Investors target return of self-financing ski properties in the French Alps28th October 2013
The combination of increased ski tourism as a result of last year’s snowfall and the current low mortgage rates has led to the return of self-financing properties in the French Alps, reports Athena Advisors, the French property experts. The company has seen a 34% increase in investor buyers targeting such properties, but warns those looking to exploit the current offers that they need to do their research.
“Last season’s snow levels gave the Alps a much needed boost to tourism and ski bookings ahead of this season are already up 10% on last year,” comments Nicholas Leach at Athena Advisors. “This increase in tourism confidence means developers are offering higher rental returns on well-located ski properties. Buyers who put down a big enough deposit usually 50-60% have always been able to achieve the break-even point. Today, with mortgage rates now holding just above their lowest in history, every-day investors can also access self-financing properties, but they need to be wary.”
With self-financing ski properties once again available to non-resident buyers, investors need to be extra vigilant and make sure the property’s rentals are being handled by a sufficiently experienced management company.
“Banks will only lend on properties in prime touristic locations and those being managed by larger and experienced management companies, so if finance is available it is normally a good indicator,” continued Leach. “But you still need to do your basic research. If the property is being run by a small company and is in remote area it will be more exposed to shortfall in occupancy.”
Mortgage rates in France are holding just above their all-time lowest, with 85% loan-to-value rates available on fixed-rental-ski properties. “The small 15% deposits are popular with buyers wanting use the property, but investors are currently opting for a LTV’s of 70% so that the property becomes self financing," added John Busby of French Private Finance (www.frenchprivatefinance.com). "In terms of affordability, essentially you can spend one third of your gross income on borrowings. Buying €100,000 over 20 years at a fixed rate of 3.55% costs roughly £480 per month so there’s good value to be had.”
Athena Advisors is currently marketing a range of ski apartments in the Alps with fixed rental returns up to 5% net and prices ranging from €107,000 (£91,000) to €540,000 (£461,000). For further information enquire with us here.