Winter sports resorts on the wane?
Winter sports resorts on the wane?
Winter sports destinations have long been considered desirable by status-conscious investors, but an element of doubt has crept into the market
Our four-part series covers the dip in demand for winter resort properties that’s causing some concern on the slopes of North America, Europe and Japan
All property markets have their ups and downs, their slippery slopes and lofty peaks – but few buyers can take things so literally as those who purchase a ski property. While winter sports properties are boosted, buffeted, or battered by the same external economic forces as other markets, their unique purpose lends this sector a distinct set of characteristics and variables to consider.
As Grant Mitchell, owner and director of Japanese winter sports real estate specialist Niseko Property, explains, the economic fundamentals of supply and demand become more rarefied – and extreme – on the slopes.
“Winter sports real estate differs from typical property investment in that there is such a low number of genuinely viable locations for world-class ski resorts in terms of geography, accessibility and infrastructure,” he says. “This means that winter sports locations, once established, see development cycles at an accelerated rate compared with the norm.”
However, just as ski properties’ physical position can leave them exposed to icy blasts of weather, so too can their reliance on “a luxury holiday activity” leave them “exposed to fluctuations in the global economy that impact peoples’ disposable incomes,” says Mitchell.
More: Why Asian property buyers are hitting the Alps
Another major factor impacting on the ski property market is obvious, but nonetheless crucial – whether people actually want to ski or not. According to Geneva-based consultant Laurent Vanat, the sport is also on the slide in terms of popularity.
The 2015 edition of his “International Report on Snow & Mountain Tourism,” a rigorous annual scrutiny of the ski industry, points to a long-term decline in major markets such as Europe and North America. Some of this comes down to demographics. “The problem of the succession of the generation of baby boomers, a generation of skiers, remains a challenge,” he explains.
For those with an interest in ski markets attracting high numbers of participants, Vanat paints a bleak picture. “The fairy tale of the inexhaustible foreign customer reservoir is to an end. This reservoir is stagnating and is even spreading to new markets.”
With skiing numbers on a slippery slope and the global economy jittery, has the winter sports real estate market frozen solid? Not according to Jeremy Rollason, managing director of Alpine Homes, exclusive associates of Savills.
“Since the end of the global downturn, the market has recovered in most resorts to price levels equal to or in excess of pre-crisis levels,” he says.
That’s not to say many people actually buy ski properties to get rich, however. Dividends are unremarkable, Rollason adds: “Investment returns are circa 2.5 percent net in Switzerland and France and roughly double that in Austria.”
However, most purchasers of ski properties won’t be troubled by the prospect of such modest returns, he points out. “Lifestyle buyers (as opposed to pure investment-driven buyers) are generally cash rich,” explains Rollason. “That is not to say that they do not still let out their chalets, it just means they don’t need to.”
While some 80 countries around the world host some sort of skiing scene, there are three main established zones in the winter sport property market – Europe, North America and Asia. Each area has its own distinct terrain, not only in terms of geography, but also economy.
Come back for Part Two.
Source: Property Report