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« Previous Story | The Industry Report Home Page | Next Story » Mirror, Mirror On The Slopes: Euro Real Estate Is Mixed BagBy Patrick Thorne 
"There is no doubt that there has been a slowdown in the purchasing of ski property for the first half of this year, but we are also in the height of summer typically when a slowdown occurs. Come September, we hope the mood will shift towards a more positive latter half of '08," said Bertie Sanderson, Director of Marketing and New Business for Erna Low Property told The Industry Report. Erna Low Property is the leading ski property sales company for U.K. buyers looking to purchase in Europe and North America. "The old adage of 'location, location, location' will be more important than ever now, so altitude and high quality and high occupancy will be key," Sanderson said. "Already popular established resorts will remain popular, such as the Chamonix Valley, Vallorcine in particular, in France, where great infrastructural investment is been channeled. The same is true for Meribel, Les Arcs, Serre Chevalier, Val d'Isere, and Tignes." Many of the leading resorts in the Alps have put a greater emphasis on resort base village developments and property sales. This has, perhaps, not been to the same extent as the entire new village developments that have swept North America, but it certainly has been the case with major property project add-ons to existing resorts. Canadian-based Intrawest has moved into the European neighborhood and are building complete new resort bases at two French resorts. Les Arcs 1950 is now complete. Traditional resort property sold in the Alps was small and basic compared to North American condos but, for the past decade, has become much more spacious and luxurious. High quality development has become the norm, again in good part as more skiers have visited the U.S. and realized what they’re missing. The second trend to arrive from the West was for easy credit from banks, many of them moving in from North America, which made individual financing to purchase much easier than it once was. The U.K., followed by Ireland, leads this trend to buy ski property, with a mixture of speculative investors, wealthy individuals buying to rent, and die-hard skiers purchasing their dream ski resort lodging. The most popular developments for international buyers have been built in France, Canada, and Eastern Europe. The growing Eastern European ski destinations, formerly behind the Iron Curtain, but now benefiting from huge European Government cash injections, are more unique to Europe. Resorts in Bulgaria, and to a lesser extent countries like Romania, Serbia, and the Slovak and Czech Republics, all are seeing Euros pour in and "Western quality infrastructure" on and off the slopes. This has led to all the characteristics of a property boom: very low prices, very big promises, building sites bought over the Internet that turn out to be on environmentally sensitive land, and so on. Low-cost airlines have moved in, making actually accessing these new resorts easier from the West. But, local infrastructure such as roads, power, water, and sewage, has been slower to keep up. Now the latest U.S. import is the "credit crunch." House prices are falling in the U.K., and that may be affecting the booming overseas property market. At best, it seems the picture is mixed, and depends a great deal on individual resorts and countries. Switzerland is expected to be a popular choice this season as the nation is finally seeing a relaxation of foreign ownership laws after decades of grumbling by Swiss resorts themselves and potential international buyers. Agents are advising developers not to pitch their prices too high due to the current market slowdown. However, a number of new projects are in the pipeline from some relatively unknown areas as well as popular resorts in the Four Valleys, which include the famous resort of Verbier. Another angle to keeping property sales buoyant are added incentives beyond the property itself, particularly for those buying property with a view to renting it out to skiers. An example is The Schappe in Briancon, France, in the Southern Alps. This historic restoration project is close to several major ski areas and lift-linked to Serre Chevalier. It is one of the properties offered by Erna Low Property. Here, investors receive a VAT rebate of 19.6 percent, as well as all interest payments on the mortgage paid for by the developer for the first year after completion, with a 7 percent guarantee in the second year. "Additionally projects which are adjusting their pricing in response to market demand are attracting buyers attention," Erna Low's Sanderson said. "At the Refuge du Golf in Flaine, the developer is offering a 10 percent reduction in the asking price, plus a VAT rebate of 19.6 percent, as well as a guaranteed rental yield of 5 percent, and two free weeks personal usage. "Where the mortgage market has frozen in the U.K., banks in France and Switzerland are offering some decent mortgage deals, though they tend to be changing fairly frequently, so we advise clients to seek advice from reliable sources and independent financial advisors.” The picture is not so rosy in Eastern Europe’s ski resorts, and the bubble appears to have burst for the first time since the boom began. It just has been reported that more Brits are now trying to sell their properties in Bulgaria than buy new ones. Still, property agents are trying to talk the country up as a good investment. "It's not like a wholesale thing, but there is a definite sea-change. Because there is trouble at home, people are saying, 'What can we get rid of?' Clearly, not buying overseas and selling your overseas property is going to be one of the first ports of call," Simon Walker told the IR. Walker is with Off Plan International, an Internet property site that specializes in looking at developments before the concrete is poured. "Personally I think that sales of detached chalets or quality apartments in top resorts such as Courchevel and Val d’Isere will not be affected," said Nick Morgan, owner of Le Ski, a chalet company. What It Means: It appears likely the market will continue to remain strong in desired destinations with a proven track record, regardless of cash flow, particularly at the higher end of the investment scale. Individuals with smaller budgets, once tempted by the idea of owning property in a mountain resort, will likely think again. « Previous Story | The Industry Report Home Page | Next Story » |
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