French Alps Property Market Update 2021
The French Alps ski property market is filled with anticipation. Foreign buyers have not been able to visit French Alps ski resorts for the best part of two seasons. Mortgages can be more difficult to obtain for some nationalities and whilst the pandemic lingers on, the call of the mountains is strong. Strong enough, it seems, to outweigh any geopolitical events or market dynamics.
Over the last 12 months, we have seen more French Alps ski property buyers than ever (in our 18-year history), all at a time when the market, or at least accessing it, has been at its most difficult for international buyers.
These buyers, who went into a holding pattern in February 2020, have in most cases accrued significant disposable income during the months of quarantine and travel restrictions as they were no longer allowed to travel.
As we approach the coming season, ski holiday companies are reporting pre-Covid levels of bookings as these skiers look forward to getting back on the slopes, something they’ve not been able to do since the season was cut short back in 2020.
This wave of potential buyers returns after French Alps ski property developers have had almost two years clear of foreign tourists, sufficient time to get their projects ahead of schedule. As a result, in some ski resorts, there is a good level of new or renovated ski chalets and apartments for sale.
Looking at the 12 month period from October to September, over the past year we have seen a 131% increase in buyer activity when compared to Oct 2019 to Sep 2020 and this is still 72% higher than the previous pre-Covid season.
This level of activity, especially considering the difficulties around travel restrictions, is unprecedented and has not been seen since 2015 – pre-Brexit referendum – at a time when buyers in Sterling and the US dollar enjoyed highly favourable rates against the Euro.
Out of the centre
Over the past 12 months, international buyers have been happy to search for French Alps properties for sale outside of a ski resort’s ‘super centre’ or most expensive areas in order to find value and make their money work harder. For example in Les Gets, La Turche area, which sits above the resort, is seeing much redevelopment and is akin to that of Méribel’s Morel area. Similarly, these neighbourhoods are outside the centre, which means properties are slightly cheaper than the prime centre, but they each have their own ski lifts, shops and amenities. This means for the right type of buyer, be it a family or one looking to generate rental income, there is little compromise other than a highly central location.
Business for pleasure
At the prime end of the market, many of our clients have sold businesses over the past 12 months in order to either finance or increase their budget for a ski property. As a result, cash buyers have been active in the prime ski market, but finance is also being used regularly with purchases above €2m, specifically with private banks where investment collateral of 30% is placed on the side, with long-term fixed rate secured, normally of less than 1.5%.
There has been a big demand for family-friendly resorts due to the legacy of Covid where people have been unable to enjoy these moments in the mountains with family. Resorts like Les Gets, Méribel and Val d’Isère, which have invested in significant child-friendly infrastructure over decades, from ski schools and events to child care facilities and apres ski activities have seen a pique in demand. Those like Les Gets and Alpe d’Huez which have the Famille Plus label are particularly of note.
Supply & demand, Resort to resort
The current supply of new-build ski properties for sale in the French Alps varies wildly from resort to resort. In Val d’Isère, where the current mayor has temporarily banned planning permissions for new buildings or complete renovations, there is little-to-no new-build stock available, with the current market heavily reliant on resale opportunities. Mature resorts such as Val d’Isère are also experiencing an intensification of a polarisation dynamic, between older and newer properties. The resorts’ older properties, most of which were built during the boom of the 80s and 90s, are now heavily outdated and more often than not require significant investment in renovations. Add in higher purchase costs, of up to 8% compared to the reduced purchase costs of newer properties (2-2.5%) along with VAT rebates on new properties for those that choose to make their property available for short-term lets, and the premium that is paid for new-build ski properties is looked on more favourably by international buyers.
In Méribel, the story is completely different. The cyclical nature of hotel ownership in the resort has seen a record volume of stock come to the market. Generally, hotels in French Alps ski resorts change hands every 20 years, largely due to the fact that this is the common period for which a building’s status as a commercial premises can be reclassified as residential or vice versa. Following the legacy pattern of hotel creation in the boom years, with many hotels being built across the early 80s and 90s, over the past few years there have been many hotels redeveloped into residential properties across the resort.
In some resorts, when this trend appears, the town hall is often quick to only allow such redevelopment under the condition that any new owners will be obligated to rent. In Méribel, however, it seems that the municipality has taken a more relaxed view of this, knowing that the vast majority of property owners in the resort choose to rent their properties anyway, such is the demand of this internationally renowned resort.
In Méribel, at one point within the last 12 months, there was around three times the normal volume of properties available for sale on the market when compared to a normal year over the past decade. However, this did not affect selling prices or the intensity of demand.
The Les Gets market is similar to Méribel, with a few developers having bought most of the plots available meaning there is a very good amount of stock available on the market.
Is anything off-market?
For prospective ski property owners, the last 18 months has in most cases intensified their demand for a French Alps ski property. For owners, their views on their long-term plans have also come into question. Many existing owners are revaluating and this means that the off-market is busy too.
Unique plots, normally in prime ski-in ski-out positions are becoming available for sale behind closed doors. As a result, the off-market is a very open market at the moment, albeit with an increased level of privacy. For example, some owners and developers are only willing to discuss the sale of an off-market opportunity personally, directly with the potential buyer.
A new lifestyle
With many offices closed around the world during the height of the pandemic, 2020 proved the ultimate WFH experiment and has left a legacy of hybrid or remote working for many. This means that it is now possible to work from wherever you want, making the dream of extended stays in the French Alps a reality. Often offering more space and intimacy than an apartment, chalets are perfect for those long trips in the Alps and many of ours are new new-build which means that they come with flexible layouts allowing owners to add quiet office spaces or perhaps a playroom for children.
Chalets in the French Alps are not only a good choice for those who want to mix work and play, but they are the perfect lifestyle investment for those who want a spacious property for entertaining friends and family for years to come. Many of our recent chalets come with a huge open-plan living and dining area – perfect for bringing the family together – as well as other more intimate areas such as a bar, a games room or an extra lounge, allowing guests to break off into smaller groups.
Market history, 2020 snapshot – Saint-Martin-de-Belleville
When priced correctly and within a resort experiencing high demand, the market for new-build ski properties moved very quickly. In late 2020, when the pandemic was approaching one of its peaks and heavy restrictions were in place on international travel, a project of 6 chalets in Saint-Martin-de-Belleville was sold to French and international buyers within one week. Totalling €12m, these six properties (two detached chalets and four semi-detached chalets) were proof that when properties were priced well within an area or resort that does not see many new-build properties come on the market, then it will sell fast, regardless of any events happening around it.
- 1 Irish in South Africa
- 1 Luxembourg
- 1 British
- 1 Dutch
- 2 French
€971,623 saved on French ski property this year
The option to apply for a VAT rebate is becoming more and more popular with French Alps ski property buyers. In the last 12 months, 82% of buyers have opted to pursue a VAT rebate, up from 75% in the previous period.
In the past year, buyers have saved on average €74,740 per purchase across the entire French Alps.
This programme, created by France’s central government continues to be looked on favourably by developers, buyers and the town halls.
If a buyer chooses to rent their property on the local market, entrusting a management agent of their choice and agrees to provide a minimum of three common rentals services to guests (key handling, linen cleaning and provision of breakfast) then the owner is allowed to pursue a VAT rebate.
French mortgages – rates are low, but there are challenges
Two-thirds of French Alps ski property buyers in the past 12 months have used a French mortgage to finance their purchase, the same percentage when compared to the previous period.
Rates have changed very little, just above their all-time lows, with long-term fixed rates of under 2.0% available to most international buyers.
The UK’s official departure from the EU at the start of 2021 has meant that securing a French mortgage has become a little more challenging for British buyers. There are mortgage products still available, but there are fewer options than 12 months ago. French banks have actually been reducing the number of mortgage products available to all international buyers regardless of their locations. Our sister company, Private Finance Group, are perfectly placed to help you and talk you through your financing options.