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Ski Investment Property – Why Switzerland?

Switzerland was, for quite some time during the last century, the most well known ski destination in the world, with many of its resorts retaining lasting recognition. It’s been attracting alpine visitors for over a hundred years and this stands it in good stead for continued investment and sustained high value property.

The Alps remain the world’s most internationally invested ski market with British buyers tending to focus on French and Swiss resorts. While Brexit continues to cause more than a ripple of concern, many British buyers have actively sought non-sterling assets to diversify their portfolios, or are taking advantage of a stronger euro and are selling to repatriate funds.

While demographics continue to be a hot topic within the ski market – one traditionally dominated by ‘baby boomers’ – the change is uneven. By 2030, the number of fifteen to fifty four year olds (those of most active skiing age) is forecast to grow by 1.6 per cent in Switzerland. This could have a positive impact on resort stamina and new developments and investment.

Resilient climate

Skiing in Switzerland has already hit the headlines in 2018 as Zermatt and surrounding resorts have been snowed in twice in January after a record number of metres fell in just a week. While this may seem to defy reports of shrinking snowfall across the Alps, long-term weather and snow conditions can certainly influence the success and popularity of ski resorts.

Luckily, for Switzerland, according to the latest Ski Report from Savills, Zermatt is deemed the most resilient resort in Europe based on five metrics to measure the quality and reliability of a resort’s conditions; snowfall, reliability, season length, altitude and temperature. Being the highest ski resort in the Alps, it enjoys sustained snow throughout the season and also offers renowned glacial summer skiing and sports. Other Swiss resorts such as Saas-Fee and St Moritz also score highly – within the top ten – meaning these three destinations feature in the top ten most resilient resorts in the world.

Prestigious property

Switzerland still boasts more illustrious ski resorts than any other country, a factor that has helped sustain property demand in the best locations. For high net worth Individuals, the Alpine property market remains a central component of a global real estate portfolio.

According to the Savills Ski Report 2017-2018, St Moritz, the first choice for global billionaires, still tops the Ultra Prime Price League (property price per sq m) with prices of €35,600 – a huge increase of €14,400 they reported the previous year.

Within this list for 2017/18, Switzerland features six resorts – sixty per cent of the entire list:

  • St Moritz €35,600
  • Verbier €27,600
  • Zermatt €24,900
  • Gstaad €21,600
  • Grindelwald €20,600

As the main resort in the Four Valleys, (French) Switzerland’s largest ski area, deservedly popular Verbier has always attracted both visitors and buyers from a wide range of countries.

It takes a little more than ten minutes to reach the pistes at nearly 3000 metres, with this height providing long seasons, usually from the end of November to the end of April, across its variety of runs and good snow, often when others are short of it. Verbier is easily accessible being that it is well connected to Geneva, the main alpine airport, which is just two hours away and it is one of the easiest Swiss resorts to access via the increasingly popular ski-trains from London St Pancras, that take around nine hours.

The good news for alpine property investors is that in Verbier, owners are better placed to enjoy the resorts than visitors, as a lack of hotel rooms, has been a real issue. Although there has been investment in recent years in the shape of the Les Trois Rocs development and the W Hotel, the groups’ first ski hotel, which opened in the heart of the town in 2014. In comparison, prospective buyers can generally expect a decent supply of stock, which can be rare in other high-end Swiss resorts.

The diversity of activities plus the alluring nightlife of Verbier is often surprisingly important to some potential property investors, as the desires of an affluent younger generation have become progressively influential in the buying choices of their parents.

Verbier, like most of Switzerland, is still for the very wealthy with prices per square metre coming only second to that of St. Moritz.

Evolving property stock

The Swiss Lex Weber law (2012) limited second homes to twenty per cent of all housing stock in each municipality, effectively putting a cap on the pool of stock available. Verbier for example, is already above the cap and the final existing planning permissions are being built out. This means that off-plan or new build properties are no longer available for foreign buyers, and in the medium term investors can expect to see upward pressure on prices. Prime prices per square metre continue to rise significantly and can be considerably higher for the best properties.

However, in 2017 things changed in St. Moritz, when a new rule was voted in that opens the foreign property quota from twenty percent of a development, to a hundred percent.

Now, if a non-Swiss national receives a foreigner’s permit from the Canton of Graubünden, any secondary home in St. Moritz can now be sold to them. Foreigners can now also buy a single family home, and can resell their property to either a Swiss resident or a foreigner, both of which were disallowed from foreign buyers previously.

Local councillor, Leandro Testa says the reason why this was decided by the town council, is that the Lex Weber does not allow St. Moritz — where current secondary home share is nearly sixty percent — to build and sell any more secondary homes. By raising the foreigner’s quota, it gives the real-estate market a little more flexibility.

The move coincides with a launch by Greek-owned hospitality group Grace Hotels, which is redeveloping and restoring the 110-year-old La Margna Hotel. As well as a five-star boutique hotel, the complex will feature serviced freehold apartments due for completion in 2019. Apartments will range in size and will feature a two-bedroom mezzanine penthouse priced at nearly ten million Swiss Francs. Residents will have views over the iconic lake and full access to the Grace St. Moritz hotel’s amenities and 24-hour concierge. What’s interesting is that as serviced apartments run by a hotel, they are classed as a commercial property. Owners can earn revenue by renting all or part of it back to hotel guests when not in residence, while Grace Hotels will take care of all the servicing, maintenance and marketing to guests. Apparently, already around half have been spoken for.

This could have more broad-reaching implications. The launch or refurbishment of top-
branded hotels sold as serviced apartments – under the guise of being commercial property — will be a precursor for wider gentrification in Switzerland. The Grace Hotel in St. Moritz could provide a foundation for resort property regeneration and further cement its position as a premier ski destination. Developments within the historic town, could also predict a more open future for elsewhere in the Alpine market.

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Ski Investment Property – Why Switzerland?

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