Mountain real estate resits the health crisis

MOUNTAIN REAL ESTATE RESISTS THE HEALTH CRISIS

After a mixed year in 2020, no snowball effect in 2021. Mountain real estate has consolidated thanks to long-term rentals and its refuge value. A study by Cimalpes looks at the evolution of the market.
The ski industry has well and truly started its season, hoping for a catch-up season after a very complicated winter in 2020, when the ski lifts were closed. In such a context, where the threat of the Omicron variant worries the professionals, is it still judicious to invest in real estate in the mountains?

A boom in rentals in December

Investing in real estate in the mountains is perhaps not as risky as one might think. This is the conviction of one of the leaders in the sector, Cimalpes, according to its latest annual study on mountain property. In December, rental demand in ski resorts jumped by 40% compared to before the health crisis.

While there was a catch-up effect after the closure of the ski lifts last winter, the network also notes new uses. With teleworking, long-term rentals of more than a month have increased by 20%. Tenants are extending their holidays and owners are adapting. According to Cimalpes, 25% of them plan to make their second home their main residence in the medium/long term.

“The trends, which have been in place for longer than the recent upheavals, are gradually taking hold and only confirm the attractiveness of the mountain property market. A market that is constantly adapting to the expectations and needs of clients and that offers numerous possibilities for investing, enjoying and passing on”, notes Cimalpes in its overview of the year.
Purchase prices on the rise
In the end, demand for property has not faltered and prices are rising everywhere. In particular in Val-Thorens with a 7% increase this year, but also in Tignes (+4%) where prices can go up to 23,000 euros/m² for a chalet according to Cimalpes.

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PriceHubble*, the property price estimation specialist, has studied for Recherche immobilier.co.uk the evolution of property prices in the 5 most expensive ski resorts in France according to Berthier & Associés : Val-d’Isère, Courchevel, Chamonix, Megève and Méribel. As a result, prices have not stopped rising for the last 6 years in these 5 top ski resorts.

In Val d’Isère, for example, in Savoie, the average price for a standard 65m² flat is 837,000 euros, or 12,890 euros/m². This is an upward trend: +1.7% over 1 year and +2.6% over 3 years. PriceHubble estimates that prices should continue to rise in Val d’Isère, by around 1.4% over one year.

In La Clusaz (Haute-Savoie), same trend, except that the price increase over 3 years is much higher with a 16% increase. The median price of the advertisements published over the last 12 months has been established at 8,421 euros/m². In one year, prices have increased by 3.7%.

Prices are clearly on the rise in this ski resort with a median price of 8,421 euros/m² for ads published over the last 12 months.
Prices are clearly on the rise in this ski resort with a median price of 8,421 euros/m² for ads published over the last 12 months.

In Chamonix, the same upward trend has been observed over the last three years, with +12% to reach an average price of 585,400 euros for a 65 m² flat, i.e. 9,006 euros/m².

Prices are rising in Chamonix with a median price of 8,900 euros/m²
Prices are rising in Chamonix with a median price of 8,900 euros/m²

In Megève, on the other hand, although prices have risen by 13% in 3 years to reach an average of 9,791 euros/sqm, the evolution is less clear-cut over the year with +1.8% over one year. PriceHubble forecasts a slowdown in the increase in this ski resort at the foot of Mont Blanc.

Prices are still rising, but less markedly than the other ski resorts studied by PriceHubble, with a median price of 9,791 euros/m².
Prices are still rising, but less markedly than the other ski resorts studied by PriceHubble, with a median price of 9,791 euros/m².

In Méribel, the price of a property is 680,400 euros, i.e. 10,468 euros/m² with a 19% increase in 3 years and 3% in one year. According to PriceHubble, prices could rise again next year with a 3% increase. And at the top end of the market, property is still rising. “We are still seeing rising prices and have reached record highs with properties at over 30,000 euros per m2. Prices have even reached 34,000 euros per m2 in new and very high-end developments,” reports Olivier Roche, director of Méribel Sotheby’s Int. Realty, who notes that there is a lack of supply of chalets and that 60% of the market consists of flats and new developments.

The median price over the last 12 months is the highest according to PriceHubble at 13,285 euros/m². Prices are up by almost 20% over 3 years and should continue to rise according to the estimates of the price estimation specialist.
The median price over the last 12 months is the highest according to PriceHubble at 13,285 euros/m². Prices are up by almost 20% over 3 years and should continue to rise according to the estimates of the price estimation specialist.

Prices are therefore soaring in the ski resorts in both new and existing properties, with more or less clear variations depending on the area. Overall, Courchevel has only increased by 1.2% in one year, as have Courchevel, Méribel, Alpes d’Huez and Megève which have all increased by around 2%.

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However, values are still very high, with prices ranging from 9,000 to 30,000 euros/m² for a new or old chalet. This corresponds to the price of a week’s rental for a chalet in Courchevel Village for the week of New Year’s Eve, estimated at 28,700 euros by Cimalpes… And it’s not the most expensive resort, the prize for renting a chalet at this time of year goes to Courchevel 1850 with a rate of 167,500 euros. What makes the prices jump? The location or the presence of an exterior.

Prices fluctuate according to different criteria: the location of course (the most expensive when you are skiing and close to the centre) but also the orientation (the south-western orientation being the favourite of clients) and the volume. Flats or chalets with double height ceilings sell for at least 20% more. Finally, in the post-Covid world, exterior surfaces such as balconies also play a role in the price

Camille Letuve, Associate Director at Athena Advisers.

Like this luxury chalet offered by Cimalpes at a price of 5,390 million euros, there are many prestigious properties in the mountains.

View of the swimming pool of the high-end chalet located in Courchevel
View of the swimming pool of the high-end chalet located in Courchevel

A swimming pool in the mountains, access to the slopes, the 323 m² chalet has a laundry room, a spa with sauna, a garage, a terrace and many parental suites…

A “pleasure” property purchase

At these price levels, it is easy to understand why Cimalpes believes that buying a property in the mountains is a “pleasure” purchase. “People buy a pied-à-terre in the mountains for their holidays, to spend exceptional moments with their family and friends”, the network emphasises.

Mountain real estate is an expensive investment, but profitable, says Cimalpes: 95% of the properties sold are rented out and the rental income at least covers the annual expenses and the cost of the owners’ holidays… “Whether you’re an investor with an experienced skier’s profile or a mountain lover, there are projects to suit all tastes and budgets,” explains Charles-Antoine Sialelli, Alpine Director at investment expert Athena Advisers. These are the tracks for buyers or for amateurs who dream of spending a holiday in the snow.

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