A ski home has long been the ultimate lifestyle purchase and for avid skiers looking out across idyllic resorts it’s hard not to think about what it would be like to own your own chalet. I myself have spent many happy ski holidays in St. Moritz and would quite happily return to the same resort year after year to a home from home. But do ski chalets make a good property investment and what factors should you consider before buying one?
Do ski chalets make good investments?
Firstly, from a financial point of view, ski chalets don’t tend to make as sound an investment as, say, property in London or Paris – although this is to be expected. Knight Frank estimates that most chalet owners looking to rent out when they’re not using it will be lucky to make a 2.5% annual return. However, this does need to be weighed up with the savings you would make by not needing to book into hotels or catered chalets every year.
Aside from rental yield there’s also the overall value to consider. Like with any property investment if you buy in the right place, at the right time, you could see the value of the property rise sharply. For example, in the Swiss resort of Villars, prime property prices increased by 6% in the year to June 2018 due to strong infrastructure spending and record snowfall. As a guide, over the last decade prices for prime properties in the Alps have risen by 19% whereas in London the price growth has been 47%.
What should you consider before buying?
While it may be tempting to buy a chalet in your favourite resort it might not make the most sense financially. If you’re looking to make a good return consider resorts that have year-round appeal, such as Chamonix, or resorts like Gstaad and Verbier which have the longest seasons. Many resorts also heavily restrict new developments and so when property does come up for sale in such resorts you can be secure in the knowledge that there’s unlikely to be lots of new supply to drive down prices. Of course, transfer times also factor heavily in most people’s decision of where to ski. Klosters and Chamonix are popular, both taking only a little over an hour from airport to resort. Those resorts undergoing major infrastructure investment should also be considered as they’re likely to see a healthy increase in property prices.
One such example from recent years is Val d’Isère which is undergoing a multi-million-euro transformation. It now has a snow factory that produces 2,500 cubic metres of snow every hour, a 5* grand palace hotel redeveloped at a cost of €250 million, a new hotel at 2,551 metres and several new apartment blocks. The resort ranked top for price growth in Knight Frank’s annual 2020 ski index which tracks 18 prime Alpine resort towns. In Val d’isère the average price of a four-bedroom chalet grew 2.9% in the year to June 2019.
So while there are lots of factors to consider, it seems that when well researched a ski chalet can be a strong investment. However, for most people the desire for ski property goes beyond financial gain. It’s a lifestyle choice and a place to be with family and friends, indulge in fine dining and enjoy stunning scenery. As an investor you have to decide if you can afford to spend your capital investing in your passion, knowing that you might not see as healthy a (financial) return as if you’d used the capital for London property.
But whether the final decision is to invest or not, doing the research is a task to be enjoyed…
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