We have now been living under the tragic shadow of SARS-CoV-2 for 12 months. With luck Europe has crested the second wave of infections, and vaccination programmes permit us to hope for a new socially distanced normality and a resumption of travel at some point this summer or autumn. If you are reading this the chances are you are as keen on the mountains as we are, and you may be wondering what impact Covid-19 has had on alpine property and the ski resorts in the French and Swiss Alps.

Surprisingly, it has not played out how many would have predicted.

It’s the end of the world as we know it….

Last March, when it became clear that the risk to health was very serious and the alpine ski resorts shut down abruptly, we assumed the property market would react like all markets react to uncertainty. Financial markets crashed immediately because they are far more liquid, and prices react in the nano-second it takes for a trading algorithm to issue a sell order. Property takes more time to adjust to a severe supply/ demand imbalance.

Equally, as property is so sensitive to sentiment, and because leverage is a key component of oiling the wheels of transactions, it seemed logical to us that job uncertainty and rising unemployment would lead to fewer buyers and some forced sellers. And that the few brave buyers out there would make offers at steep discounts. We assumed the price discovery process would take some time and settle at, or worse than, the 5-8% correction of the Global Financial Crisis of 2007-2009. It seemed a reasonable benchmark to use.

Indeed, we saw a small number of sales fall through as offers were withdrawn, but for the most part signings were delayed rather than cancelled.

 …….but the alpine property market feels fine

As Europe emerged from lockdown in the Spring it became evident that working from home, and the desire to escape the city were driving interest in the ski resort property markets. Beginning with the domestic buyers, demand was buoyant across the Alpine property markets. 4G and internet coverage is excellent across most of the Alps and many owners were lucky enough to spend the first lockdown in their mountain homes. By the summer international buyers and renters were back, booking holidays in the Alps and taking the opportunity to view properties.

If anything, the virus has accelerated an existing trend towards spending summer in the Alps. The mountains provide relief from the hot and overcrowded cities and beaches – wide open spaces, fresh air and security are all ingredients for a quality family experience. The resorts have been busy expanding their summer offerings from traditional hiking and biking, to providing more action pursuits and cultural programmes.

Try Before You Buy

Autumn brought a second set of lockdowns across Europe. We noticed more people taking long-term rental contracts on properties in resorts that they were already familiar with. Some even sought resorts that were new to them, in order to do their due diligence for permanent relocations in 2021. Upscale private chalet operators Ultima, with luxury residences in Gstaad, Crans-Montana, Lake Geneva, Megève and Courchevel, saw strong bookings throughout the period. Even Robbie Williams decided he liked spending last summer so much renting a Swiss mountain property that he bought a villa on Lake Geneva recently.

Interest rates are an important supporting factor. 10-year government bond yields are negative in France and Switzerland and just 0.4% in the UK. Stock markets have been volatile. At the time of writing, the French market is down 7%, the UK market down 13% and the Swiss market up just 1.5% respectively since the end of 2019. Mortgages can be fixed long-term at well below 2% in both countries, so future debt-service is more than manageable. Property is therefore an attractive place to park cash.

Making your French or Swiss ski property work for you

Buyers are increasingly looking to generate some return on their investments, at the very least to cover their costs. 90% of our French ski property enquiries are from such buyers. The French government is very supportive of its tourism industry and offers VAT rebates (20% of the price of the property) for buyers of new properties. They are required to commit to a rental management agreement and make their properties available for renting when not using themselves. A whole industry has grown around this with developers and agencies offering para-hotel services such as check-in, cleaning, laundry, breakfast as well as more luxury services, swimming pools and wellness areas.

We work with the largest rental management providers in the French Alps and the majority of our French properties for sale can be managed in such a way. Rental yields average 3%. These programmes are positive for the ski resorts as they generate warm beds and attract more visitors. And they boost the addressable future sales market because almost all buyers have rented before they decide to take the plunge and buy their home in the mountains.

Swiss Property as a Safe Haven

The buy-to-let trend is less discernible for buyers of our Swiss properties. This could be due to different buyer motivations – as well as its amazing skiing and lifestyle, Switzerland is seen as a “safe-haven”. Owning a Swiss franc asset is often a hedge for one’s overall currency exposure. We have seen a large increase in enquiries from people looking to relocate their businesses and families, or simply to retire to Switzerland and take Swiss residency. We can help facilitate this process.

It is also the case that successive Swiss governments have not followed their French counterparts in encouraging new residential development with tourism facilities. The property market is more restricted than in France and as of now there is a less well-developed rental service offering.

Yet selling new property with in-house or third-party rental services can be a solution for property developers to circumvent the strict Lex Weber restrictions on the building of new property. We expect to see more of these in the Swiss resorts in the future.

The Le Montagnier residence in Champéry is an example of a new apartment development that can be bundled with a successful Swiss rental management service. Services include wellness and spa area, oenotheque, private dining and the award-winning Mrs Miggins concierge service. A handful of apartments remain for sale, enquire for information in the link below.

Demand outstrips ski property supply in many resorts

A common theme across many of our resorts is a lack of supply, reflecting the strong demand over the summer from domestic French and Swiss buyers and latterly the return of international buyers. Val Thorens is a particularly hot market with properties taking less than a week to sell. Prices for new property in most of our French resorts are rising.

This is the paradox of Covid-19 and the opposite of what we and most other market participants expected this time last year.

Sellers are also pulling their properties from the market as there are fewer options for where to invest the proceeds, as we mentioned earlier. In Switzerland this lack of supply is exacerbated by the Lex Weber restrictions on new development in the resorts. The few new properties that remain represent the last opportunity to purchase a new holiday home in Switzerland.

Brexit & Covid 19 – a double whammy for group chalet operators and owners

The picture is different for the catered chalet operators and owners. Peoples’ desire to avoid large groups on holiday comes on top of Brexit, which at a stroke removed the source of cheap UK gap year labour. We have noticed some of the larger chalets in French resorts coming onto the market as the predominantly British owners call it a day. Those that stick it out will have to hire under French or EU contracts and entrust the management to French or EU operators.

Where should I start my alpine property search?

People often start their conversations with us saying they want to buy in France or Switzerland, please can we show them some properties. Our response is that the property is the last part of the picture. It really does come down to that tired aphorism – location, location, location. Once we have identified your requirements, we can accurately match them to our resorts. Notwithstanding the supply issues we mentioned earlier, we can show a selection of suitable properties from our developers and partners in both France and Switzerland.

From the perspective of rental income and long-term capital appreciation, focus on resorts with easy accessibility. All of our ski resorts are close to the conurbations of Lyon and Greater Geneva/Lausanne with 1.5 million inhabitants each. Resorts close to motorway exits or TGV/SBB railways stations include Courchevel, Méribel, La Tania, St Martin de Belleville, Les Menuires, Val Thorens, Alpe d’Huez, Sallanches-Combloux–Megève, Chamonix, Les Gets and Morzine in France and Villars, Champéry, Verbier, Nendaz, Veysonnaz, Grimentz and Crans-Montana in Switzerland.

If you would like to discuss alpine property or anything we have touched on here, do get in touch for a chat.

February 2021, Alpine Property Search. Graphic images courtesy of our partners Cimalpes.