Published on and written by Cyril Jarnias
Nestled between the Mediterranean Sea and Mount Faron, blessed with one of Europe’s most beautiful natural harbors and record sunshine, Toulon is ticking more and more boxes for investors. Long overshadowed by its neighbors Marseille and Nice, the prefecture of the Var region has modernized, launched ambitious urban projects, and now boasts a real estate market that is dynamic, profitable, and still affordable for a Mediterranean coastal city.
This article provides a data-driven analysis of real estate investment in Toulon, including price levels, rental yields, target neighborhoods, local taxation, and urban projects. It also addresses risks to anticipate and strategies to prioritize for an informed investment.
A Mediterranean Lifestyle Driving Real Estate Demand
Between sea and hills, in the heart of the Provence-Alpes-Côte d’Azur region, Toulon combines several structural advantages that support housing demand.
The city has just over 180,000 inhabitants, integrated into an urban area of about 600,000 people. The population is growing, with over 15,000 more students gained in ten years and approximately 1,400 new residents per year. The demographic structure is balanced: an average age around 43, a significant share of young professionals, families, but also retirees attracted by the climate.
The local economy no longer relies solely on the navy, even though the military arsenal and naval base still account for nearly 24,000 jobs and a constant source of solvent tenants. Services account for over 60% of activity, tourism is strengthening, and the city relies on a university hub (University of Toulon, University Institute of Technology, engineering schools like SeaTech) attracting French and international students.
All within a well-connected metropolis: TGV high-speed train station (about 4 hours from Paris), bus network and Mistral boat-buses, A50 and A57 highways, Toulon-Hyères airport 20 minutes away, and proximity to Marseille and Nice. This accessibility, combined with over 300 sunny days a year, helps make Toulon a sought-after place to live. For an investor, these are all drivers of rental demand, whether for primary residences, student housing, or furnished rentals.
A Real Estate Market Still Affordable on the French Riviera
In the very tight and often overpriced landscape of the French Riviera, Toulon stands out as a relative exception. Compared to Nice or even certain areas of Marseille, the city remains significantly more accessible, while offering a similar quality of life.
Price Levels: Apartments and Houses
Data from several sources converge: Toulon apartments trade on average between €3,000 and €3,300 per m², with a median around €3,150–€3,340 per m² depending on sources and periods. For houses, prices generally range between €4,000 and €4,500 per m², with higher peaks in upscale neighborhoods like Cap Brun, Faron, or Le Mourillon.
We can summarize this landscape in a first simplified table.
Table 1 – Price Ranges in Toulon (Sale)
| Property Type | Average Price per m² (approx.) | Main Comment |
|---|---|---|
| Apartment (all areas) | €3,000 – €3,300 | Dominant market, strong rental demand |
| Older Apartment (median) | ~€2,975 | Interesting for yield and renovation |
| New Apartment (median) | ~€4,595 | More expensive, but lower notary fees |
| House (all areas) | €4,000 – €4,500 | Entry budget around €400,000 |
| Upscale House (coastal, Faron…) | > €5,000 /m² | Sea view, pool, luxury features |
In comparison, Marseille hovers around €3,750–€4,500 per m² for apartments, Nice easily exceeds €5,000 per m² for condos and €6,000 per m² for houses. In neighboring seaside resorts like Bandol or Sanary-sur-Mer, prices are closer to €6,000 to over €10,000 per m² on the waterfront.
This discount compared to the major metropolises of the French Riviera represents an investment opportunity in a promising coastal market.
Moderate but Upward-Trending Price Evolution
Over the medium term, prices in Toulon have risen significantly but without overheating: around +24% over seven years and +5% over three years according to the FNAIM index. The increase has slowed markedly in the last two years (+2.8% approximately over two years), with even a slight correction in some apartment segments, while houses remained stable or slightly increasing.
The price per square meter in Toulon remains about 25% lower than the average for the Var department.
For an investor, this dynamic corresponds to a rather healthy scenario: steady progression, but without an apparent bubble, and the possibility to aim for both rental yield and asset appreciation in the medium term.
A Housing Stock Highly Oriented Toward Rental
Investing in real estate in Toulon primarily means investing in a city of renters. The structure of the residential stock is particularly favorable to rental demand.
Among just over 96,000 dwellings, nearly 90,000 are primary residences, representing over 94% of the stock. Apartments dominate heavily: about 79% of dwellings, versus just over 20% houses. Crucially, only about 44–45% of households own their primary residence, meaning 52–56% of occupants are tenants according to sources.
The breakdown by dwelling type shows that small and medium-sized units form the core of the market for rental investment.
Table 2 – Approximate Structure of the Primary Residence Stock
| Typology | Share in Primary Residence Stock |
|---|---|
| Studios | ~7.3% |
| 2-room apartments (T2) | ~18.6% |
| 3-room apartments (T3) | ~34.4% |
| 4-room apartments (T4) | ~25.2% |
| 5 rooms and more | ~14.5% |
Simultaneously, expressed demand concentrates on T2s and T3s, but also on slightly larger units (75–100 m²) for families and shared housing. In the city center, half of searches are for T2s and a quarter for T3s, confirming the appetite for formats suited to young professionals, students, or couples.
For the investor, this very clearly guides the strategy: target small and medium-sized units in good locations, rather than large family apartments that are difficult to make profitable, except for very specific targeting (shared housing, subdivided house, etc.).
A Tight Rental Market and Yields Above the French Average
Classified as a “tense zone” by decree, Toulon is among urban areas where rental demand structurally exceeds available supply. The rental tension score reaches 10/10 in some barometers, and the re-letting period is short for well-located and correctly priced properties.
Rent Levels and Recent Evolution
Across the entire city, the median rent for apartments, excluding charges, hovers around €13 per m², with an increase of about 4% over one year and nearly 7% in two years. The five-year increase is even more pronounced, especially for T3s and larger, which have risen over 10%.
The order of magnitude by typology is as follows:
Table 3 – Indicative Median Rents (excl. charges)
| Apartment Typology | Median Rent €/m² | 5-year Evolution (approx.) |
|---|---|---|
| T1 (studio) | ~€15 /m² | +8% |
| T2 | ~€14 /m² | +8.5% |
| T3 and larger | ~€11 /m² | +10–11% |
In the real market, this translates into average rents around €500–€700 for a T1/T2 in a classic long-term lease, with T4s potentially reaching €1,500 depending on the neighborhood, property condition, and amenities (balcony, terrace, sea view, parking).
A large apartment in short-term furnished rental can generate up to €3000 in monthly revenue during the high season.
Attractive Gross Yields
Cross-referencing price and rent levels, the average gross yield in Toulon is around 5–5.5%, above the French average, which is closer to 4.6–4.8%.
Average overall gross yield observed in the municipality, with variations depending on typology and neighborhood.
A summary table allows to visualize typical yields by typology.
Table 4 – Example of Average Yields by Property Type
| Property Type | Average Price (approx.) | Average Monthly Rent | Indicative Gross Yield |
|---|---|---|---|
| Studio / 1 room | €70–90k | €450–520 | 7–7.5% |
| 2 rooms (T2) | €100–160k | €550–660 | 5.5–6.5% |
| 3 rooms (T3) | €140–230k | €750–840 | 4.5–6.3% |
| 4 rooms (T4) | €180–330k | €800–1,100 | 4–5.2% |
| House (3–4 rooms) | €280–330k and up | €800–1,100 | 3–4% |
These figures are averages. For a small two-room apartment purchased for €82,000 and rented for €750 per month, one obtains for example a gross yield around 11%. Conversely, a prestige villa over a million euros, even well-rented seasonally, will mechanically show a lower gross yield, but strong asset potential.
The city center offers some of the highest yields, around 6.4% gross, as do certain popular sectors like Escaillon/Bon Rencontre, nearing 6.3%. Upscale residential neighborhoods, more expensive to buy, will offer yields between 3.5 and 5%, but with a more affluent clientele and often lower rental risk.
Understanding Key Neighborhoods to Guide Your Investment
Investing in real estate in Toulon isn’t just about choosing between sea and hills. Each neighborhood carries a specific combination of prices, rental demand, tenant profile, and appreciation prospects.
City Center and Haute-Ville: Yield and Urban Transformation
The city center, around the train station, Place de la Liberté, and the port, long suffered from a degraded image. Renovation programs (Rue des Arts, rehabilitation of Haussmannian buildings, new developments like Voile Blanche or the Haute-Ville residences) have changed the game.
Prices remain contained compared to the coastline, with apartments around €3,000 per m², sometimes less in certain micro-sectors, while renovated buildings or premium locations can reach €3,300–€3,500 per m². Rental yields here are among the best in the city, around 6–6.5%, thanks to strong demand from young professionals, students, and temporary workers.
The center offers all services (markets, shops, cinema, opera, transportation), a relatively young population (median age close to 32 in some blocks), and a stock composed almost exclusively of apartments. Well-designed T2s/T3s are particularly sought after.
Le Mourillon and the Coastline: Upscale, Seasonal, and Mixed Clientele
Once a fishing village, Le Mourillon is now Toulon’s iconic seaside neighborhood, with its sandy beaches, marina, seafront bars and restaurants. The atmosphere is halfway between a Provençal village and a trendy seaside resort.
In this sector, prices exceed the Toulon average. Apartments trade around €4,100 per m² and houses frequently exceed €6,500 per m². Some exceptional properties, especially in micro-neighborhoods like La Mitre, can easily exceed €8,000 per m².
Le Mourillon attracts a varied population: three out of five residents are single, but the neighborhood also appeals to many families, particularly due to the proximity of schools and beaches. It’s an ideal sector to mix year-round rentals, upscale furnished rentals, and seasonal rentals. The risk of vacancy in summer is almost nil, provided short-term rental rules are respected.
Cap Brun and La Serinette: Upscale Heritage and Exceptional Setting
To the east of the city, Cap Brun and La Serinette represent the most prestigious side of the Toulon market. Villas surrounded by pines, upscale residences with sea views, renowned schools, and a very green environment make these neighborhoods safe bets for a heritage investment.
Average prices reflect this positioning: around €4,500 per m² for apartments and €6,000 per m² for houses on average, with strong variations depending on view, size, and features. Gross yields are more moderate, often between 3.5 and 5%, but the scarcity of supply and strong demand suggest good price stability, even potential progression in the coming years.
For a long-term investor aiming more for asset security than maximum yield, Cap Brun and La Serinette are very credible targets.
Faron and Bas-Faron: Dominant Views and Affluent Clientele
On the heights north of the city, the slopes of Mount Faron are home to a wealthy residential stock, made of houses and apartments nestled in vegetation, with panoramic views over the bay. It’s a few minutes’ drive from the center, while enjoying a very peaceful setting.
In affluent neighborhoods, real estate prices are significantly higher than the city average, often around €4,000 per m² and more for houses with views. The rental clientele is mostly composed of senior executives, liberal professionals, and affluent retirees. Although pure rental yield is generally lower here than in popular neighborhoods, this drawback can be offset by stronger asset appreciation and often more stable tenant quality.
Popular and Transitioning Neighborhoods: Pont-du-Las, Bon Rencontre, Les Routes, Valbertrand, Saint-Jean-du-Var…
To the west and north of the city, neighborhoods like Pont-du-Las, Bon Rencontre, Les Routes, Brunet, Valbertrand, or Saint-Jean-du-Var show lower prices, between €2,000 and €3,000 per m² for apartments and around €3,200–€3,800 per m² for houses.
They host a population of young couples, modest families, often with a strong presence of naval base employees or nearby industries. These sectors are gradually benefiting from improvements (public spaces, transportation, amenities) and now offer gross yields often above 6%, especially on recent or well-renovated T2s/T3s.
For those who accept a more popular context and know how to select the building well (avoid very degraded condominiums, heavy charges, poor energy performance), these neighborhoods constitute the heart of the yield market in Toulon.
Eco-Neighborhoods and Major Projects: Montéty, Font-Pré, Mayol–Pipady
Beyond traditional neighborhoods, several structuring operations are reshaping the real estate offer and the city’s face, with a direct impact on investment.
The Font-Pré eco-neighborhood was designed to reconcile urbanism and environmental respect, with priority for pedestrians, large green spaces, and the presence of shops and daycare centers. It primarily attracts families and young professionals seeking recent dwellings, often compliant with current energy standards. This compliance limits risks related to the Energy Performance Diagnosis (DPE) and the progressive ban on renting properties considered as energy sieves.
The Montéty area, long perceived as a working-class neighborhood, is undergoing a major restructuring with the “Harmonie” project: over 20,000 m² transformed, creation of a healthcare training campus, a 3-star hotel, offices, a hybrid “Hüb”-type residence mixing aparthotel and co-living, and a pedestrian bridge linking to the Chalucet district, dedicated to knowledge and creativity. Near the TGV station, this sector attracts students, business tourists, and mobile professionals, generating strong rental income potential for small units and hybrid products.
Finally, the “De Mayol à Pipady” project represents arguably the most emblematic transformation. On 44 hectares of port wasteland, the Toulon Provence Méditerranée metropolis and a consortium of developers (Eiffage Immobilier, Icade, renowned architects, landscapers) are reinventing the bayfront: large park open to the sea, upscale hotel-spa, cultural spaces, offices, shops, co-living, sports facilities, and restaurants. The implementation of a thalassotherapy energy network, cultural animation, and complete waterfront requalification are expected to boost the attractiveness of adjacent sectors (Mayol, Mourillon, city center).
For the investor, these projects mean both opportunities in new construction (with reduced notary fees, but higher prices) and appreciation prospects for well-located older properties around these new hubs.
Local and National Taxation to Integrate from the Project Setup
Investing in real estate in Toulon involves anticipating not only purchase price and rents, but also all additional costs: acquisition fees, local taxation, taxation of rental income, capital gains tax, and potential wealth tax on real estate.
Acquisition Fees: Old vs. New
As everywhere in France, acquisition fees are often mistakenly called “notary fees”. They actually include transfer duties (taxes), the notary’s fees, and administrative disbursements.
For old properties, one must budget an average of 7–8% of the sale price, or around 6.5–7% excluding financing costs. For new properties (off-plan or dwellings under 5 years old never occupied), the bill drops to around 2–3%, thanks to a more favorable tax regime (the seller is subject to VAT, which reduces transfer duties).
A concrete example well illustrates the difference:
– For a T3 of 70 m² at €216,953 in a new development, total fees are around €4,670;
– For an old property at the same price, the bill rises to nearly €15,900, more than triple.
For an investor in Toulon, choosing new construction can thus significantly reduce the initial capital needed, at the cost of a higher entry price per square meter and sometimes a slightly lower gross yield.
Local Taxes: Property Tax, Residence Tax on Secondary Homes and Vacant Properties
Like all municipalities in tense zones, Toulon has several local fiscal levers that impact landlord-owners.
Property tax is mandatory for all owners. Its amount depends on the cadastral rental value of the property, calculated on old bases but revalued annually. Although the city historically controlled its rates compared to similar communes between 2000 and 2014, the average annual cost is estimated between €1,200 and €1,300, with significant variations depending on the type of dwelling.
The residence tax on primary residences has been abolished, but remains for secondary homes. Toulon, as a tense zone, can apply a surcharge ranging from 5 to 60% of the amount, to discourage the holding of vacant dwellings and little-occupied residences in tense sectors. For an investor who effectively rents their property year-round, this surcharge does not apply, but it must be integrated in case of a secondary home project or an unrented pied-à-terre.
Percentage of vacant dwellings in Toulon, subject to the tax on unoccupied properties.
Rental Regulations in Tense Zones
The classification as a tense zone has several practical consequences for rental investment.
On one hand, it entitles the tenant to a reduced notice period of one month to leave their dwelling (furnished or not). For the investor, this means more frequent turnover, but also an ability to quickly adjust rent to market rates during re-lettings.
On the other hand, while Toulon is not subject to strict rent control (like Paris, Lille, or Lyon), rent increases during a lease remain indexed to the INSEE reference rent index (IRL) and are prohibited for dwellings classified F or G in the DPE, in application of national legislation. In practice, renting an energy-intensive dwelling is becoming increasingly difficult, even impossible in the long term.
Finally, fees charged to the tenant by an agency are capped: a maximum of €10 per m² for file setup and lease drafting, plus €3 per m² for the inventory, totaling €13 per m². With direct management, no fees are charged to the tenant.
Taxation of Income and Capital Gains
Rents received in Toulon are subject to the standard French tax regime. For unfurnished rentals, the micro-property regime offers a flat-rate deduction of 30% for income below €15,000. Beyond that, or for optimization, the real regime allows deduction of charges, loan interest, repairs, insurance, etc., and possibly generating a property deficit deductible from overall income within certain limits.
For furnished rentals, the Furnished Non-Professional Rental (LMNP) status offers two tax options: the micro-BIC regime, with a 50% deduction on receipts (specific thresholds for tourism), and the real regime, which allows amortization of the property and furniture, potentially neutralizing a significant portion of rents tax-wise for several years.
In case of resale, real estate capital gains are taxed at 19% (income tax) plus 17.2% social levies for non-EU residents, with a system of progressive reductions based on holding period. The capital gains tax is eliminated after 22 years of ownership, social levies after 30 years.
Finally, net real estate assets held in France exceeding €1.3 million fall under the scope of the Real Estate Wealth Tax (IFI), including for non-residents, on French assets only.
Financing and Interest Rate Climate: A Favorable Window
The national context also favors investment in Toulon. After a sharp rise in interest rates between 2022 and 2023, the European Central Bank and French banks have initiated a relaxation movement. Average mortgage rates, which had flirted with 4–4.5%, have returned to around 3.0–3.8% depending on terms and profiles, with cautious projections around 3–4% by 2026.
For an investor, financing costs have become reasonable again, especially in a city where gross yield often exceeds 5%. The differential between rental yield and interest rate still allows for cash-flow neutral or slightly positive operations, particularly on well-chosen small units, even after integrating charges and taxation.
French banks finance both residents and non-residents, subject to respecting a maximum debt ratio of about 35% of income. Financing ratios generally vary from 70 to 85% for non-residents, and can go higher for residents or French expatriates.
Winning Investment Strategies in Toulon
Investing in real estate in Toulon offers several possible paths depending on budget, risk appetite, investment horizon, and time one wishes to devote to management.
Unfurnished Long-Term Rental: Stability and Property Deficit
The classic unfurnished rental remains a safe bet, particularly suited for households and professionals seeking stability. T3s/T4s near schools, transportation, and shops, in neighborhoods like Les Routes, Valbertrand, Saint-Jean-du-Var, or certain sectors of the center, find takers easily with three-year renewable leases.
This investment strategy in older properties allows benefiting from the real tax regime and the property deficit mechanism, particularly useful for deducting costs of major renovations (facades, roof, compliance). In a market where prices have corrected, it offers the opportunity to create value by buying below market price, renovating intelligently, and repositioning the property with an adapted rent.
Furnished Rental (LMNP): Yield and Tax Optimization
The Furnished Non-Professional Rental (LMNP) is well-suited to the profile of Toulon demand: students, young professionals, military personnel, mobile executives who prioritize flexibility. A functional T2 near the station, city center, universities, or major transport arteries rents easily furnished, with rents per square meter higher than unfurnished rentals.
The LMNP real regime allows amortizing the property and furniture, which, in many cases, fiscally neutralizes the rental profit for several years. The additional investment effort (furniture costing €3,000–€5,000 for a T2, more active management, higher turnover) is generally compensated by the surplus profitability (often +15 to +25% compared to equivalent unfurnished rental).
With over 12,000 students, a growing university, and specialized schools, Toulon offers fertile ground for shared housing. Large T4s/T5s near university hubs, the station, or transport axes can be divided into furnished rooms, each rented separately.
This strategy can generate gross yields above 7–8%, but it requires intensive management: multiple contracts, tenant turnover, and more frequent maintenance. It is recommended for experienced investors or those who fully delegate management to specialized professionals.
New Construction and Eco-Neighborhoods: Betting on Long Term and Energy Peace of Mind
In a context where dwellings poorly rated in the DPE are progressively becoming unfit for rental, investing in new construction in Toulon, particularly in eco-neighborhoods like Font-Pré or in labeled residences around the Montéty or Mayol–Pipady projects, can be relevant.
Gross yields will often be somewhat lower than for older properties (higher prices, rents capped in some schemes, end of the classic Pinel scheme nationally), but peace of mind regarding energy aspects, optimized condominium charges, and the attractiveness of a modern dwelling for tenants are real assets.
Risks to Monitor and Best Practices to Secure Your Investment
Toulon is not a risk-free El Dorado. Several points of attention must be integrated from the property selection stage.
Dwellings classified F or G in the DPE see their appreciation and rental potential reduced, with rent increases prohibited and rental limited for the worst energy sieves. Investment is only conceivable with a quantified renovation plan to significantly improve the rating.
The quality of the condominium is another key element. In some popular neighborhoods, buildings display heavy charges, unpaid condominium fees, and significant repair needs not provisioned. A careful reading of general meeting minutes, technical diagnostics, and provisional budgets is essential.
The choice of neighborhood and street is decisive. Within the same sector, a few hundred meters can significantly impact environmental quality, sense of security, noise levels, and, long-term, resale potential. To avoid bad surprises, it is advisable to visit the area at different times of the day, talk to local shopkeepers, and observe the turnover rate of shops as well as the general vitality of the streets.
Finally, taxation, although stable in its broad principles, regularly evolves in detail: regulation of tourist furnished rentals, evolution of micro-BIC and micro-property regimes, reforms of local taxes, updates of cadastral values. Regular monitoring or support from a tax advisor remains recommended to adapt one’s strategy (choice of real regime, switch to a company, arbitration between unfurnished and furnished, etc.).
Investing in Real Estate in Toulon: For Which Investor Profile?
The diversity of the Toulon market makes it a suitable playground for several profiles.
The patrimonial investor, seeking security, can turn to sectors like Cap Brun, La Serinette, Faron, part of Le Mourillon, or well-located new developments. Gross yield will be moderate, but the use value and long-term price stability constitute major assets.
Possible annual gross rental yield on small units in Toulon’s transitioning neighborhoods.
The opportunistic investor, finally, can target more specific operations: heavy renovation in undervalued older properties, purchase of multi-unit buildings, subdivision, operation as tourist furnished rentals in very touristy micro-sectors like Le Mourillon or the future “Mayol–Pipady” bayfront, having of course verified local regulations on short-term rentals.
Conclusion: A City Still Undervalued on the Scale of the French Riviera
Investing in real estate in Toulon is betting on a major coastal city catching up, still significantly cheaper than its French Riviera neighbors, but endowed with solid fundamentals: growing and diversified population, economy driven by defense, higher education and services, very attractive living environment, major urban projects transforming the waterfront and central neighborhoods.
Toulon’s rental market offers a gross yield generally above the national average, often between 5% and 7%. This potential fits within a context of interest rates that have become reasonable again. To optimize the investment, meticulous selection of the neighborhood, condominium, and rental type is crucial. The city presents a rare compromise on the coast, combining attractive yield, appreciation potential, and patrimonial quality.
The equation is not automatic: it requires a rigorous analysis of the figures, a good understanding of the city and its projects, and real anticipation of energy and tax issues. But for those who take the time for this work, Toulon appears increasingly as one of the strongholds of real estate investment on the French Mediterranean coast.
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Cyril Jarnias is an independent expert in international wealth management with over 20 years of experience. As an expatriate himself, he is dedicated to helping individuals and business leaders build, protect, and pass on their wealth with complete peace of mind.
On his website, cyriljarnias.com, he shares his expertise on international real estate, offshore company formation, and expatriation.
Thanks to his expertise, he offers sound advice to optimize his clients' wealth management. Cyril Jarnias is also recognized for his appearances in many prestigious media outlets such as BFM Business, les Français de l’étranger, Le Figaro, Les Echos, and Mieux vivre votre argent, where he shares his knowledge and know-how in wealth management.
