Buy high

    4 March 2017

    At first glance Europe’s skiing industry, much loved by its aficionados and by far the world’s most advanced, would seem to be in something of a crisis. The number of ‘skier visits’, defined as a single day’s swooshing down a mountain, fell in 2015, the last year for which the full figures are in, by 5.2 per cent in Switzerland and 2.5 per cent in France. Overnight stays in both of these prime destinations for British and other skiers have been down every year since 2004.

    Part of the reason is cost. Equipment hire, flights, hotels, après-ski: they all add up. Currency fluctuations don’t help, with sterling falling 13 per cent against the Swiss franc since June and 11.5 per cent against the euro. Climate change is a more unpredictable factor. Snow is not disappearing, but the heaviest falls often bypass Europe these days. Haute-Savoie in France has just endured its least white December in 50 years.

    But the industry is fighting back. Developers are pumping cash into infrastructure, sprucing up tired resorts and seeking new ways to attract and retain customers. In the process, a more nuanced class of real-estate investment is emerging, capable of generating tidy returns for the careful buyer.

    Until recently, ski chalets and apartments were typically passive investments, left empty during the summer months. Now they are more commonly bought-to-let, with owners squeezing in a few weeks’ holiday each year between rentals.

    In its 2016 Ski Property Report, consultancy Knight Frank said 94 per cent of its clients in this market planned to rent out their ski homes. Ceri Tinley, co-founder of Consensio Chalets, a London manager of high-end chalets, said her clients buy ‘primarily because they want a single, dedicated place to leave their gear. Renting is economical: it costs them nothing to use their own property.’

    This overlaps with a push by national and regional governments to give resorts more economic life outside the ski season. France has eliminated VAT on new-builds, so long as the buyer owns the property for at least ten years and rents it out. So a new flat bought in Courchevel today for £480,000 can generate cash in three ways: through lettings, resale profit, and a handy £80,000 VAT refund due in full in 2027. ‘The aim is to increase the number of “warm” rather than “cold” beds in a resort,’ notes Alex Koch de Gooreynd of Knight Frank. ‘If a chalet sits empty, no one is making money.’

    Buyers are also pickier about where they put their money to work, and for good reason. A million euros buys you 40 square metres of real estate in Courchevel, against 74 in Megève and 84 in Villars. But Courchevel sits at an altitude of 1,850 metres, where snow abounds, often long into the spring. Megève, at 1,110 metres, is having an awful season, reliant on snow cannons to keep pistes open. In the long term, that altitude discrepancy will matter, both in terms of consumer interest (who wants to ski where there’s no snow?) and the resale value of your property. Prices in Courchevel rose 3.4 per cent in the year to June 2016, according to Knight Frank, but fell 3.6 per cent in Megève. A savvy buyer recognises that higher arrival numbers in the resort lends higher intrinsic value to a chalet or apartment.

    Those with money to splash on Alpine property also need to ask what they will be surrounded by. Infrastructure is a word that rarely swirls around the minds of holiday-home buyers, who often value simplicity and remoteness, but for a ski property it should. Ask which resorts are building hotels and restaurants, or installing extra snow cannons and longer, faster ski lifts.

    Chamonix, with more than 10,000 permanent residents, is spending £400 million to upgrade its lifts, while Courchevel plans to open a multi-season water park. Val d’Isère, at 1,850 metres, is rebuilding a sizeable portion of the resort, opening new hotels and bars, and expanding lift capacity by 40 per cent. Little wonder that prices in the high-end French resort rose 5.9 per cent last year, despite a longer drive from Geneva airport than, say, Chamonix. Compare rising prices there with in the Swiss resort of Villars, a more faded destination that Alex Koch de Gooreynd says ‘just hasn’t invested enough in itself’. Prices there fell 5.8 per cent last year.

    Resort infrastructure investment matters for two reasons. It offers skiers more to do when night falls, and it allows resorts to stay open year-round (thus increasing your property’s letting and resale value) by offering a better range of activities and amenities for summer visitors.

    Wealthy families from Russia and the Gulf are buying Alpine property partly as somewhere cool to stay in summer. ‘One of my Dubai clients bought a chalet in Megève rather than an apartment in London, to escape the summer heat, but also because he didn’t want his wife and kids loose in Oxford Street with his credit card,’ notes one property agent. So some property at lower altitudes may retain its value, so long as its owner gives it enough care and attention.

    One final and often overlooked factor plays an increasingly vital role in valuing Alpine property. Wealthy families are willing to pay more in places renowned for safety. A prime example is Gstaad in Switzerland, which despite its lower altitude (1,050 metres) seems to have it all: private schools, great restaurants, fabulous slopes, plenty of summer pursuits (hiking, cycling, tennis, hot-air ballooning), some of the most sought-after property in Europe — and perhaps even the opportunity to bump into Taki. Importantly, it’s also a self-contained village off the beaten track, where residents typically know each other by sight, heightening the sense of security. Little wonder property prices there rose 13.3 per cent last year.

    Can you still have fun on the slopes while making a tidy return on your chalet? Yes you can. You just need to know where to look.