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Alpine Skiing Resorts Invest to Survive

Wednesday 04 January 2012

Many alpine skiing resorts are having to undertake major investment in order to attract buyers and visitors.

Over the past 30 years a large number of ski apartments have been constructed in French Alpine ski resorts in response to the growth in the popularity of skiing.

Others have emerged more as a result of the tax incentives available rather than clear demand, and the future outlook for some of these stations looks decidely uncertain.

Many of the apartments constructed in the Alps were designed for short-term holiday breaks and the expectation that users would be spending most of the time on the slopes, not in the apartment.

As a result spatial comfort was not necessarily a key priority of either the developers or the ski devotees.

However, time has moved on, and with it so have the tastes of many visitors.

Those who now seek to buy or holiday in a ski resort want more space and better creature comforts.

With global warming they also want a stronger guarantee of suitable metereological conditions.

The French resorts also face much stronger competition from elsewhere, notably from Italian and Austrian resorts.

Invest or Decline

Inevitably, therefore, many French resort owners and operators are having to invest substantially to cope with the changes in the market, and some are succeeding better than others.

Studio apartments on low lying village resorts have been the first to suffer from the change in the market, with prices that have on average fallen in 2010, and with occupation levels lower than higher resorts.

Many stations are responding imaginatively to the challenge, with studio apartments of 13m² being merged with adjoining apartments to create new accommodation of 40m² or more.

Such is the case at La Plagne where apartments of 18m² to 20m² in their original construction have been transformed into deluxe condominiums of 60m² to 70m².

Resort operators are also investing in snow canons and widening the range of activities and services provided at the resorts so that they cater for range of other winter sports, and not exclusively for the downhill skier.

There has also been a huge investment by the public authorities in lift systems and networks, so that smaller low lying resorts have access to a far larger skiing domain.

Thus, users of the ski resort of Val d’Arly now have access to 285 kilometres of piste in the Portes du Mont Blanc and l’Espace Diamant.

At Courchevel, €135 million will be invested in the lift system between now and 2020, a plan which will also be accompanied by a programme of renovation of the residential stock and leisure activities. One of the major investment projects will be a new acquatic centre costing €70 million.

A new 5 star hotel will also be opening at Méribel next year, which will also similarly benefit from major investment in the lift system over the next two years.

This huge investment is also being accompanied by growth in the number of low-cost airlines serving the ski tourism market, notably from Easyjet, who have opened several new routes this year.

Property Prices

The price differential between the resorts remains substantial, and although too much generalisation is dangerous, it is possible to distinguish three price categories for apartments. Chalets prices will be at least double to treble the rates quoted below.

  • Business Class Resorts – Those resorts of distinction, such as Chamonix, Courchevel, Megeve, Meribel and Val d’Isere, where the price of entry for purchase of an appartment is around €8,000m² and frequently a lot more.
  • Tourist Class Resorts – More affordable and generally the most popular with European buyers and visitors are the resorts such as Les Arcs, La Plagne, Val Thorens, Menuires, and d’Avoriaz, where average prices are between €4,000m² to €5,000m².
  • Village Resorts – Generally lower lying, where the main group of buyers and visitors are French and where prices are between €3,000m² and €4,000m².

The following table shows the average prices for existing apartments for the main Alpine stations and resort areas.

The prices are those from the Chambre de Notaires d Savoie and Haute-Savoie, for the period up to the end of June 2010, the most recent date for which figures are available.

Apartment Prices in 2010
Price Per m²Average Change 10/11

Chamonix€5,700+ 9%
Châtel€3,900+ 4.4%
Combloux€4,900- 2%
La Clusaz
€5,400+ 3.7%
La Grand Bornand
€4,300+ 2%
Les Carroz Arâches€3,650- 6%
Les Gets
€4,800+ 2%
Les Houches
€4,200- 7%
Megève€6,800+ 3%
Morzine€4,400- 6.5%
Saint-Gervais€3,400+ 2.4%
Samoëns€4,000+ 7.6%
Secteur Montagne
€4,300+ 2.5%
Average Haute-Savoie€3,500+ 4.6%

€4,800+ 1.7%
Val d'Isère€7,800- 3%
Valloire€3,950+ 4.7%
Vallmoral€3,650+ 13%
Haute Tarentaise
€4,000- 3%
Secteur Maurienne
€2,250- 2%
Secteur Trois Vallées€5,100- 15%
Average Savoie
€2,800- 2%

As will be seen, Haute-Savoie has held up more strongly than Savoie, although in both areas there has been substantial variation in the range of price movements, ranging from an increase of 13% at Valmoral to a rather spectacular fall of 15% in the Les 3 Vallées.

Investment Return

Investors will also be disappointed to hear that although property prices have, in general, increased, there has been no commensurate increase in rental levels, with seasonal returns now fairly modest in most resorts.

Rental Rates in 2010
Purchase PriceAverage (Low)Average (High)
La Clusaz (Haute-Savoie)€200,000€545€1085
Courchevel (Savoie)€420,000€950€1600
Avoriaz (Haute-Savoie)€5,000m²€538€1150

Neither are the regular outgoings of the apartment a negligible cost, for as well as the usual costs associated with maintenance of an apartment property there are the higher than normal heating and maintenance costs of a ski property.

The level of local taxes have also started to rise significantly in some stations in order to meet the cost of the public investment that has taken place or is planned.

Although only of relevance if you are tax resident in France, the government is also bringing to an end some of the tax reliefs (Censi-Bouvard, Scellier) that that have been available for investing in new rental development properties in some resorts.

By 2013 it is envisaged that no further reductions in income tax will be available for investment in these residences de tourisme, although a rebate of the 19.6% VAT on the acquisition cost will continue to be available, provided the letting conditions are met. The VAT refund is available to both residents and non-residents.

The decision of the regional council of Rhône-Alpes in 2008 to pull out from investing in skiing projects in favour of more sustainable activities should also be a warning that public sector support cannot be taken for granted.

In the end, buying a ski property solely for investment is more of a gamble than it was in the past, so it pays to ensure that if you do buy make the best use of it yourself!

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