Skiing and luxury property go rather hand in hand, whether it’s for buyers seeking the perfect chalet in the most sought-after resorts, or investors keen to take advantage of the high potential yields. But, with worries of a global economic slowdown in the future, how is the luxury ski property market looking for 2020? The short answer is ‘in rude health’ – find out why in today’s article.
What is available in the luxury ski property market?
In Europe, most luxury properties are concentrated in the Alps. The majority of them are single-family chalets, with an average size of around 480m2, according to UBS data.
Outside space is certainly not lacking either, with an average lot of 2,500m2. As dual seasonality becomes more and more popular, this could be a boon for property investors looking for somewhere to make the most of the summer season, too.
As you might expect, the most exclusive resorts do have a limited supply of houses on the market, especially in areas like Gstaad and Zermatt, but also in relative ‘newcomers’ to the market like Samnaun.
How are luxury ski property prices performing?
While the mainstream residential markets in some countries might be suffering jitters from fears of an economic slowdown, luxury ski property largely does not seem to be affected. Prices continue to show high annual growth – Gstaad has seen 11% annual growth, for example, and Verbier, 12%. In terms of prices, a 480m2 luxury property will cost at least €3.7 million. In the highest-end resorts, like St Mortiz, you’ll be looking at around €6.8 million.
In the ultra-prime sector – that extremely exclusive, top end of the market, separate even from the usual luxury homes, prices are also strong. In St Moritz, an ‘ultra-prime’ 480m2 property would cost around €15.9 million (based on figures from Savills research).
Unlike local domestic markets, there is a huge proportion of international buyers (and sellers) in the ski sector. This diverse market means that risks are much more widely spread in many cases, with global wealth transfers from investors in places like Hong Kong, Russia and the Middle East helping to buoy demand. Of course, perhaps the most significant growth in demand is from mainland China, whose government wants to see 300 million winter sports enthusiasts by 2022.
What is the investment potential?
Given the exclusive nature of high-end properties and consequent low supply, the rental market can be quite lucrative if you play your cards right. Knight Frank research shows that the average rental return for a four-bedroom chalet in Gstaad, for example, is €17,000. In the same resort, you could expect an occupancy rate of as much as 100% in high season and 60% in low season. However, this is heavily dependent on area, so it pays to do your research; Courchevel has a lower winter occupancy rate of around 40%, for instance and Verbier just 20%.
It’s also important to remember that the priciest properties may command the highest rents, but the yields might be lower – divide the annual total rent by the property value, and multiply that by one hundred to get a projected yield.
With a strong outlook, 2020 could be the perfect time to invest in the luxury ski property market. Start your planning today, and you could be in time to start viewing properties by the New Year. To get started, download your free buying guides today – and don’t miss the Property Buyer’s Guide to Currency, explaining everything you need to know about protecting your funds when buying overseas.