Buying a Property in a Winter Sports Resort

Introduction

Not so long ago, skiing and other winter sports were pastimes reserved for celebrities, the royal family and the very rich, who frequented resorts like Gstaad and Klosters. In recent years, however, there has been a quiet revolution. The exclusive resorts are still there, but the expansion of no-frills airlines and the emergence of new, mass-market destinations, among them Eastern Europe, have made winter sports available to a much wider public.

Such is the worldwide popularity of skiing that new resorts are opening all the time, some in less-than-likely places. Even Dubai now has its own ski resort – surrounded by desert.

More than a million British people now flock to the slopes each winter, and the number is growing steadily. However, the cost of skiing holidays is still comparatively high, especially if a whole family goes together – another trend that is on the increase. This has led some to decide to buy their own ‘place in the snow’. Rather than choosing the traditional-style detached chalet, many are opting for an apartment in a new or developer-renovated complex.

Another inevitable consequence of the increasing popularity of skiing holidays (and the associated desire to economise on hotel costs) is a rising demand for rented accommodation in many resorts – good news for purchasers who plan to let their property when they themselves are not using it, or those buying purely for investment. In Europe, ski properties offer some of the best rental returns available, though this naturally varies with area and the type of property. In general, new-build and developer-renovated properties are among the highest earners.

Like any other property purchase, buying a home in a ski resort is a major undertaking and requires thorough groundwork. This fact sheet provides a place to start by suggesting some of the factors to consider. There are many resources to help with further research, among them television and radio programmes, books, magazines, the Internet and property exhibitions, as well as estate agents and developers, both in the UK and abroad.

Deciding where to buy

Start by deciding how you plan to use your property. Your requirements may vary depending on whether you want a second home for your own use during the winter, or whether you want to maximise rental income.

It’s all reasonably straightforward if you’ve fallen in love with a particular resort and want a base there, for your own use. If you haven’t yet decided where to buy, or are investing for rental income or capital growth, research will be necessary.

As with most property purchase, there is a delicate balancing act to be done by anyone with a less than A-list budget. A property with ‘ski in, ski out’ access in a high-altitude resort where first-rate skiing is guaranteed is everyone’s dream, but, in many areas, prices increase with altitude and you may find better value slightly lower down.

You may decide that the best way of maximising both your own enjoyment of the property and the amount of income you can earn from it would be to buy in one of the increasing number of all-season resorts. There’s more about this in our All-season resorts section.

Below, we look at some of the winter sports locations most popular with British purchasers.

Western Europe

Western Europe is traditionally the region of choice for Britons buying ski properties, France being the most popular country, thanks to its easy accessibility and the quality of its resorts. It is estimated that more than 70 per cent of homes in the French Alps are now British-owned.

Italy has also been popular for some time, and EU integration has opened up more possibilities to foreign buyers, who have only recently been permitted to buy property in, for example, Austria. Switzerland has also relaxed its rules on foreign ownership, but these vary from canton to canton, so be sure to check thoroughly if you’re considering buying there.

Surprisingly, Switzerland, generally seen as an expensive country, is widely considered to offer better value than France at the moment, and it is still possible to find traditional-style Alpine villages that are not too commercialised.

Western Europe’s popularity as a skiing destination has led to a shortage of suitable properties, which in turn has resulted in high prices in the most desirable resorts. However, more affordable alternatives still exist, with resorts a short drive from the slopes tending to offer the best value. Alternatively, consider a village close to a larger resort. You can enjoy all the atmosphere and facilities of the larger place, then retreat to the peace and quiet of the smaller one.

Take, for example, the exclusive resort of Gstaad and its smaller neighbour Zweisimmen, a traditional Swiss village. A chalet in Zweisimmen, only 15 minutes from Gstaad, can be acquired for half the cost of a comparable home in the larger resort, enabling the purchaser to enjoy all the advantages of a more intimate resort with easy access to the bright lights of Gstaad.

Eastern Europe

If Western Europe is the traditional frontrunner in the winter sports stakes, Eastern Europe is coming up fast on the inside, with countries like Bulgaria, Slovakia and Slovenia showing huge growth in house prices, thanks to investment in facilities and infrastructure and improved transport links, including low-cost flights. Being far cheaper than their Western European neighbours, these eastern countries are attracting a whole new clientele to their slopes, particularly those looking for a family holiday at a realistic cost and/or a promising investment.

Bulgaria is scheduled to join the EU in 2007, a fact that has undoubtedly influenced its emergence as an international property hotspot. In 2004–5, properties in its winter resorts outperformed all other ski destinations worldwide in terms of capital growth. Bulgaria’s bid to host the 2014 Winter Olympics will undoubtedly lead to further price rises, particularly if it makes it onto the shortlist, due to be announced in June 2006.

The country’s most established winter resorts are Pamporovo and Borovets, but Bankso is proving increasingly popular, and prices there have increased significantly since 2003.

Located at the foot of the Pirin Mountains, within a national park, Bankso offers ever-improving ski facilities and other leisure opportunities, both sporting and cultural. Its ski season is particularly long, starting in mid-December and ending around mid-May. Snowfall is abundant (up to 2m), and the resort’s well-maintained ski slopes and facilities are suitable for different levels of skier. Recent infrastructure improvements have included the provision of ski lifts and a gondola station.

Nightlife, too, is plentiful. Traditional taverns and inns abound, but the number of contemporary-style clubs is increasing.

Daily flights from a number of UK cities to Bulgaria’s capital, Sofia, around two hours’ drive away, make Bankso easy to get to. A new dual carriageway, currently under construction, will shorten the journey time further.

Only 10 minutes from Sofia, Vitosha, which until recently lagged behind other Bulgarian resorts, is fast catching up, as a result of significantly increased investment in facilities and infrastructure, fuelling speculation that property prices may be about to increase dramatically.

Canada

If you’re considering purchasing in Canada, travel time and cost will probably govern your choice of location. These will vary considerably depending on whereabouts in the UK you live, but you are unlikely to be able to pop across for the weekend.

Canada’s government has invested vast amounts in tourism, particularly in the east of the country, which until recently was largely neglected as a holiday destination. Prices in Eastern Canada are still around 40 per cent cheaper than those in Western Canada, and of course travel times are significantly shorter.

Partly as a result of the increased investment in tourist infrastructure, resort developments are now big business. They are attracting an increasing number of British purchasers, many of them younger than the traditional second homebuyer. In some resorts, more than half the buyers to date have been British. Easier travel and increasing coverage by low-cost airlines are attractions, as is the fact that Canada’s international homes market is still young and developers wanting to appeal to British buyers therefore have to provide good value. For skiers, the absence of crowds and the relatively low costs are added inducements.

Most of Canada’s resorts are now billed as all-season and provide facilities for all ages. This helps to extend the rental season and attract a wider range of purchasers – and tenants. Build quality is generally high, maintenance is taken care of by a management company, and capital appreciation tends to be excellent, particularly in the east of the country.

For those wanting to go west, the British Columbian village of Whistler is consistently ranked as one of the world’s leading ski resorts, with first-rate facilities, lively nightlife and varied shopping. Property here is already among the most expensive in Canada, and the fact that Whistler, with its neighbour, Vancouver, is to host the 2010 Winter Olympics, will lead inevitably to further price rises.

Transport links with the UK are improving. There are direct daily services from London to Vancouver (flight time approximately nine hours and 30 minutes). Zoom Airlines, which provides two flights per week to Gatwick and one per week to Glasgow and Belfast, plans to introduce services to other UK airports.

The Rockies is another popular area, but property there can be pricey, and, depending on location, is often out of bounds to foreign purchasers. An area worth considering is Canmore in Alberta, on the fringe of the Rockies. Given that it is next to the Banff and Kananaskis national parks, only an hour’s drive from Calgary’s international airport (flight time to London approximately nine hours) and in a temperate climate zone, it is no surprise that Canmore has doubled its population since it hosted the Winter Olympics in 1988. Prices are relatively low, but increasing, so it may well be an area in which to consider investing.

What if it doesn’t snow?

When selecting a ski resort, whether for a holiday or for property purchase, the amount and reliability of snowfall will be of paramount importance, affecting both your enjoyment and potential rental returns.

Today’s resort operators are more fortunate than their predecessors, state-of-the-art snowmaking technology allowing them some control over the quantity and quality of snow, even when the temperature is slightly above freezing.

Some areas (for example, eastern Canada) offer abundant and reliable natural snowfall. If you are considering a purchase in a resort where the weather is less dependable, it is wise to check that there is provision for providing artificial skiing conditions should occasion demand.

Bear in mind that there can also be the opposite problem – too much snow. Of course, freak conditions can happen anywhere, but over-abundant snow is more likely in some regions than others, so ensure you do your homework.

Maximising rental returns

The number of weeks per year for which a property can be let is the key factor in achieving good rental returns. In the case of a resort that only offers winter sports, with a limited range of summer activities, the letting season is usually relatively short, though it may well be lucrative. Remember that if you want to use it yourself during peak season, your rental income will plummet.

Bear in mind also, if you plan to finance your purchase through a mortgage, that some lenders do not take projected rental income into account when deciding how much you can borrow. And don’t forget that it usually takes at least a couple of seasons to build up business.

Choosing a property in a location that has good travel links with all parts of the UK, not just where you live, will maximise rental potential, as will analysing what sort of tenant is suitable for your property and marketing it accordingly. Are you aiming at families, older couples, or footloose-and-fancy-free young people in search of lively nightlife? The answer will have a huge influence on the type of property you buy, and where you buy it – always assuming, of course, that you are not viewing the property primarily as a second home for yourself.

Guaranteed rental schemes

Some resorts now offer guaranteed rental schemes, under which the purchaser of a new-build property authorises the developer or management company to let his property on his behalf for a fixed period (generally the first two years of the property’s life), in return for an agreed percentage of the rent. Though the rates offered are often on the low side, such an arrangement can benefit the buyer, as it not only guarantees him a certain level of return but also saves him the trouble of letting and managing the property himself in the short term.

Variations on this theme include the rental pools run by some resorts, which enable owners to use their properties for an agreed number of weeks per year and the developer or management company to let them for the rest of the time. The rental income from each property is placed in a central fund that is divided between the owners and the resort. The owners’ percentage is split between the different owners according to certain criteria (usually size of property, amenities and location), so that even those whose properties haven’t been used in a particular week are still entitled to a share.

This guaranteed level of income can be helpful with budgeting, but bear in mind that you will probably be required to choose your weeks well in advance, so you won’t be able to take spontaneous holidays.

All-season resorts

To maximise both your own enjoyment of your property and potential rental returns, you may want to consider purchasing in one of the increasing number of resort developments described as all-season, where, in addition to a range of skiing and winter sports facilities (often wider than those provided in traditional resorts), activities such as golf, tennis, swimming, fishing, riding, water sports and mountain biking, among others, are offered. Such add-ons as luxury spa and health facilities add to year-round appeal.

This may sound ideal, but remember, it’s hard for any resort to be entirely four-season. During a thaw, for example, you can’t ski or play golf. At some times of year, it will be too cold for golf, but there won’t yet be snow.

Do your homework. Visit at different seasons, to see how busy the resort really is, and ask the developer to show you occupancy figures from similar developments.

© Copyright Buy Associates Limited 2006