River James Property

Home prices may be falling to pre-housing bubble levels in the U.S., but on the French Riviera, the recovery appears to have begun.

"Growth is back," says Fredrik Lilloe, CEO of France's Estate Net, a luxury property agent, and Estate Net Research. "The market is regaining its strength, particularly on the coastline."

The luxury-property market on the Cote d'Azur improved late last year, with nearly 6% of available properties on the Riviera and in Monaco sold between December and January 2011, according to a new index from Lilloe, based on data from local agents, banks and notaries. Prices rose 1.4% last year, says Catherine Bernard, of Stone & Living, a luxury realtor based in Lyon, citing the French Notaries' Association.

Bernard expects Riviera prices to edge up this year, and Lilloe sees it as a recovery year, with prices staying flat with last year's. Lilloe estimates that prices have fallen about 10% since 2009, but next year he expects growth to return to an average 10% annually, about what it was before the crisis. Time on the market has risen to six to nine months, up from an average three to six months before the crisis.

Interest rates in France are at historical lows, and Bernard says international buyers returned to the high-end market in 2010, with more Eastern Europeans, Russians and Scandinavians buying. And private investors have been scouting the Riviera for properties to develop, Lilloe says, with U.S. and European banks looking to invest money for clients or portfolios.

Original article in full at Barron's