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Alpine real estate: a market in the midst of a (r)evolution

Over the last few months and years, the Alpine real estate market has been in constant fluctuation. This evolution has notably been influenced by new tourism practices, increasingly demanding requirements on the part of buyers, and a Swiss context impeded by economic and tax constraints.

At a time when growing numbers of French and Swiss individuals are making the move into luxury real-estate investments at a ski resort, the Alpine villages, aware of the new requirements of these new buyers, need to step up their efforts in order to attract a more selective clientele.

Indeed, the draw of the mountains has never been as strong. Set in motion by the baby boomer generation with a love of Alpine skiing, the taste for higher summits has continued to abound with the generations that followed, so much so that the number of tourists and potential buyers has been on a sharp upward trend since the 2000s. It appears to have reached its peak between 2008 and 2009, with no fewer than 80 million visitors recorded in the French and Swiss Alps.

The Alps cover a vast area stretching out over 205,000 square kilometres, meaning that future buyers have to rank their priorities when it comes to choosing a resort.

Buyers can be divided into two categories:  1) experienced skiers who favour the high-altitude resorts, and 2) families looking to earn rental income from their real estate investment all year round and who are more likely to opt for a resort offering a wide range of activities.

Tourist offices in particular attest to the aspirations of ski resorts intent on diversifying their leisure offering in order to attract visitors whose centres of interest go beyond Alpine skiing. Indeed, a recent survey showed that 25% of people visiting a resort are not Alpine ski enthusiasts, and are interested in additional activities.

Resorts have thus begun to realign their strategy with the development of attractive facilities: spas, water parks, ice skating rinks, summer toboggan runs, and mountain bike trails are all new features that have been added to help them retain a competitive edge.

Resort performances as measured by the alpine real estate price index

Close to Geneva, Megève is particularly popular with Swiss nationals looking to buy. The introduction of a 20% quota on secondary residences has contributed to the revival of interest in neighbouring French resorts like Megève among the Swiss.

Prices in Val d'Isère and Chamonix have risen +3% and +2.3% respectively. Val d'Isère’s notable assets include its altitude, which is conducive to lasting and reliable snow cover.

Overall, the Swiss resorts are seeing a fall in property prices even if resorts like Villars that were in the negative in 2017 have risen to + 6% this year. Its notably due to the restrictions imposed on foreign buyers.

This price fall at Swiss resorts can also be explained by the inflexibility of prices which is contributing to the slowdown in sales.

Courchevel takes the lead for the highest prices per sq.m. in the French Alps

With an average price of €25'500 per sq.m, Courchevel 1850 is home to the highest prices in the luxury Alpine real estate market in France.

Val d'Isère is not far behind with an average price per sq.m of €19'000, while Méribel, Courchevel 1550 and Courchevel 1650 have recorded equivalent average prices per sq.m at €16'000 per sq.m.

Real Estate in Courchevel

Rapidly changing ski resorts

The Alpine market is constantly evolving. Resorts have understood that in order to remain competitive and attract new buyers, tourists and residents, they have no choice but to adapt by improving the quality and diversity of their facilities.

With the spike in tourist levels between 2008 and 2009 at 80 million visitors, French and Swiss resorts are now facing a shift in the market, notably in the form of the stabilisation and even fall in annual visitor numbers. Investors also have new demand, with reliable snow cover and high-quality accommodation and facilities ranked top of their criteria.

The major change affecting these resorts is the diversification of leisure activities among Alpine tourists. Whereas the baby boomer generation was all about Alpine skiing, today’s visitors have new needs. Although investing in snow canons, new gondola lifts and ski tows is vital at resorts, it is not enough to attract demanding tourists whose expectations have radically evolved. Indeed, recent data published shows that 25% of Alpine tourists are non-skiers

Proliferation of recreational sports activities at Alpine resorts

Faced with this reality, Alpine resorts have fully grasped the stakes at play when it comes to expanding and enhancing their leisure facilities. This diversification of Alpine activities is also designed to encourage mountain tourism in the summer season.

In order to respond to these new demands, resorts need to step up their efforts to propose varied and attractive amenities. Activities such as mountain biking, ice skating, golf on snow, paragliding and zip lines are all commonplace nowadays at resorts.

Resorts that do not adapt to this new context will inevitably see their real estate investments fall, given that buyers have a vested interest in investing in resorts that promise their future renters modern and attractive facilities.

As such, the communities concerned will benefit from increased services and structures for permanent residents: schools, transport services, health services, etc.

Completed developments and ambitious projects still to come

The notable developments completed in 2018 include the installation of a new ski lift system and/or snow system at Chamonix, Courchevel, Meribel and Megeve.

The new facilities include non-ski activities, such as the creation of the Aquamotion water park in Courchevel, a new night-time toboggan run in Moriond (3km from Courchevel), and a new sports centre in Megeve.

The Val d’Isere resort also completed the creation of the new Solaise centre, equipped with new installations such as gondola lifts, day lodges, moving walkways, ski lifts and novice slopes, in addition to the new high-altitude restaurant: L’Etincelle.

Discover Val d'Isère

A new mountain bike trail was has also been recently created in Méribel. New projects are also under way at the resort, with the renovation of the Brides les Bains gondola lift and the installation of a new Roc de Tougne ski lift in Méribel-Mottaret.

In Courchevel, the creation of a new Aquamotion ski lift and the Moriond gondola lift are among the flagship projects the village can expect to see in the near future.

The two communities are also preparing to host the 2023 World Ski Championship which will take place in these two resorts.

Numerous other development projects are scheduled over the coming years, including the spectacular creation of two new high-end hotel complexes in Megeve.

Discover Megève

Alpine resorts with an international reputation

Val d'Isere is also attracting an international clientèle comprised of large numbers of British tourists as well as Swedish, Dutch and German visitors. Brazilians seem particularly taken by Courchevel, while our trans-Alpine neighbours flock to resorts like Megeve.

Ski resorts that are investing heavily in modern and competitive facilities, tourists with a taste for the new activities on offer in the Alpine villages, and buyers who are raising their expectations when it comes to sealing the deal. That is the current profile of the Alpine property market, which promises bright prospects still to come for 2018.

The aim of all new buyers is to procure a property at market price with guaranteed profitability. Many buyers choose to rent out their property in order to take advantage of VAT rebates in France or simply to cover their expenses.

Our Swiss neighbours on the hunt for a primary residence can rely on the strength of their currency, while those looking to acquire a secondary residence will be more tempted to rent or to invest in a property located at the heart of a neighbouring French resort.

The rental property market at resorts is also changing

Indeed, we are gradually seeing a shift in tourist practices when it comes to seasonal bookings. Visitors are looking to rent out chalets and apartments that come with inclusive services, whereas previously this market share was reserved for hotels and holiday residences.

The trend previously observed in Méribel which appeared to point to a fall in visitor numbers as at 15 November of -0.7% and -0.5% at 1 December, has since been overturned. Indeed, as at 10/01/2018, a +5.6% increase had been recorded in bookings for properties rented out for 12 weeks per year and those rented out for 2 to 4 weeks per year. Holiday residences have shown a marked improvement in just under one month, from a -4.2% fall (as at 1 December) to +5.4% as at 10/01/2018. Estate agents are also recording strong performances with a +7.6% increase to date.

Real Estate in Méribel

In the Val d’Isère, bookings were up +1.3% at the same date for properties rented out for 12 weeks per year and those rented out for 2 to 4 weeks per year. The estate agency sector was the sector that recorded the most significant growth compared to the previous year (+12.5%). Bookings for holiday residences are up a timid +0.4%, while the hotel and villages & holiday resorts sectors have increased +3.6% and 2.1% respectively.