Whether they fancy the thrill of racing down a black run themselves or just want to rake in a healthy rental yield, UK investors are piling into property in ski resorts across Europe and the US.
Property companies say investment in ski chalets and apartments in old and new resorts has surged in popularity over the past few years and is now at record highs.
Ski aficionados are being lured by the strong capital growth potential and high rental yields in many popular resorts, as well as the opportunity to enjoy a couple of cheap weeks on the slopes.
“More people want their ski holiday to pay its own way to an extent. They are buying property with a view to renting it out but also want to make use of it themselves,” says Simon Malster, managing director of Investors in Property.
But experts warn that investors need to plan their purchases carefully. The rate of growth in newer markets such as Bulgaria already seems to be melting away, while prices in some of the most sought-after resorts such as Courchevel in France may already have peaked.
Last year saw huge numbers of investors plough money into Bulgaria to take advantage of high guaranteed rental yields, cheap property and strong growth forecasts.
Stuart Law, managing director of Assetz, the property investment group, says growth in Bulgaria has slowed remarkably quickly – from 36 per cent last year to around 14 per cent this September – as an oversupply of ski apartments has driven down rental yields in recent months and the lack of any proven resale market has stunted price growth. Lenders in Bulgaria have also become uncomfortable with the widening gap between the price of local homes and the new-build holiday homes around the country.
Also the “guaranteed” rental yields offered by many developers last year were in many cases not honoured and such offers have now all but disappeared.
“Bulgaria has suffered a dramatic change of fortunes in recent months. Only long-term investors would consider buying there in the current climate,” says Law.
Conti Financial Services, an overseas mortgage specialist, says the heat has not gone out of eastern Europe yet. The group says clients are still going into Bulgaria and also looking at mountainous regions in Romania, Turkey and Cyprus. These resorts can offer cheaper skiing and double up as attractive summer destinations.
But specialist ski property companies say that if you want more reliable snow, a better choice of ski runs and a livelier après-ski, then it could be wise to stick with the established winter resorts in countries such as France, Austria or further afield in Canada.
Some of the most popular resorts in France such as Chamonix, Tignes and Courchevel have seen huge growth in property prices – as much as 75 per cent in three years – although this now seems to be levelling off. Better growth opportunities may be available in some up-and-coming resorts in Austria and Switzerland. Malster says: “We are selling a lot in Austria. Property is amazing value there.”
Austria has been relaxing quotas governing the number of foreigners that can buy there. Detached chalets in cheaper provinces are selling from around €109,000 – roughly the same price as a two-bedroom apartment in the main resorts in Bulgaria.
Good opportunities can also be found in Switzerland, where properties are often 50 per cent less than you might pay in France.
Mike Boles, head of international at Savills, says people are more drawn to Europe for ease of access for long weekends and the explosion of cheap flights.
Malster says clients typically look for high altitude resorts with good ski runs and close proximity to a major international airport. The length of the ski season is also important, and so is the quality of the resort as a summer destination.
Demand is growing in Canadian resorts such as Banff and Whistler from buyers with a slightly higher budget, partly because of the summer attractions around Lake Louise.
Boles says investors might put down a 20-30 per cent deposit and then take out a loan for the remainder of the value. In such cases, rental income typically covers the interest on the mortgage and a proportion of the repayment, he says. Investors should also benefit from capital growth.
“The biggest change in this market is the sale and leaseback system that provides secure rental income. It means investors are offered a nice packaged product without much hassle,” says Boles.
In France the sale and leaseback system – where an agent rents and manages the property you have bought – is well established. It has also become common in many other European resorts. Experts recommend using a reputable company that has a good portfolio of properties and a strong track record.
