market
We have already answered this question in the introduction to this article. With what we have just highlighted, it is possible to make a forecast.
The Bordeaux agglomeration has 15,500 newcomers every year, 2,900 of whom are in the city of Bordeaux alone. At the same time, its tourism is picking up after the pandemic, with 16.4 million overnight stays per year .
The good news is that tourism figures are only 34% of what they were in 2019, before the health crisis. This gives you an idea of the growth potential of Bordeaux.
If you look at the real estate market, it guarantees one thing: there is no end in sight to the evolution of the Garonne.
5. What is the tax rate on rental income in Bordeaux?
Between 0% and 45%. France being a unitary state, the rule is that taxation is the same throughout the country, and Bordeaux is no exception.
The tax rate therefore depends on the tax regime you choose. Under €15,000 gross of property income, you can choose the micro-foncier regime (2042 declaration, box 4BE). A 30% deduction is then automatically applied by the tax authorities to the amount declared.
Alternatively, you can, or must, declare your property income under the real estate regime, via the 2044 declaration. To reduce the amount of your income, you must use the land deficit, without exceeding €10,700.
You can carry over the property deficit to box 4BC of the 2042 return.
Once these amounts have been added to your income, refer to the following table to find out the tax rate to which you will be subject:
|Tax brackets||up to 10 225€||10 226€ to 26 070€||74 546€ to 160 336€||160 336€ and more|
6. Is now the right time to buy a property in Bordeaux?
The right time is always now. If you wait for the right time to buy, you may never invest anything. Why is this? Because the right time is always known once it has happened.
So if you bought in Bordeaux 10 years ago, you would say that you made a good investment, and that it was the right time.
With the growth of the city of Bordeaux and its agglomeration, the investments made by the city for its development and the trend of the real estate market, investing today is definitely a good investment.
7. Short, medium or long term?
We have seen that the long term does not yield much in the way of gross annual rental income. Depending on your situation, the net-net could even lead you to an investment that costs you money rather than making you money.
However, the purpose of an investment is to make you money. That’s exactly why short or medium term rental is the ideal solution to increase the rental yield.
Why? Because you can easily double or even triple your rental income through rental platforms like Airbnb.
And that’s not all. By renting out your flat to tourists or transient workers, you can maximise your rental income according to the events taking place in the city, and according to the seasons.
This is why companies like GuestReady have sprung up. Experts in the rental management of properties intended for short or medium-term rental, their mission is to prevent vacancies while multiplying your income.
Bordeaux is without doubt one of the most dynamic cities in France. Few metropolises today can boast of attracting 15,500 additional inhabitants each year, the population of a small town.
Ambitious and economically very well located, Bordeaux is undoubtedly one of the most important cities in France in the decades to come.
With its rich historical, cultural and gastronomic heritage, it is still far from having reached its full potential. Investing in it means making a bet on the future, the risk of which is particularly limited.
Get in touch today to find out how we can help you make the most of your property in Bordeaux.