The infrastructure that adds value to investment properties
This article was originally published on Financial Times NOVEMBER 1 2019. Read the original article here.
When skiers dream of buying chalets, they are seduced by wood cladding, roaring stoves, outdoor hot tubs and views over snow-covered spruce trees. Rarely are their dreams interrupted by the metallic clunk and clang of something as prosaic as a ski lift. Yet advances in ski-lift technology are key to resorts staying in business — both during the winter season and in the long term as they grapple with climate change.
The lifts that resorts are investing in now not only provide better and speedier access to bigger ski areas, but they enhance the skier’s experience in other ways: heated seats, WiFi, even waiters serving champagne.
For investors in ski properties, proximity to the latest lift technology and comfort is increasingly important and for attracting lettings at a time when the number of ski trips worldwide is broadly static, rather than increasing.
In the heart of western Europe, the Alps attract more skiers than anywhere else in the world — accounting for some 43 per cent of global ski visits — and the highest proportion of foreign visitors, according to research by Savills. In its forthcoming Annual Ski Report, published this month, the agent notes that although there have been record snow falls in the past two seasons, Alpine resorts have still invested significantly in ski-lift infrastructure and snow-making technology in anticipation of long-term climate change.
Savills also reports that capital values have increased in many resorts by an average of 2 to 5 per cent in the past 12 months, with domestic buyers driving demand in France and Switzerland.
This future-proofing is also highlighted in Knight Frank’s annual ski index, which notes the completion of the first stage of €477m of infrastructure investment in France’s Chamonix Valley over 40 years and €42m in lift upgrades and new hotels in the Three Valleys in the run-up to the 2023 FIS Alpine world ski championships.
Higher aims This year, 136 lifts will be installed or upgraded across Europe, including 34 in France, 23 in Austria, 19 in Italy and 18 in Switzerland. So which are most likely to affect visitor numbers — and property prices?
Even after they are approved, ski lifts can take decades to be installed and become fully operational. Add to that growing environmental awareness and changing local politics, and some investors may want to bide their time.
In France a lift link between the resorts of Les Deux Alpes and Alpe d’Huez has been mooted for at least 20 years, yet “until the first hole is made in the ground [for the pylons] property prices will not move upwards”, says Niven Dyer of French agent Leggett Immobilier.
Once built, lifts can have a significant impact. “A new lift that links two domains has the biggest positive effect by raising the profile of both resorts, for example France’s La Plagne and Les Arcs [which were linked in 2003] and Lenzerheide and Arosa in the Swiss canton of Graubünden [linked in 2013],” says Simon Malster of Investors in Property, an Alpine specialist agent.
New links also lengthen the ski season for resorts lower down the slopes — an attraction for visitors and investors. Austria’s new Kaprun-Maiskogel-Kitzsteinhorn cable car (or K-Onnection) opening on November 30, will connect the resort of Zell am See-Kaprun in Salzburg province (786m), directly with the Kitzsteinhorn Glacier (3,203m), with its more reliable snowfall and is capable of carrying 2,800 people per hour up to the glacier.
The new link was a key factor in Singapore-based Joanna Aarvold’s decision to buy a four-bedroom penthouse in the centre of Kaprun. “With three children of primary-school age, we are a ski-mad family and Austria is so much more affordable than Japan,” she says. “The new lift means that we can get up to the glacier really quickly — it’s popular when the snow is not great elsewhere — for skiing nine to 10 months a year. As property owners, we are future-proofing.”
The lift has also raised prices, says Ralph van Kollenburg, chief executive of AvenidA, one of the area’s largest developers, which also runs Alpin Rentals. “Our new-build prices have gone up from €6,091 to €7,500 per sq m since the K-Onnection was announced [in 2016]. It gives us the justification to raise rental prices by around 10 per cent, although investors will also benefit from this.”
Most new-build resorts in the Alps have a rental obligation, which means owners must make their property available for holiday lets for an agreed number of weeks per year in return for a share of the income collected by the management company.....
How to buy: the mountains to climb
France
There are few restrictions on buying residential property in the French Alps, or requirements to rent out your holiday home. The exception are some of the larger developments that are sold on a leaseback scheme, which involves leasing your property back to an operator for a period of typically nine to 11 years with some weeks for personal use.
Austria
Generally only EU citizens may purchase property in Austria (unless they purchase via a company with one of the directors an EU citizen), with the exception of a small number of homes with “second-home” status — or Zweitwohnsitz. In most Austrian ski resorts new-build developments come with “buy-to-let” status and a rental obligation, which requires owners to rent out their property for a certain number of weeks per year, to prevent “cold beds” in tourism areas.
Switzerland
There are restrictions imposed at a national, regional and local level on where and what foreigners may buy in Switzerland. The Lex Koller law established a permit system so only certain properties are eligible for foreign ownership. Foreigners may only buy a residential (second home) property in tourist areas. However, since 2012 the Lex Weber law has prevented new building permits being granted for second homes in any communes where second homes already make up 20 per cent of the stock. There are a few exceptions where old permits are still valid such as in Andermatt; plus there can be further restrictions at a regional (canton) and local (commune) level.
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