Selling prime Alpine homes is a breeze

While an Alpine chalet continues to be a staple of global property portfolios, the profile and preferences of buyers have shifted in recent years.

Skiing as a pastime is appealing to a larger and more diverse cohort of buyers globally. In 2010, buyers came from a handful of countries, primarily France, Switzerland, the UK and Russia. Today, enquiries from Middle Eastern and Asian buyers are commonplace, alongside a broader mix of northern Europeans, including those from Scandinavia and the Benelux nations.

Data from the Knight Frank global property search website shows more than 120 nationalities searched for properties in the Alps during the 2015-16 ski season.

Planning restrictions and policy changes such as the introduction of Lex Weber in 2012 (the Swiss second home cap) have meant new-build opportunities, both multiple unit projects and single plots, are decreasing in number. As a result, buyers wanting a blank canvas are increasingly opting for a property in need of renovation to enable them to stamp their own design on the build.

In France, demand is further boosted by the existence of a 20 per cent VAT rebate on new homes, allowing owners to reduce their initial outlay in return for the provision of basic rental services.

The shift in exchange rates inevitably influences the inward flow of investment capital from foreign buyers. Since January 2015, when the Swiss franc was unpegged from the euro, the franc has cemented its reputation as a safe haven asset and, against a backdrop of global economic uncertainty, a similar status has been conferred on Switzerland’s luxury brick-and-mortar.

The real winners in the last six years have been non-Eurozone buyers looking to buy in the French Alps. For example, a €1 million property would have cost a Swiss franc-denominated buyer around SF1.48 million in January 2010, but in November 2016 the same property would cost significantly less, close to SF1.08 million.

This is partly due to the unpegging of the franc from the euro in 2015 but also due to the emergence of a weaker euro in recent years.

Buyer trends have shifted over the last decade in the Middle East, as the region saw large capital outflows on the back of ongoing geopolitical tensions. While the residential sector in London has been the greatest beneficiary, wealthy families from the GCC are now looking at diversifying their portfolios and seeking second homes elsewhere across Europe.

We expect this trend to strengthen further as improvements to the infrastructure of key resort villages continue to drive their value. This is in addition to favourable investment conditions, particularly in France, with strong rental demand both on- and off-season and France’s buyer-friendly leaseback scheme.

With the introduction of a negative interest rate by the European Central Bank in March 2016, even those in a position to acquire their ski home without the need for finance are opting to take advantage of historically low rates. For some, such a move enables them to invest in alternative assets and spread their risk, whilst for others that are purchasing in the French Alps, a mortgage will reduce the assessable value for wealth tax purposes.

A decade ago a high-value chalet in Courchevel 1850 or St Moritz might have been left empty and used only two to four weeks of the year. Today, even at the super-prime level, a chalet is expected to be more than just a trophy asset.

— The writer is partner, head of International Project Marketing (MENA), Knight Frank.