Where next to invest? We profile the world’s top property hotspots, detailing everything an investor needs to know.
Up 1.8% in year to June 2016 (Knight Frank)
2% to 2.5% (Knight Frank)
Sales of French property hit an all-time high in the year to December 2016 (Notaries)
Where is it?
Located in the East of France, in the regions of Auvergne-Rhône-Alpes and Provence-Alpes-Côte d’Azur, the French Alps is the part of the Alps mountain range that is located within France’s borders. The area’s popularity has snowballed in the last decade, both among tourists and investors, thanks to their lifestyle appeal and their stability as an asset. Notable hotspots include Chamonix, Annecy, Grenoble and Évian-les-Bains, with famous resorts including areas such as Les Trois Vallees, which covers Courcheval, Merible, La Tania and more. In addition to a skiing destination, the Alps have become an increasingly population location for summer holidays, with their potential for hiking, paragliding and other sports and their year-old stunning landscapes.
Who lives there?
Accounting for around 10 per cent of the French population, the Alps are a popular destination for workers as well as tourists, with careers connected to the resorts and other urban centres a draw for families and young adults. There are also a number of students and also a significant number of foreign nationals who have moved to the area, which makes for a diverse, lively population. In the summer months, as well as the peak ski season in the winter months, populations increase due to the arrival of tourists. This steady influx of people, fuelling rental demand, makes the region a favourite among investors in French property.
Steady returns are the order of the day in the French Alps, but ski properties have become less about high-yield income and more about asset stability. Renting out units is extremely common, as opposed to buying for personal use, with the primary aim of covering maintenance costs and other charges. In that way, investors can own a property and enjoy the long-term benefits without the worry of overheads.
Indeed, French leaseback schemes mean that buyers can enjoy a reliable flow of income from a development, while investors in some off-plan properties can also reclaim VAT, if they commit to renting out their property for a significantly long time.
Higher returns are possible, particularly in areas with heavier and more frequent snowfall. Travel times are also a factor to consider, as they can help fuel tourist demand and make it easier for owners to access their properties. However, proximity to airports can also mean that resorts are at a lower altitude, which will result in shorter ski seasons and therefore potentially lower rental income. Indeed, high altitude homes have the longest ski seasons and are priced accordingly.
Capital growth potential can be significant, however, particularly when investors buy in the right location. Knight Frank’s Alpine Property Index increased 1.8 per cent in the year to June 2016, reversing a 1 per cent decline recorded in 2015.
Thinking in the long-term, therefore, is the key to investing in the French Alps. That means investors should look for resorts that are actively investing in their own facilities and infrastructure, whether it is improving a ski lift or expanding the provision of non-ski activities outside of the snow-filled months. This investment is an indicator of future tourist demand and minimal void periods, and will boost capital growth as well: resorts in The Three Valleys, such as Chamonix, have invested significantly in improvements, pushing up prices by an above-average 6 per cent in the last year. Moreover, that investment also improves asset liquidity, making it easier for buyers to sell their property on in the future.
As of 2017, investors in France’s property market are also benefiting from record low mortgage rates. With a less restrictive ownership market than other parts of the Alps, in addition to the established and highly stable leaseback schemes available, the French Alps are therefore both accessible and affordable, which make them more sought-after than ever. Indeed, according to the French Notaires, sales of real estate in France hit a record high in the 12 months to December 2016, while transactions in half of the resorts in the Alps saw sales rise in the year to September 2016.
Investors in the French Alps come from a diverse range of countries, including the Netherlands, Switzerland, Poland, Germany, South Africa and Sweden. US buyers are particularly active, due to the favourable exchange rate between the dollar and euro. Despite the UK’s vote to leave the European Union in 2016, demand in 2017 has also continued from British buyers, thanks to both leaseback’s strength as an investment model and low mortage rates. Interest from the Middle East and Asia is also rising.
“Highly stable and even more highly sought-after, French ski properties are a staple of global real estate investment.”
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