2017’s Unsure Economic Conditions Sustain ‘safe haven’ Status Of French Ski Home Market

Guaranteed rental returns, a strong dollar and very attractive mortgage rates continue to make ski homes in the French Alps an attractive option to international investors looking for a secure immovable asset during 2017.

Political and economic uncertainty throughout global markets are helping to steer wealthy investors to property in established markets, where prices are buoyant – and in many cases rising – and rental returns are secure. Top resorts in the French Alps, such as Méribel, Megève, Courchevel, Val d’Isère and Chamonix, offer just this and estate agents there are reporting bullish demand from savvy foreign buyers.

“The uncertainty in the USA, as well as globally, caused by Trump’s election triggered a spike in interest in European property, including ski homes, from American investors,” said Julian Walker, direct at ski property specialist SkiingProperty.com. “With Brexit about to be triggered and concerns about how pending elections in Europe, including France, will go, we expect the ‘safe haven’ appeal of French ski property only to rise throughout the year.”

The strengthening of the dollar in has added to the attraction of ski chalets for sale in the French Alps, not only to Americans but other foreign investors with dollar-based assets. These include Middle Eastern buyers as well as British expats based in international business hot spots such as Dubai, Abu Dhabi, Hong Kong and Singapore, who typically are remunerated or have savings in dollars. The dollar has become more than 20 per cent stronger against the euro during the past two years, increasing these investors’ buying power.

Elsewhere, while the fall in value of the pound against the euro might put some UK buyers off investing in Europe right now, some British buyers are removing the sting of the poor exchange rate by taking advantage of France’s historically low interest rates.

Recently, fixed-rate French mortgages dropped to less than two per cent, with loans now available from as little as 1.70 per cent with 80 per cent LTV on a 20-year term. Financial experts have crunched some numbers and calculated that the fall in payments on a loan throughout its term (from 2.7 per cent last year to 1.7 per cent now) more than compensates for the depreciation in the pound’s value. These rates are available to most non-residents from leading French banks, such as BNP Paribas and Credit Agricole, who have dedicated English-speaking staff.

“Savvy UK buyers realise that the lower their euro deposit in France, the less their exposure to the exchange rate,” continued Mr Walker. “So, they are taking out a French loan and waiting until the exchange rate improves before paying it off. In the meantime, their French property is earning them regular rental income in euros, often 3-4 per cent, helping to cover their repayments. Not to mention, those that opt for an apartment in a new leaseback résidence will also benefit from the 20 per cent VAT rebate and fixed rental income that comes with leaseback, depending on the amount of personal usage they opt for.”

Interest in new ski apartments for sale, or chalets, in leading high-altitude resorts is especially buoyant this year. This is because building plots in prime spots are in diminishing supply, helping to maintain values. In addition, a number of top-flight resorts have upped their game through infrastructure investments. Courchevel, for instance, opened a £50-million water park last year, while Chamonix is in the process of a €477-million lift upgrade.