Don't be snow blind: Alpine homes have a summer value
French resorts are diversifying into the warmer months, allowing for greater rental income, reports Julian Knight
Sunday 02 September 2012
Hear anyone talk about the French Alps and your first thoughts are probably of the white stuff, snow, neige. Skiing and snowboarding, vin chaud and après ski is where it's at in the French Alps, yes?
No, not any more. According to the estate agent Savills, there has been a 26 per cent fall in Alpine ski tourism since 2007, as result, no doubt, of double dip recessions and financial crises. The region has had to adapt to survive – no longer reliant on a glut of tourists in a few short, not necessarily snow-bound, winter months to make their money for the year.
The French Alps is now a year-round destination and this is making its property – always a favourite with British buyers – potentially more lucrative. "The resorts used to be ghost towns in the summer, but now they buzz with holidaymakers. This provides the chance of higher rental returns," says Charles Weston Baker, the head of international residential sales at Savills.
With warmer summer months than the UK, but with lower rainfall and a cooling breeze, hiking, the most traditional of Alpine summer pastimes, has been joined by mountain biking and even the anglophile golf. And, once you add more extreme pursuits such as canyoning, paragliding and abseiling, it's easy to see why the Alps are beginning to carve a tourism niche beyond the snow.
"The Alps seems to appeal more to a younger demographic than in the past and is seen as a place for the family. That's one of the great joys of owning property, lending it to friends and family," adds Mr Weston Baker.
Property prices are still pegged to the prestige of ski resorts. Courchevel, Chamonix and the like, command some of the highest prices as do resorts over the Swiss border. Back in France, more affordable property locations – but still well established ski areas – include Morzine-Avoriaz, Meribel, Les Arc and Valmorel.
Located in Savoie, a couple of hours from Geneva airport, the village of Valmorel is next to the landmark Col de Madeleine and on a clear day Mount Blanc is visible. Club Med, one of France's biggest tourism companies, is selling 19 ski-in, ski-out chalet-apartments near to its all-inclusive resort.
The properties, which can be seen at villas-chalets.clubmed.com, start at ¤556,000 (£440,000) for two beds and go up to ¤1.3m for four beds. When in residence, owners can use the club facilities, including restaurants, bars, gym, spa and pool. It's a walkers heaven, with more than 150km of footpaths set in nearly 9,000 acres of protected countryside. Owners, like paying guests, even have the use of an onsite butler to cook breakfast and make the beds as part of the package.
The properties are available on a leaseback basis, so for the first 11 years of ownership the properties are let out by Club Med to high-end guests. In return, buyers receive a guaranteed rental return of 3 per cent and three weeks use a year.
"The idea is that owners can enjoy the privacy of their villa and dip into Club Med's all-inclusive facilities, which is ideal for families. This all-inclusive deal is a unique offering of this development," says Sylvie Ernoult, Club Med's head of villa marketing.
Leaseback has received some bad press and understandably so. Buyers have found to their cost that the guarantees are only worthwhile if the developer can follow through with its promises. After the financial crisis, large number of developers either went bust or were unable to deliver their guarantees. This wasn't just seen in Eastern Europe or less developed countries, France suffered its fair share of developer failure.
"There were problems with leaseback and people need to be alive to the risks that the guarantee is only a guarantee if the firm is strong enough to follow it through," says John Busby, a director at French Private Finance who specialises in French properties.
Big, it seems, is not only beautiful but necessary when considering buying on a leaseback basis. "Go with the big providers. The Club Med's and Pierre Vacances (P&V) of this world are massive, strong companies which should be well placed to honour their promises. Overall, people like leaseback in the Alps because it gives them the usage while the rental returns allow the investment to pay for itself," Mr Weston Baker adds.
At Club Med, for instance, the chalets are maintained for owners and materials are top drawer – essential in the often harsh Alpine environment.
There are also freehold properties available in the Alps – not tied into a leaseback arrangement – but these come at a premium as developers cannot claim the tax advantages that come with building property designed to be let out.
Savills, for instance, has just started marketing a six-apartment development in Meribel, with beautiful views over the valley and La Chapelle Notre Dame des Neiges. Ranging from two to four-beds, apartments cost from ¤720,000. P&V has a range of properties at a heady 2,000m altitude in Belle Plagne from ¤502,219, sold through athenaadvisors.co.uk.
Mortgages, although subject to quite strict criteria, are readily available in France, regardless of whether the property is bought leaseback or outright. "Mortgage rates are near record lows, with tracker products available from just 2.5 per cent and 20-year fixed rate deals at 3.75 per cent," says Mr Busby.
Generally, mortgage loan to values stand at 70 to 80 per cent. However, there is an affordability test applied to French mortgages and borrowers' total debt repayments cannot exceed a third of their income. But lenders do take account of potential rental income in their calculations.
"The best advice is to have the finance in place before you start looking. You don't want to be rejected once you have your heart set on a place. The good news is that prices are soft at the moment so serious buyers have the whip hand," Mr Busby says.
The buyers market, no doubt, is down to the euro's troubles. But buyers in France, rather than their counterparts in Spain, Italy or Greece, can be fairly sure of France's continuing place in the eurozone. British buyers have benefitted from the uncertainty because exchange rates have improved, but market jitters can strike the unwary buyer at any time.
"On average, it takes between six and eight weeks to complete a resale property purchase abroad. If you're buying off-plan this is generally elongated to 12 to 18 months. Even over just one month currency rates can change dramatically and have a real impact on the price of an overseas property," says Mark Bodega, a director at currency firm HiFX said.
One way to counter such fluctuations is to arrange a future currency contract, which allows you to buy the currency at current rates and pay after completing the purchase.
Independent Partners; request a free guide on NISAs from Hargreaves Lansdown
- 1 All Blacks Aaron Cruden misses New Zealand flight after drinking session, has brilliant excuse
- 2 Kim Kardashian 'nude photos' leaked on 4chan weeks after Jennifer Lawrence scandal
- 3 'F*ck it, I quit': TV reporter Charlo Greene quits live on air in spectacular fashion
- 4 Alicia Keys leaks nude photo 'to create a kinder and more peaceful world'
- 5 Clothes store Joy angers mental health campaigners with Twitter exchange on bipolar disorders
Scotland could still declare independence – even without referendum, says Alex Salmond
Scottish independence referendum: A nation divided against itself
Scottish referendum results: Cross-party consensus collapses amid Tory-Labour spat on the 'English question'
Hilary Mantel 'should be investigated by police' over Margaret Thatcher assassination story, says Lord Bell
Scottish independence: David Cameron is becoming the 'George Bush of Britain'
Plebgate MP Andrew Mitchell called officer a 'little s**t', claim court documents 'exposing ex-Chief Whip's 'record of abusing police'
iJobs Money & Business
£20000 - £25000 per annum + OTE £40,000: SThree: SThree are a global FTSE 250 ...
£20000 - £25000 per annum + OTE £40000: SThree: As a Recruitment Consultant, y...
£20000 - £25000 per annum + OTE £40,000: SThree: SThree Group have been well e...
Up to £80000: Saxton Leigh: My client, a large commodities broker, is looking ...
Day In a Page
A three-bedroom, 15th-century cottage with original features in the picturesque village of Sissinghurst
A six-bedroom terraced house with large south-facing roof terrace, cinema room and wine cellar
A new seven-bedroom home built in Queen Anne-style with swimming pool and parkland views in Mortimer
A listed, four-bedroom farmhouse in the rural hamlet of Rushall with detached barn, four acres of gardens and paddocks
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens
A seven-bedroom Grade II-listed property with a separate self-contained apartment
A five-bedroom Victorian house with three reception rooms and galleried landing, £695,000
A six-bedroom farmhouse with five acres of land in a former cloth-making village
A secluded seven-bedroom detached house with large private garden, £490,000
A three-bedroom cottage overlooking Sarratt village green with open fires and solid oak floors
A three-bedroom maisonette flat in a Grade I-listed, Georgian townhouse in a sought-after location
A one-bedroom apartment located within a private gated development, north of Turnham Green
Look forward to a brighter future at two-bedroom Sunny Cottages, ideal for Londoners looking to downsize