Queenstown and Aspen recorded the strongest rise in luxury prices, up by 24.8% and 20.7% respectively, according to the latest Knight Frank prime ski property index.
It says that New Zealand’s economic upturn, foreign investment and low interest rates are fuelling price growth in New Zealand’s top resort. In Aspen despite annual price growth of over 20% luxury prices are still 18% below their pre-crisis peak.
Overall, North America outperformed Europe by some margin, recording average price growth of 13.3% compared to 1% in Europe. However, average prices across the North American resorts remain 9.9% below their 2008 peak whilst the comparable figure for Europe is already 8.8% above.
Amongst Europe’s top performers is Morzine in the French Alps, a resort which arguably comes the closest to being recognised as a truly year round destination and one that is investing heavily in its infrastructure. Luxury property prices here rose by 6.7% in the year to June.
Val d’Isere, which has seen sales strengthen in 2014, particularly in the €1 million to €2 million price bracket, saw prices increase by 3.2% following two years of largely flat prices.
The Swiss resorts are broadly mid-table this year with Zermatt leading the pack having seen annual price growth of 5.5%. The report points out that uncertainty in the market surrounding
Lex Weber, the introduction of a 20% cap on second homes per commune, has delayed some purchase decisions.
‘It will take another year for the law to be fully implemented and thereafter we fully expect confidence to return. Already, speculative investors are starting to take advantage of some lower prices, confident that stock levels will tighten in the coming years driving prices upwards,’ the report says.
It also explains that with the Winter Olympics now over it remains to be seen whether the
Russian city of Sochi will break into the big league of European resorts. However, the suspicion is it will continue to cater almost exclusively for a domestic clientele. Despite the large amount of new supply delivered in the last year, prime prices in the resort rose 4% in the year to June.
Cortina, the most upmarket resort in the Italian Dolomites, is at the foot of the rankings table. The Italian resort saw prices fall 11% in the year to June. ‘Discounts, combined with the strength of the pound against the euro, may make for a strong buying opportunity for sterling purchasers,’ the report adds.
It also points out that while prime prices dipped in the Alps they but did not plummet like they did in some of Europe’s oversupplied second home coastal markets. But the story was a little different on the other side of the Atlantic. Prices and sales volumes in several of the key resorts tumbled.
Luxury prices in Aspen hit £1,670 per square foot in 2008 before falling 36% over the next 18 months. A ski home in the US was one of the first assets to be disposed of when the subprime crisis took hold.
In contrast, the lack of supply in upmarket resorts such as Courchevel and Val d’Isere, along with the sheer level of wealth amongst home owners in these markets, meant that there was no kneejerk reaction to the shifting global financial landscape.
‘If vendors in these markets achieved their asking price they would sell but there was no urgent need to reduce prices in order to release capital to shore up other investments,’ the report says. The situation in nearby Chamonix was different, however, particularly below the €1.5 million threshold which saw a raft of properties entering the market post 2008.
One shared trend on both sides of the Atlantic was the decline in sales volumes post 2008. The French Notaires estimate sales volumes in the French Alps dropped by 60% in 2009 year on year. Sales data from the Multiple Listing Service in the US shows it was not a
European phenomenon with sales in Aspen and South Lake Tahoe falling 57% and 52% respectively between 2007 and 2008.
‘Certainly, the world’s top resorts have a lot currently riding in their favour; limited supply, rising global wealth, large scale investment in infrastructure, easier access via new flight routes and an increasing focus on delivering a year round holiday destination. And this is against a backdrop of a global economic recovery,’ the report explains.
‘With the number of UHNWIs around the world forecast to rise by 28% over the next decade continued demand for lifestyle investments in the form of a ski property looks assured,’ it adds.
The report also points out that in some of the key centres of future wealth creation the demand for ski homes is strengthening with Chinese, Indians and Indonesians amongst the top nationalities interested in owning a ski home.
Asian resorts such as Niseko in Japan and Pyeongchang in South Korea, a contender for the Winter Olympics 2018, are still in their infancy with limited luxury homes as yet forming part of the resort.
‘However, research shows that the Chinese alone undertake on average seven million ski visits per annum, an indication that Asian resorts are likely to expand and mature whilst at the same time provide a relatively untapped source of demand for the established resorts worldwide,’ the report says.
‘If we set this expanding demand against the limits on supply, either in the form of moratoriums on development in resorts such as Courchevel or caps on the construction of second homes in Switzerland, the gap between demand and supply looks set to remain tight, in the Alps at least,’ it explains.
‘The US is a different story. Supply is less of an issue given the space and the less prohibitive planning constraints. The issue in the US is the uptake of the sport. The baby boomer generation are skiing afficionados but although wealthy millennials and thirty somethings have adopted a broader range of snow sports, they have yet to embrace ski property investment to the same extent as their parents or grandparents,’ it points out.
Indeed, according to the National Ski Areas Association the over 55’s in the US accounted for 7% of all skiers in 1997/1978 but last year this figure rose to 17% and the report says that the steady recovery of sales volumes in the top US resorts is an indication of the confidence returning to the market..
The number of property sales in Colorado’s top resorts of Aspen, Vail and Beaver Creek increased by 64%, 81% and 45% respectively in 2013 compared to 2009, according to US analyst DQ News.
For British buyers who put off purchasing in the French Alps in 2013 and instead committed in 2014, the decision was an insightful one. The pound reached a 22 month high against the euro in April 2014 and the impact for British buyers, combined with price falls in certain markets, created significant discounts.
Knight Frank expects the Alpine market to see limited price movement during the 2014/2015 ski season with sales activity picking up thereafter. Reasons given are some uncertainty across Europe’s political and economic landscape, namely the general election in the UK, the finalisation of key pieces of Swiss legislation and the sluggish European economy.
It says Courchevel Le Praz and Courchevel Village are increasingly being seen as ‘good value’ but the resorts that are the most successful in boosting their non-ski pursuits, enabling them to provide year round activities, such as Morzine, are likely to outperform their neighbours.
