The cows are in the fields, the cyclists are out, the streams and rivers are cascading torrents. It’s going to be a great summer for white-water rafting in the Alps. The prodigal snow has been a huge shot in the arm for the entire ski industry, with record amounts from Scotland to Spain. Resorts have been able to stay open longer and discount less. Interestingly, the larger benefit has been felt lower down the valley. Resorts at good altitude and with snow-sure credentials do better when the conditions are less abundant, so we have heard that footfall in for example Vald’Isere and St. Anton was down slightly from recent years. If we assume that the record snowfall this year was more of an outlier, it is safe to say these ski areas will remain considerably more resilient to, and are much better equipped for, the gradual long-term trend of less favourable climatic conditions.
Starting with the Tarentaise Valley. Like a few other resorts at altitude, Vald’Isère had to close for a few days to deal with several metres of snowfall early in the season. But it has benefitted from the abundance, we were there again in early May with ski conditions as good as Christmas, and the winter runs are due to re-open in June. We heard last year that French buyers have been more active in Val, the place was full of Parisians and agents had all hands to the pump. British buyers are back there, selectively, competing with a strong international mix. The property market in Vald’Isère is rather unique, new space is rare, so smart redevelopments are the norm, and these are selling well. Vald’Isère goes from strength to strength, good infrastructure with efficient lifts that take more skiers up the mountain faster feeds the accommodation and property markets. At long last the La Daille gondola will be upgraded, with new cabins designed by Pininfarina, no better an illustration of how the resort is positioning itself.
Sainte-Foy had an excellent season; it is always rather popular with British skiers and there is renewed interest from UK buyers and other nationalities. This makes sense, the ski area is smaller but very good and property is excellent value. Nearby La Rosière has announced the opening of a new ski area adding to its existing 160kms with five new red runs, two new six-man chairlifts and allowing easier access to a substantial range of off-piste. We’ve always liked the idea of skiing into Italy for lunch, now it has more to offer, and it is set for a busy summer. A stage of the Tour de France will finish in the ski station this summer in respect to Simon Atkinson, British cyclist who lived in the village and ran the ESF there who recently passed away.
Over in the Trois Vallées, more of the same in the snow department! In Courchevel 1850, the stand-off at the very top end of the chalet market persists – this doesn’t surprise us as there are fewer buyers than before at these levels and the revised wealth tax hits harder above €5m. But overall, the property sector there had another good season, it is a truly international market and British buyers are more in evidence. Courchevel stayed open beyond the end of the season but did not endear itself to some visitors by having too few runs in operation. The property market in Méribel was a little patchier, some good sales to French buyers have been recorded and a few more Brits are out there kicking the tyres. The HB position on the Trois Vallées remains the same – it is one of the top ski regions in which to consider a purchase given the vast range of skiing, good altitude and plenty of choice – Méribel Village, Courchevel Moriond/Village and St. Martin all have excellent access to the ski area with property values that remain reasonable.
Chamonix is a good example of an iconic resort that has suffered from a lack of snow in the lower parts of the valley. This has impacted its property sector in recent years. Since Brexit, British buyers have come, gone and come back again; the general sense is that confidence is recovering, and it is a rather international market anyway. We often see research reports pointing to strong price performance in Chamonix, this does not seem to be felt ‘on the ground’. Chamonix either draws you in, or it doesn’t – the property sector is different, spread out, busier in the summer but with minimal direct access to the lifts – it is good value among the leading resorts.
Up the road in Megève it seems to have been a tougher sell, despite excellent snow. As the Gstaad of France, Megève remains a worthy lifestyle and often retirement destination for well-healed French buyers and an upturn in activity has certainly been noted in this context. At the top of the resort, right on the slopes on Mont d’Arbois, the Four Seasons group is making a big bet on Megève with a slick chalet style hotel which adds to the already impressive Michelin star count that the village can boast. The hotel group has also taken over running other Rothschild family assets in the area. Elsewhere, the Aquatic Centre has received a €35m upgrade. It could all come together nicely. As far as property activity is concerned, to us it still feels more like a buyers’ market with plenty of supply, British buyers disappeared off the map last year but have quietly re-appeared, Swiss and French buyers seem to be doing more of the heavy lifting.
Next, we move onto Verbier. Never challenged for snow in the way lower resorts are, Verbier has a strong ‘social brand’, world class skiing, and a highly diverse mix of nationalities who ski and buy properties there. Low mortgage rates in Switzerland and a stable benign tax regime are all supportive. On the supply side, as is well known, Verbier has already ‘maxed out’ on its quota for new developments that can be sold to non-residents under the Lex Weber laws in the country. Therefore, under the current law there will be next to no new developments, of individual chalets, that foreigners can buy. Some are getting around this law by developing “Appart-hotels”, similar to the French leaseback system, these are selling for CHF30k/sqm. In general, the current market for good quality large chalets that foreigners can buy is extremely tight, with agents reporting less than half the supply for sale that they had in the past. We have for some time predicted that this phenomenon would be supportive for values, it is, and that should remain the case. It does of course mean there isn’t a significant choice on the market at any one time.
Finally, a word on the chalet rental market. Across the Alps, we have heard that one of the possible consequences of Brexit is causing concern, this is because British chalet operators are dominant players. ‘Saisonnaires’ from the UK, starved for snow and mountains back home, are happy to work for low pay in return for a season during which they can ski with all costs covered. The outlook is uncertain, if they will no longer have the automatic right to live and work in EU member states, as seems likely, costs will go up and the commercial grounds for some of these businesses will be more challenged. And it is competitive, some have already reduced prices to offset the drop in sterling. We have heard directly of groups of UK owned chalets for sale, and rental businesses being taken over by local operators. This may have a knock-on effect on the economics of owning a chalet in the Alps, since for many owners, rental income can offset (or partially) the cost of ownership. M. Barnier himself is from Grenoble, one wonders whether he is aware of the ramifications, either way. More on this from HB as the situation evolves.