Ski property developers celebrate “record season” with discounts
Nicholas Leach, Partner at Athena Advisors, comments: “Increases on forecasted sales for the 2012/2013 season have enabled alpine developers to leverage offers and soften their prices to provide an end-of-season sales boost before the summer. For some developers this has been the best season since 2006/2007 and they want to keep it going for as long as possible.”
The best snow conditions in years, a fluid mortgage market and a sense of ‘now or never’ from buyers following the financial downturn have been the main sentiments behind buyers from buyers over the last 6 months, argues Leach.
“Developers know that the current all-time-low mortgage rates won’t be around forever so they’re making it as easy as possible for investors to capitalise now,” he continues.
But not all alpine developers who have reported good sales this season have followed this strategy.
“A project we launched in Chatel in February this year is already over 60% sold but here the developer chose to increase prices by 5%,” added Leach. “This is normally a risky strategy as alpine sales tend to slow during the summer so an increase only slows sales further, but developers who have exceeded their targets have room to manoeuvre. Also, the ski property market is no longer a single season market as so many resorts cater for the continually growing summer crowd.”
Other developers, though, saw discounted prices this season prompt an avalanche of attention. A resort in the Three Valleys, managed by Leapfrog Properties, was the most popular listing on TheMoveChanenl.com at the end of 2012.
Niclas Dowlatshahi, Managing Director of Leapfrog Properties, commented: "Demand is strong partly because the prices have been so heavily discounted - to be able to have an apartment in The Three Valleys ski domain for £50k is unheard of! These large discounts mean that rental yields are higher than 2 to 4 per cent, which is the normal yield of a leaseback."
“Most people who wish to buy in the Alps wish to buy outright, but 95 per cent of new build developments are sold leaseback, which means this development really stands out. It is somewhere they can use themselves as well as generate a good return from, while crucially being in charge of their own property and choosing when they want to rent it out rather than being told when they are allowed to use it."
One of the latest alpine developments to feature an end of season offer is the popular l’Etoile des Cimes development in Savoyard resort of Sainte-Foy. Prices have been reduced by up to 10% and the guaranteed rental returns have been increased to 4.3% including personal usage.
“These are piste side properties at around 50% of the value of nearby Val d’Isere so they already represented great value,” adds Leach. “Some of the larger units are now over €57,000 cheaper.”
“This decrease in price and increase to the rental yield coupled with the very low mortgage rates means that only very small top ups to monthly mortgage payments are required”, continued Leach. “In many cases these amounts only add up to a value similar to that of one peak-time holiday, yet of course here you are paying off the mortgage and the holiday is free.”