RESIDENTIAL RESEARCH

SKI PROPERTY REPORT 2015 ASSESSING CURRENT PROPERTY MARKET CONDITIONS IN THE FRENCH AND SWISS ALPS

FRENCH VS. CURRENCY SHIFTS 2015 INDEX RESULTS SWISS ALPS DRIVING DEMAND KEY FINDINGS ALPINE FOCUS Demand for Alpine property is rising, spurred on by a more Val d’Isere and Meribel lead the resilient Eurozone, greater clarity over tax and the second 2015 Ski Property Index recording home cap in Switzerland, as well as a weaker euro. annual price growth of 5.8% and 4.5% respectively The latest results of our Prime Ski Property Index (see below) underline a SKI PROPERTY Prime sales activity in the broadly stable market environment with INDEX is focussed between only 13% percentage points separating Knight Frank’s Prime Ski Property Index 1.5 and 2.5m with resorts such the strongest and weakest performer. € € tracks the price performance of prime as Chamonix and 1550 Currency movements have played a ski chalets across 15 key resorts in the increasingly popular pivotal role in determining demand across French and Swiss Alps. the region; we explore its impact on sales French resorts occupy the top five The number of sales completed activity on page 3. rankings this year as uncertainty in Megeve in the first half of 2015 For many, having decided to buy a surrounding Lex Weber in Switzerland was double the number of sales ski home, choosing where to buy and dampened sales, and as a result agreed during the whole of 2014 weighing up the pros and cons of the price growth. different ski resorts can be a challenging Home to the world’s oldest ski resorts, task. On pages 4 and 5 we outline some Previous uncertainty in the Swiss the French and Swiss Alps attract in of the key facts and figures for those excess of 80m ski visits* per annum and market is giving way to renewed looking to take the next step and highlight account for a third of the total number of optimism as clarity emerges those resorts which sit within the crucial ski resorts worldwide. surrounding taxation and the two-hour drive time from airport to resort. In the past year ski homes in Europe’s second home cap Swiss rules on who can buy what, and top resorts have continued on the same trajectory that they have been following where, can be complex for even the most since 2008; no radical acceleration or experienced property lawyer, on pages deceleration just small single digit shifts 6 and 7 we set out the rules for residents year-on-year. and non-residents according to Lex Koller and Lex Weber. Finally, we examine Overall, the index proved largely static how the French and Swiss markets with only a marginal 1% fall recorded in compare when it comes to demand and the year to June 2015. supply indicators, property costs and Val d’Isere and Meribel lead the 2015 wealth forecasts. rankings with the price of a typical 4-5

FIGURE 1 The Knight Frank Prime Ski Property Index, 2015 Annual % change to Q2 2015*

+5.8% VAL +4.5% D’ISERE MERIBEL +3.2% CHAMONIX +2.1% COURCHEVEL +1.2% 1550 COURCHEVEL -1.4% 1650 VILLARS -2.0% GSTAAD -2.0% COURCHEVEL -2.4% 1850 KLOSTERS -2.8% ST -4.5% GERVAIS VERBIER -4.8% DAVOS -5.0% CRANS -6.7% MONTANA MEGEVE -7.2% ST MORITZ

Source: Knight Frank Research, UBS (St Moritz, Davos & Klosters) * Based on a 4-5 bed chalet in a central location within the resort. The index tracks prime as opposed to super-prime properties.

2 Please refer to the important notice at the end of this report SKI PROPERTY REPORT 2015 RESIDENTIAL RESEARCH

bedroom chalet in each resort rising by The performance of the Swiss resorts 5.8% and 4.5% respectively in the year in this year’s index is strongly linked to to June. whether non-residents are able to buy in a given location and how close the local The length of Val d’Isere’s ski season commune is to its 20% threshold for explains its long-standing appeal, second homes (see pages 6-7). St Moritz, particularly with British buyers. Few other for example, which saw values decline Alpine resorts can guarantee sufficient by around 7.2% year-on-year has few snow to ski during both the Christmas and Easter holiday periods. properties available for foreign buyers.

In Meribel’s case, a combination of its FIGURE 3 location (in the heart of The Three Valleys) CURRENCY and its pricing explains its 4.5% increase year-on-year. Meribel provides better £ IMPACT How much does a €1m property £ £ value than Courchevel 1850, but can July 2014 July 2015 22% cost a British buyer? CHEAPER compete with 1550 and 1650 in terms of The unpegged Swiss Franc £791,360 £701,840 facilities. Investment in the form of new has rebounded whilst residential developments such as Olympe the Euro has weakened £ £ £ £ £ in and Point de Vue in Meribel JULY 2014 JULY 2015 11% CHEAPER July 2014 July 2015 22% leading to repercussions CHEAPER Village has also helped to build confidence £791,000 £702,000 £791,360 £701,840 amongst buyers. for foreign buyers. In real price terms, the exclusive resorts British buyers looking to purchase in Max size? £ of Courchevel 1850 and Gstaad come SWITZERLAND £ £ the French Alps are now in a stronger How much does a CHF1m property July 2014 July 2015 22% CHEAPER out on top, with prime prices typically position than two years ago, the GBP/ cost a British buyer? £791,360 £701,840 around €25,000 and CHF30,000 per sq m EUR exchange rate has moved from respectively. A prime ski chalet in Gstaad approximately 1.17 to 1.43 during is, on this basis, four times the price of an this period. £ £ 2% £ equivalent property in the French resort JULY 2014 JULY 2015 MORE £ £ Switzerland’s unpegging of the franc from EXPENSIVE July 2014 July 2015 22% of St Gervais. £651,000 £661,000 CHEAPER the euro in January 2015, whilst initially £791,360 £701,840 In the French Alps, the focus of unnerving for buyers, has rebounded. Source: Knight Frank Research sales activity in the last 12 months has Prior to its unpegging the pound stood at Exchange rate as at 31 July 2014 and 2015 (figures rounded) been within the €1.5m and €2.5m CHF1.54, it dropped to CHF1.31 but by price bracket. August it had returned to CHF1.52.

The super-prime market (€15m+) has Taking account of currency movements slowed, partly because of the absence only and focussing on the year to July of Russian buyers but also because a 2015, a British buyer who bought a French number of ultra high net worth individuals property in July 2015 instead of a year (UHNWIs)€ are reviewing€ their budgets €earlier will have€ saved approximately€ 11%, 1. 2. MIDDLE EAST 3. SWITZERLAND 4. FRANCE 5. UK and considering spreading their capital whilst in Switzerland the same buyer’s € € € across2.9M multiple properties2.5M or assets in 2.7Mbudget would2. have1M shrunk marginally,1.8M 1. RUSSIA 2. MIDDLE EAST 3. SWITZERLAND different locations. by 2% (figure 3). €2.9M €2.5M €2.7M

*2015 International Report on Snow and Mountain Tourism € € € € € FIGURE 2 The1. Alps:RUSSIA Average2. MIDDLEproperty EAST price3. searched SWITZERLAND by nationality4. FRANCE on 5. UK www.knightfrank.com€2.9M €2. Jan-Jul5M 2015 €2.7M €2.1M €1.8M

€ € € € € 1. RUSSIA 2. MIDDLE EAST 3. SWITZERLAND 4. FRANCE 5. UK €2.9M €2.5M €2.7M €2.1M €1.8M Source: Knight Frank Research

3

JUNE 2014 € € € € € MÈRIBEL

SKI PROPERTY REPORT 2015 RESIDENTIAL RESEARCH

HOW THE ALPINE VILLARS GSTAAD KEY POINTS TO

RESORTS COMPARE… CHF KM CHF KM CONSIDER... CRANS CRANS CRANS CHF13,800 1,300m 125km 102cm CHF30,000 1,000m 220km 186cm € KM MONTANA MONTANA MONTANA Renowned for its top boarding schools and its Its mountainous backdrop and prestigious alpine views this 1,300m resort enjoys 125km international boarding schools have made it Typical Resort Average upper Resorts accessible Knight Frank The graphic alongside 13,800 13,800 13,800 of family-friendly slopes. Easily accessible, the popular with the wealthy. Cable cars connect Total FRANCE resort is only 1hr 30m from Airport. the resort to various ski areas with 220km of prime price height pistes slope snow in under 2 hrs sales office** highlights some of the all-level slopes and the nearest international (€/CHF per sq m) (m) (km) depth (cm)* drive of an airport 1,560 1,560 1,560 airport two hours away in Geneva. key considerations which ST GERVAIS 138 138 138 Espace Evasion even the seasoned VERBIER pro-skier may have 311 311 311 The Four Valleys € KM ZURICH KLOSTERS €7,000 810m 445km 89cm overlooked when CHF KM CHF Located between Chamonix and Megeve, KM deciding where to buy. CRANS CRANS CRANS St. Gervais offers the best of both resorts yet is CHF21,000 1,500m 412km 152cm CHF14,200 1,124m 305km 138cm MONTANA MONTANA MONTANA cheaper than both. A huge (and uncrowded) This cosmopolitan resort rests on a sunny In contrast to neighbouring Davos, Klosters has ski domain, amazing views and a real dual plateau with impressive views of Mont-Blanc. Most buyers arriving in the Alps have a season destination. a romantic village feel. A favourite of the British 13,800 13,800 13,800 The resort, sat at 1,500m, forms part of Royal family, Klosters benefits from a cable car basic understanding of the region having The Four Valleys ski area. Widely lauded for to the Davos ski area whilst the Madrisa region its off-piste skiing Verbier also boasts 412kms above the village is perfect for beginners. holidayed there for several years. To aid 1,560 1,560 1,560 of marked runs. the next stage of a buyer’s decision- MEGEVE Espace Evasion Klosters making process we have drawn on the 138 138 138 knowledge of Knight Frank’s network of 15 offices across the Alps. We have 311 311 311 € KM Davos €14,000 1,113m 325km 101cm highlighted some of the key facts and Developed by the Rothschild family, Megeve figures that merit consideration, from the has the feel of a village rather than a resort and SWITZERLAND altitude of the resort to the average snow is only 67km from Geneva. One of the most luxurious resorts in the Alps, Megeve St Moritz depth (on the upper slopes) and the accommodates a discreet clientele. length of pistes available. Lake Geneva Gstaad For most, finding a ski home which is MERIBEL Crans DAVOS under a two-hour drive of Geneva or The Three Valleys Montana Zurich Airport is a top priority. Megeve, Villars CHF KM St Gervais, neighbouring Combloux, and € KM CHF14,300 1,560m 311km 138cm Chamonix rank highly in this regard but €15,000 1,450m 600km 121cm A truly international resort, Davos boasts 58 ski lifts, 311km of slopes and 75km of cross- even Verbier in Switzerland is around the Comprising 10 distinct villages, the Meribel GENEVA Verbier country ski tracks along with world class 2-hour mark. valley lies at the heart of The Three Valleys restaurants and hotels, all within a 2-hour giving it prime access to the world’s largest drive of Zurich. ski domain. A great family resort with an Chamonix CHAMONIX Owners looking to rent out their property exciting village atmosphere. during the summer months show a ST MORITZ Typical prime price (€/sq m) € KM preference for the mid-altitude resorts St Gervais Resort height (m) Megeve €10,000 1,035m 155km 154cm (Chamonix, Megeve, Crans Montana) CHF KM Average weekly snowfall (cm)* A vibrant and exciting town, Chamonix is the where non-snow sports proliferate spiritual heartland of the Winter Olympics. CHF24,400 1,822m 350km 119cm Total Pistes (km) Lorem ipsum dolor sit amet consectetur adipis Within a short distance of Geneva Airport, resulting in longer occupancy periods. One of the oldest villages in The Alps with its cing elit. Donec efficitur aliquam massaid imper Chamonix is a must for those looking for the Chambéry Bourg-Saint- 3,000 year old spa, this 1,822m village is the diet tortor ultricies id. Cras fermentum hendrerit ultimate weekend bolthole in the heart of The Alps. Maurice home of the Cresta run. It offers 350km of Resorts such as Chamonix and St purus, non consequat tellus conva lroem llis eu. slopes as well as the “White Turf” horse race Gervais stand out as strong buying Vestium dignissim velit nisl, vel ultricies sapien. Meribel and Polo on the frozen lake. CRANS MONTANA Courchevel 1550 Val opportunities. Here, prime prices sit at or € KM d’Isere CRANS MONTANA below the average for the region (€10,000 per sq m) yet both are easily1,500 149 140 Courchevel 1850 Courchevel CHF KM accessible, offer uncrowded ski domains 1650 CHF15,000 1,500m 140km 149cm and operate as dual season destinations. A combination of two villages, Crans and COURCHEVEL 1550 COURCHEVEL 1650 COURCHEVEL 1850 VAL D’ISERE Montana, this year-round resort at an altitude Those wanting a fresh challenge each The Three Valleys The Three Valleys The Three Valleys Espace Killy of 1,500m, offers 140km of slopes alongside visit should focus on those resorts two international golf courses. With the arrival of the new international school this resort is sat within The Three Valleys (Meribel € KM € KM € KM € KM becoming popular with families wanting to and the Courchevel resorts) or within relocate to Switzerland permanently. €15,200 1,550m 600km 119cm €15,000 1,650m 600km 119cm €25,000 1,850m 600km 119cm €17,000 1,850m 300km 122cm Switzerland’s Four Valleys (Verbier) which Prices in this expanding Courchevel resort are Located on the opposite side of the valley from The superstar of The Three Valleys, Courchevel The best in high altitude skiing The Alps has to expected to outperform the wider French Alps 1850 and 1550, the village of Moriond offers 1850 prides itself on excellence in everything it offer, it has some of the longest winter seasons provide 600km and 412km respectively due to its direct access to 1850 and the new sunny south facing slopes and large well-built does. From fine dining to queue free skiing via and even summer glacier skiing. Val d’Isere, of pistes to explore. Aquatic centre. ‘Courchevel Village’ is coming chalets on the Belvedere slopes. Direct access ‘palace’ graded hotels and chalets, this resort with , forms the iconic Espace Killy of age and is fast becoming one of the ‘go to’ to the new aquatic centre will drive demand. is unique. ski domain. Source: Knight Frank Research, Ski Club of Great Britain destinations in The Three valleys. * Based on 2014-15 season **Knight Frank network includes representative offices

4 5 FRANCE SWITZERLAND Maximum size Where

FRANCE SWITZERLAND No limit 200 sq m of official living space No limit 200 sq m of official living space Max size? No limit “Holiday/Ski Zones”, plus Lugano and Montreux. The 20% threshold for second homes per commune applies “Holiday/Ski Zones”, plus Lugano and Montreux. The 20% AS A NON-RESIDENT No limit threshold for second homes per FRENCHcommune applies VS. SWISS ALPS AS A NON-RESIDENT Where? The French and Swiss Alps now present buyers,No limit No limit No limit No limit both lifestyle purchasers and investors alike, with an Max size? No limit 20% threshold for second homes per commune interesting scenario, one that differsAS A RESIDENT significantly from

No limit 200 sq m of official living space three years ago. Where? AS A RESIDENT

FIGURE 4 Switzerland remains a long-term of second homes within any Swiss The Alps: Who can buy what, opportunity for investors. Although foreign commune. After a period of consultation, and where? purchasers are faced with a higher entry full details of the rule, which applies to cost due to the strength of the Swiss both residents and non-residents alike, Franc, the country still offers an unrivalled areAS expectedA NON-RESIDENT to be published within FRANCE SWITZERLAND level of privacyFRANCE andSWITZERLAND security. the next 6-8 months ending a period of uncertainty. FRANCE SWITZERLAND The availability of quality stock is at its No limit for Inevitably,Max Switzerland’s size? property market No limit EU residents highest for 3-4 years200 and sq m thoseof official wanting Where? Max size? 200 sq m of official Max size? No limit living space to sell are increasingly considering has been Nosubdued limit in200 the sq interim.m of official Few Max size? No limit living space have opted to purchaseliving unsurespace whether offers. Switzerland,“Holiday/Ski as a result, Zones”, may plus be “Holiday/Ski Zones”, plus 20% threshold for the closest it has beenLugano to and resembling Montreux. The a they would only be allowed“Holiday/Ski to Zones”, sell theirplus Lugano and Montreux. The No limit second homes 20% threshold for second No limit Lugano and Montreux. The 20% threshold for second AS A RESIDENT per commune property to permanent residents in future, buyer’sWhere? marketNo limit for homesseveral per communeyears. applies 20% threshold for second Where? No limit homes per commune applies Where? AS A NON-RESIDENT AS A NON-RESIDENT effectively halving theirhomes pool per communeof potential applies Two regulations operating in tandem have buyers. The result has been fewer AS A RESIDENT c. 250 sq m of stymied the Swiss property market. Lex transactions and modest price falls (see No limit FRANCE SWITZERLAND official living space Koller (in force since 1983) restricts where index results).FRANCE SWITZERLAND Max size? Max size? No limit No limit and what non-residents can buy, allowing No limit No limit “Holiday/Ski Zones”, them to only purchase in certain “tourist” Apart-hotels are one potential loophole. Max size? No limit No limit plus Lugano and Classified as a commercial interest, some No limit Montreux. 20% areas and up to a maximum20% threshold of for c.250second sq m threshold for second AS A RESIDENT owners could add a concierge, pool or Where? of officialWhere? livingNo limit spacehomes (figure per commune 4). 20% threshold for second AS A NON-RESIDENT homes per commune No limit 20% threshold for second gym and market their homesunits peras commune a serviced AS A RESIDENT Where? No limit homes per commune The introduction of Lex Weber in March apartment thereby bypassing the second Source: Knight Frank Research 2012, imposed a 20% cap on the number home cap. Demand for such properties is likely to strengthen.

FIGURE 5 Going forward, we expect some of the Purchase and sale costs compared smaller and less well-known Swiss ski Based on a non-resident purchasing a $1m property in Paris/Lake Geneva as a second home and resorts, where second homes are well owning it for 5 years* below the 20% threshold, to see above average price inflation as Lex Weber pushes buyers off the beaten track.

By spring 2016 we expect the Swiss market to be gaining traction. Greater certainty in the market will mean a return FRANCE** SWITZERLAND*** to a simple equation between supply and demand, sales volumes will increase but asking prices will not be as open to negotiation as they currently are.

France, too, is entering a new phase. Buyers who opted to sit on the side € € lines until the Eurozone crisis had run its course are now active once more, buoyed by low interest rates, the upturn % % % % in foreign demand due to the weak euro 7 4 3 5 and the recent low level of construction Purchase Sale Purchase Sale which has insulated prices.

With a general election in France Source: Knight Frank Research *Notes: Excludes Swiss residency costs. France example based on a resale property. Assumes 5% capital growth pa. Purchase costs include stamp duty, expected in May 2017 the country’s transfer fee, registration fee, legal fees where applicable. Sale costs include agent’s fees and legal fees where applicable.**Based on a resale property. ***Data corresponds to Lake Geneva adherence to its strict austerity

6 SKI PROPERTY REPORT 2015 RESIDENTIAL RESEARCH

programme is expected to wane, buyers FIGURE 6 are, as a result, looking more favourably Market indicators on France. The European Court of Justice’s ruling that France can no longer apply the so- called ‘social charge’ on rental income FRANCE SWITZERLAND and capital gains – a measure introduced Base interest rate 0.05% -0.75% by Francois Hollande in 2012 and which GDP growth, full year 2015 forecast* 1.2% 0.8% equates to a saving of up to 15.5% for Average annual wage 36,066 CHF 86,812 all non-residents – has fed through to € buyer sentiment. New construction volume Low Low Forecast growth in UHNW The number of sales completed in +14% +22% population 2014-24 Megeve in the first six months of 2015 was more than double the number Source: IMF, WealthInsight, OECD of sales during the whole of 2014. *As at October 2015 Chamonix has seen record prices achieved in price per sq m terms. a new Four Seasons Hotel open in commonplace and a large range of Where possible, especially at the top end autumn 2016 which will cement the non-ski activities on offer. resort’s reputation as a prime mid- of the market, buyers are using a level of We expect the Swiss to increase their altitude resort. debt against the property (in some cases market share in the French Alps over the 50%+) to help leverage any potential Chamonix, although still at heart the next few years. Outside the jurisdiction euro risk and reduce their exposure to true mountaineer’s resort, it has one of of Lex Weber, Swiss buyers can take France’s wealth tax. the largest resident populations in the their pick of the French resorts, many Megeve and Chamonix will see demand Alps (10,000+) which has enabled it to located within a 90-minute drive of strengthen further. Megeve, a resort raise its offer in terms of retail, sports Geneva and crucially find chalets at a developed by The Rothschilds, will see and amenities with luxury outlets now third of their own market’s value.

The rise of the year-round resort

Around 55% of Knight Frank’s buyers international schools, the provision of buyers to look instead at permanent are looking to rent out their ski home. non-snow activities (hiking, cycling, residency allowing them a greater Few (around 10%) are buying solely golf etc), as well as cultural and music choice in terms of properties, location for investment purposes; instead most festivals has led some second home and size. want their apartment or chalet to be cost neutral. Most owners in the French FIGURE 7 FIGURE 8 Alps aim to cover their taxe foncière Reasons for purchasing Year-round tourism and taxe d’habitation, the property’s a ski home Airport arrivals: Geneva and Lyon maintenance costs and ideally the 2013/14 vs 2014/15 13.0 flights and ski pass expenses for the13.0 family’s visit each year. 2013/2014 Winter = Nov to Apr 13.0 2014/2015 Summer = May to Oct45% 2013/2014 Winter = Nov to Apr 12.5 The latest passenger numbers from 12.5 LIFESTYLE 2014/2015 Summer = May to Oct REASONS 12.5 Geneva and Lyon Airports provide positive news for those looking to rent. 12.0 12.0 12.0 During the 2014/15 season the two airports cumulatively saw a million 10% 11.5 11.5 11.5 RENTAL more passengers arrive during the million INVESTMENT million summer months (May to October) than 11.0 11.0 they did during the winter ski season11.0 (November to April). 10.5 % 10.5 This deliberate re-branding of the 45 10.5 LIFESTYLE & 10.0 Alps as a summer destination is also INVESTMENT WINTER SUMMER influencing buyers in Switzerland. 10.0 10.0 Winter SummerThe increasing number of top Source: Knight Frank Research Source: Aeroports de Lyon and Geneve Aeroport WINTER SUMMER

7 GLOBAL BRIEFING For the latest news, views and analysis on the world of prime property, visit KnightFrankblog.com/global-briefing

RESIDENTIAL RESEARCH Liam Bailey Global Head of Research +44 20 7861 5133 [email protected]

Kate Everett-Allen International Residential Research +44 20 7861 1513 [email protected]

ALPINE SALES

FRANCE Roddy Aris +44 20 7861 1727 [email protected] Mark Harvey +44 207 861 5034 [email protected]

SWITZERLAND Alex Koch de Gooreynd +44 20 7861 1109 [email protected]

Alasdair Pritchard +44 20 7861 1098 [email protected]

PRESS OFFICE Astrid Etchells +44 20 7861 1182 [email protected]

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