The Hot Chocolate Index: An alpine property market report

The pace continues in France's prime ski property markets, reports Athena Advisors, but a two-tier market is emerging

Following a record breaking 2015/16 season for French ski property, the result of a strong pound, strong dollar and historically low mortgage rates, the international appetite for ski property has continued into the 2016/17 ski season, reports Athena Advisors.

Whilst sterling buyers are in a less favourable position than they were this time last year, the extremely accessible French mortgage market is underpinning demand, especially in the larger internationally renowned ski resorts.

The lack of availability for certain property types across the market has created pockets of high demand and low supply, particularly with new-build and developers are trying to react quickly to respond to the needs of the market. This trend, along with the ageing nature of many resorts’ property stock, is creating a two- tier market for ski property.

Market Movements: New-build & renovated

One of the strongest examples of the new-build supply and demand trend can be found in Val d’Isère in the Espace Killy ski domain, where opportunities for developable land are extremely rare. Such is the rarity, this is one resort where buyer waiting lists for certain property sizes have appeared again, something not seen since the last decade.

In Val d’Isère prices for new-build or renovated properties of a sufficient quality have risen by almost 18% (17.7%) over the past two years, with high specification apartments now arriving to the market at around the €20,000 per square metre mark. New-build chalets are even more rare and therefore prices here can reach €25,000 per square metre and higher, especially if they are ski-in ski-out. The recent announcement of a large-scale redevelopment of the central “Le Coin” area of the village will see around 100 new-build properties in phases over the next five years, the largest ever addition of accommodation to a French ski resort that pre-dates the purpose-built resorts of the late 1970s.

Similar trends have been seen in smaller, less well known resorts like Châtel in the Portes du Soleil, where competitive prices and the recent completion of li and leisure infrastructure have attracted buyers with a long term view towards capital appreciation. Two years ago new-build property in Châtel was around €6,000-€7,000 per square metre. Today, prices stand at around €7,500-€8,000 per square metre demonstrating the resort is catching up with its Portes du Soleil neighbours in Les Gets (€9,000-€11,000) and Morzine (€9,000-€12,000).

Throughout most French ski resorts, whilst resale properties can be found at lower prices and costs for improvements can be nanced, the investment required to bring the property up to a modern day standard can be substantial and can often spread across two ski seasons. This continues to push international buyers towards new-build.

Market Movements: Resale properties

The market for resale properties across French ski resorts has a mixed pattern of growth. Recent figures from the French Notaires accounting for sales up to the year ending September 2016 show that roughly half of French ski resorts posted increases, with the other half posting decreases.

Resale properties in the Three Valley’s resorts (Courchevel, Méribel, Les Ménuires & Val Thorens) and those reachable by a Mont Blanc ski pass (Les Houches and Chamonix Mont-Blanc) all posted increases. In contrast, one third of the stations saw their prices fall, particularly in Tignes-le-Lac (-5.8%), La Clusaz (-2.4%) and Grand Bornand (-5.6%).

Where decreases have occurred it’s usually due to aging areas of the resorts, like in Tignes-le-Lac, which is old compared to the other Tignes “stations”. Tignes is an interesting example as prices continue to increase overall when the area’s more recent resorts are also factored in. The higher Tignes resorts have become increasingly attractive due to their snow surety and the same is true of other grouped resorts with large ski domains above 1,800m.

Megève and Val-d’Isère remain the most expensive resorts for resale ski property at €7,620 and €7,970 per square meter respectively. However these average figures are heavily tempered by cheaper properties at the boundaries of the resort. Conversely, one or two sales in the historic centre, of prime properties that change hands once every few decades, can affect these figures the other way significantly.

Lloyd Hughes, Communications Director at Athena Advisors: “The price differential between resale and new-build French ski properties shows that many resorts are hitting a critical ageing point with their property stock, creating a two-tier market of properties that either meet the requirements of modern day buyers and renters, or don’t. Properties older than ten years or not renovated within the same period now have a significant disadvantage in both the sale and rental market. Alpe d’Huez is a good example here, with around 300 properties being deemed unusable by the tourism office each year. The same is true in older resorts and this is creating increased demand for newly built ski property, especially if done in an old savoyard style.”

Hot chocolate and alpine property

It is perhaps no surprise that the most expensive hot chocolate found was in Méribel at €6 each, due to its popularity and central location in the Three Valleys. Not far behind were the usual suspects including Courchevel and Val d’Isère, with even higher property prices than Méribel. Smaller resorts also turned up anticipated results — Les Arc’s competitively low property prices at €5,500 per square metre matched with its average hot chocolate price as did Praz-sur-Arly.

Interestingly, some resorts came up with unexpected results. Les Menuires, while still a part of the Three Valleys and next to Val Thorens, has considerably cheaper prices, with hot chocolate at €3 each and competitively-priced real estate too. The maturing resort of Châtel still enjoys low property prices, yet here hot chocolate prices suggest that the cost of living is already reaching the standard of the likes of Chamonix and Courchevel, thereby elevating it inline with the more internationally popular and expensive resorts in the French Alps.

  • The Hot Chocolate Index

French mortgage rates rise from historic lows, though not deterring buyers

Average rates have increased by 0.30% across France creating a new benchmark rate of 2.15% fixed for 20 years at a loan-to-value rate of 80%, though rates below 2.00% can still be negotiated for some locations and profiles. In real terms this recent increase only adds €14 to the total monthly cost per €100k borrowed on the average fixed 20-year repayment mortgage.

For French mortgage specialist French Private Finance British buyers remain the most potent force in the market. “Over 90% of our clients either live in the UK or are British expats living overseas,” comments John Luke Busby, Private Clients Director at French Private Finance. “With the pound bouncing back upwards slightly and French interest rates only rising just above rock bottom we anticipate another posi- tive year for non-residents buying in France.”

Whilst there is some pressure on rates to increase further, with the main indices in France for long term fixed rates rising by 0.80% since August last year, the market for finance in France remains extremely attractive.

Download Athena’s full alpine property market report here (PDF)