Is investment in Alpine real estate a lucrative option?

Wengen, Switzerland (Reuters)

Ski homes in the Alps witnessed an average price growth of 19 percent over the past decade. In fact, the region outperformed average returns from prime properties in Tier-I cities such as Geneva (19 percent), Mumbai (13 percent), Monaco (-11 percent) and St Tropez (-22 percent), a report found.

“Prime ski homes offer capital value comparative to prime residential properties in global cities. From a long term outlook, Alpine investment is a lucrative asset class for Indians looking to diversify their portfolio and invest in a safe currency,” Shishir Baijal, Chairman and Managing Director at Knight Frank India said.

Knight Frank’s Prime Ski Property Index showed the price of a centrally located four-bedroom chalet in the French and Swiss Alps, increased by 1.4 percent year-on-year (YoY) in the second quarter (Q2) of 2019.

Since 2008 the index provides an overview of prime market conditions and tracks prices across key resorts in the French and Swiss Alps.

Val dIsere in France leads the index, with an annual price growth of 2.9 percent in the year to June 2019, followed by Chamonix (2.6 percent) and SaintMartindeBelleville (2.4 percentat the second and third positions.

Easy accessibility, low mortgage rates, hassle-free rental, stable or rising prices, market liquidity to facilitate their future exit strategy and currency advantage are major factors facilitating growth, the report said.

Wealthy Indians from London and Dubai target the premium luxury markets in the Alps, favouring Courchevel and Megeve, for the quality of the services in these resorts, besides the restaurants and shops on offer.

Courchevel 1850 saw a price rise of 1.8 percent YoY in Q2 2019 with a price of Euro 26,000 per sq m. Price remained constant for Megeve at Euro 13,700 per sq m.

In terms of the investment class, KF Prime Ski Prime Index (1.4 percent) performed better than furniture, which gave 1 percent YoY return in Q2 2019, cars (-5 percent) and jewellery (-7 percent), the report added.

According to Knight Frank Wealth Report 2019, 18 percent of wealthy Indians look to emigrate to another country permanently. Of the total, 3 percent are considering Switzerland and France each; formulating a latent demand for prime residential properties, including ski resorts.

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