Early ski season brings good news for property investors

The Alpine ski season got off to an early start last month after a drop in temperature led to an early snowfall. This has raised hopes of a bumper season despite the economic downturn.

France, already top of the hot spots list for buying property abroad, according to enquiries received by Conti this year, is increasingly popular with British buyers when it comes to ski properties. Proximity is a key factor. Many resorts in the French Alps are just one hour by road from Geneva airport, and flights from the UK are quick and widely available. More than 40 per cent of British skiers already holiday in France, so rental opportunities are good. It’s also fortunate that the Alps are popular over all the seasons, attracting walkers and climbers from the spring onwards, and golfers and cyclists in the summer.

Higher-altitude resorts such as Chamonix have had up to 50cm of snow already, with more forecast. And if this continues into the traditionally quieter times of mid-December and early January, there should be some good bargains to be had for skiers, and improved rental opportunities for property owners. This is good news following last year’s slight decline in the number of Britons who went skiing. According to recent reports, the early start to the season has led to a rise in bookings, which is bringing more confidence to the industry, especially after last year saw sales dip due to the credit crunch.

There are other reasons for prospective buyers to be feeling positive. The French tend to holiday within their own country, especially when times are tough, so rental opportunities are good in that respect too. And there are plenty of bargains to be had. Many potential buyers have been holding back, in many cases due to the strength of the euro, but the lack of buyers has resulted in price falls of more than 30 per cent in some French ski developments. And French interest rates are at an historic low – at the time of writing, there are some rates on offer which are below 3 per cent – which makes a mortgage much more affordable. It’s a buyers’ market.

Clare Nessling, Conti’s operations director, says:
“This is all positive news for prospective buy-to-let investors, as a bolstered domestic ski tourism market should mean more demand for rental properties. However, it’s important to consider a property that can be enjoyed all year round so that you get the best chance of a good return on your investment.”

Finance options
When it comes to finance, there are a few choices open to prospective buyers, each with varying timescales and financing options. The most common choice is to buy a resale property and this will give you access to the widest range of mortgage products. If you’re thinking of going for ‘off-plan’ property, you’ll have less control over timescales for completion, but finance for this type of purchase is also widely available, with many lenders offering stage-payment schemes. A leaseback mortgage is another option, whereby you buy the property and then allow a management company the right to let it to holidaymakers. Each lender, however, will have different rules as to what they’re happy to finance and what the terms will be. The final option is to go for a new-build, which means you can design and build your own property, but is obviously more complicated and time consuming. Finance is available, but, again, you’ll need to meet the individual lender’s requirements.  

Stable market
France continues to enjoy a very stable market, primarily due to its financial system having been more cautious in the past. Its system also means that lending is very much based on affordability and only those people who can really take on the debt are allowed to do so. As it’s in a relatively secure situation, there’s a strong appetite for lending to foreign investors and in some cases, it’s possible to borrow up to 100% of the value of the property. Obviously there are certain restrictions on who is eligible for such a loan, but it’s still pretty normal to obtain up to 80% of the purchase price.

Conclusion
Overall it’s a positive picture for the property sector in France, despite the global economic downturn. A combination of price reductions, historically low interest rates and a good deal of properties on offer is making the real estate sector very attractive.

France really does offer the long term investor a wealth of opportunity. But anyone considering an overseas property purchase must take professional advice before committing to anything.