Ski properties increasingly in demand from wealthy buyers

Ski properties are increasingly in demand among wealthy investors around the world who are competing for an asset which is in relatively limited supply, according to new research.

They not only have lifestyle advantages but also the potential for long term capital growth as the average price of ski homes around the world increased by 4.6% in the 12 months to the end of June 2013, according to the latest index from Knight Frank.

This means that ski properties outperformed luxury homes in many cities and popular second home locations around the world such as the French Riviera, according to the Prime Ski Property Index (PSPI) which tracks the price performance of luxury homes located across 18 ski resorts worldwide.

Ski homes in South Lake Tahoe in the United States and Queenstown in New Zealand recorded the strongest price growth over the period, rising on average by 20.9% and 18.6% respectively.

In Europe, the Swiss resorts of Zermatt and Davos recorded the strongest annual price growth, up by 14.1% and by 10% respectively. These locations were closely followed by properties in the resorts of Morzine and Chamonix which saw prices rise by 8.5% and 8% respectively.

Aspen in the United States and Whistler in Canada were the next best performing North American destinations having recorded growth of 7.4% and 6.3% over the 12 months to June 2013.

‘Ski homes are appealing to a growing pool of wealthy investors who are seeking a relatively finite asset, one with lifestyle advantages and the potential for long term capital growth,’ said Kate Everett-Allen, of the international residential research team at Knight Frank.

In previous years the PSPI results were relatively clear cut with Swiss resorts at the top of the rankings for price growth, the French Alps mid table and the North American and Russian resorts towards the bottom.

In 2013 however, the resorts and their respective world regions are interspersed throughout the rankings. Despite record snowfalls in the Alps during the 2012/2013 season, the volume of property sales in the Les Trois Vallées has been limited, partly due to tight supply.

‘The ski property market does not function along the normal laws of supply and demand. Ski property owners are usually discretionary sellers with no pressing need to sell unless the right price is achieved,’ explained Everett-Allen.

The index shows that a consistent performer in relation to price growth has been has been the Swiss resort of Verbier recording annual price growth of 6.2% and 8.2% over the last two years. However, even here the volume of prime properties sold declined significantly in 2012.

‘We expect sales activity to improve during the 2013/2014 season as interest in ski homes spreads beyond Europe and North America to emerging centres of wealth,’ added Everett-Allen.

Indeed, a Knight Frank survey of HNWI advisors recently showed that their Latin American clients were the largest owners of ski homes and there was significant appetite for a ski property amongst their wealthy Middle Eastern clients.

The venue for the 2014 Winter Olympics, the Black Sea resort of Sochi in Russia, has seen a small rise in prices, up 1.3% in the 12 months to June. The decision to host the games in Sochi was announced in 2007 and the following two years saw residential prices rise by 40% to 50%.

‘However, the global financial crisis has weakened demand and prices are expected to remain relatively static in the run up to the Winter Games in February 2014,’ added Everett-Allen.