Property markets in the Alps are faced with a number of challenges and opportunities linked not just to local conditions but also to population, demand and technology, according to a new analysis report.
The winter sports market, which is the bulwark of the Alpine economy, is seeing new trends which will alter the fortunes of towns and villages in the region. Some resorts will win by adapting and diversifying their markets, while others will suffer from shrinking skier numbers and ageing populations, says the report from international real estate firm Savills.
It points out that globally, the potential for growth in skiing, winter sports and summertime mountain recreation looks strong but Alpine resorts will need to adapt to the new markets that will be created and new trends if they are to flourish.
‘Buying an Alpine property with confidence means understanding these trends and spotting which resorts and types of property are best placed to weather storms ahead. The Alpine residential markets are largely driven by second home owners and investors, but also national trends,’ it explains.
In general, Swiss resorts are the most expensive in which to buy property, an average 20% above the all-Alpine average while Austrian resorts have risen later on the global stage and prices are on average 28% below the Alpine mean.
In the wake of the UK’s decision to leave the European Union and the resulting weakening of sterling, Swiss Alpine property has become 8.6% more costly to British buyers, while French or Austrian Alpine homes have become 7.6% more expensive. For US Dollar, Euro and Swiss Franc buyers, the picture is broadly unchanged. Dollar denominated buyers are in a marginally stronger position than in May of this year, the dollar up 1.1% to the euro and 0.2% to the Swiss franc.
But Swiss resorts have also been impacted by the recent changes in second home legislation. The Lex Weber law limits second homes to 20% of all housing stock in each municipality, effectively putting a cap on the pool of stock available. Switzerland’s most popular resorts are affected most, the report says.
‘Verbier, for example, is already above the cap and the final existing planning permissions are being built out. This is therefore the last season that off-plan apartments are available for foreign buyers, and in the medium term we expect to see upward pressure on prices,’ it adds.
However, Villars and Crans Montana are suffering from an oversupply of new property, following a glut of new development in the last five years, particularly in Crans so the report suggest that there are opportunities for buyers who shop around.
Switzerland boasts more prestigious ski resorts than any other country, a factor that has helped sustain demand in the best locations. St Moritz tops the prime price league with prices of CHF23,000 per square meter.
The report explains that demand for prime French ski resort property has traditionally been driven by British buyers who benefited from a weak euro in 2015, and were particularly active in the market but this currency advantage has since been eroded and the impact on sterling buyer volumes remains to be seen.
In the top resorts Eastern Europeans, and to a lesser extent Russians, continue to play a role. Courchevel 1850 is a favoured destination and activity has been concentrated in the €1 €4 million bracket, though a few ultra-prime deals have taken place.
In Meribel prime new build apartments sell for around €15,000 per square meter and are popular with euro-denominated buyers from the Netherlands and Belgium along with domestic buyers. These buyers typically purchase at lower price points and seek value for money.
The report points out that Austrian ski resorts still offer value for money compared to their established Swiss and French counterparts. Austrian resorts are generally at lower altitude with shorter ski seasons readily marketing themselves as year round destinations, in turn attracting a diverse visitor base.
‘With ongoing infrastructure investment and growing international skier participation there is room for upward price movement,’ the report says. It names Mayrhofen, not far from Innsbruck, Salzburg and Munich as an attractive option to both long and short stay visitors from the immediate region and beyond.
‘The resort taps into the short-activity based holiday markets that are in growing demand from millennials, in turn supporting demand for accommodation. In common with other Austrian resorts, prices per square metre are low, ranging from €3,300 per square meter to €7,500,’ it explains.
Kitzbuhel is named as the stand out ultra-prime resort in Austria, although it is still at half the price of its Swiss counterparts. ‘Infrastructure in the resort is good, the centre is pedestrianised and lift upgrades are underway. Lech is Austria’s other prime stand-out, with a much more domestic buyer profile. This is in part due to a limited amount of available stock in this small village resort,’ the report says.
‘Skier numbers in the west are at a high plateau, or, in some markets, in decline. The most resilient Alpine resorts will be those that are able to diversify their demand base. This means attracting new, younger visitors for a variety of activities and tapping into growing Asian ski markets,’ said Paul Tostevin, associate director of Savills World Research.
‘The prime resorts in the Alps have a key advantage, an established reputation as a destination for the world’s wealthy. Few global rivals have the cachet of the premier Swiss, French and Austrian destinations. We expect more demand from the newly rich from emerging markets as they seek out the right places to be seen,’ he added.
The report also explains that with prices broadly static in resorts across the region, international buyers and sellers have found any profit or losses dictated by currency movements.
‘Luckily for developers, UK buyers do not dominate the Alpine property market in the same way that they might have done a decade ago. We are seeing a greater diversity of buyer nationalities across the Alps, with Belgians, Dutch and Chinese particularly active, in addition to domestic buyers. UK buyers however could have been hit harder by currency swings and are slowly returning to the market post-Brexit,’ said Jeremy Rollason, managing director of Savills Alpine Homes.
