How has a leading ski resort really fared during the economic crisis?

Ski property thoughts in the recession …

Joanna Yellowlees-Bound, CEO of Erna Low Property, takes a look at Arc 1950, an example of a village that sold spectacularly well in the peak of the market, and how it is faring in the hard reality of the recession.

Arc 1950, the 4* village in the French Alps illustrates well how the economic climate, the euro and other factors have affected the alpine property market in recent years. Made up of 8 residences, Arc 1950 was launched for sale over 6 phases with the first properties released for sale in 2002, five years before completion. Prices started at around 4,000 euros per square meter and rose as the phases one-by-one sold out and reached their peak with the last phase at over 9,000 euros per square meter. The knowledge that off-plan was the best way to save on the property price was widespread but once people could really see what they were getting was real North American luxury, rather than French shoe boxes, the clamour began. Clients fought over the apartments and deposits, reservations and contracts came in thick and fast. All 750 apartments sold out by summer 2007 (70% being British owned) in time for the village’s overall completion for winter 07/08. It was the real glory days for developers and agents alike with a strong high pound and bright economic outlook - investors were hungry to buy and confidence was at its highest. At one release, there was actually a fist-fight, people were so anxious to get on board.

Today, as we enter the second year of the credit crunch, the atmosphere has changed completely. The village is spectacularly successful from the tourism perspective (for example, Radisson SAS, the village’s hotel, is proud to have been ranked second in the Top 10 French hotels favoured by skiers run by Tripadvisor®) and it has become an icon in the Alps - but the property market is in disarray worldwide. How has this affected the real estate in the village?

L-R: Nightfall reveals the village heart at its best, Savoyard façade detailing adding warmth and colour; apartment units are styled to resemble individual chalets.

Since Arc 1950’s overall completion, we have seen a new wave of clients emerge. Today´s clients are nervous. The feel-good factor has gone, they do not want risk or uncertainty. They do not want real-estate speak. They want to see exactly what they are getting. Something finished, something as good as new, sound management, the right attitude, ski-in ski-out, and something they know they can sell quickly if their fortunes change. Clients are seeking the security of investing in a completed property with the systems (management companies, facilities…) already in place. Attitudes have shifted to wanting ready-made rather than off-plan. For this reason, Arc 1950 is proving popular even in this climate as it is an established resort and all up and running with excellent occupancy.

See Also...
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In autumn 2007, Erna Low Property took over the handling of the resales market from the Canadian developer, Intrawest, and we became the official agents for the village, opening an office in the centre of Arc 1950 having been granted the ‘carte professionnelle’, the notoriously hard to obtain real estate agent’s license to operate in France. The office helps cater to the international market who are hesitant in purchasing off plan properties, and many French are buying - always a sign of confidence as they tend to wait and see before they buy.

As with any completed development, 5%-10% of owners will be seeking to sell. In the past, this has been driven by what we call the ‘3D´s’- debt, death, divorce. But over the last twelve months, another factor has burst upon the scene: job loss. This has changed everything because it is a market driven by urgency and despair - people in tears call in, “how can you sell?” As a result, prices of virtually new, top-end properties have plummeted - although this crash is not expected to last and people need to act very fast if they want to secure their apartment before prices start the inevitable rise and begin to stabilise. Never in my thirty years of the ski industry have I known opportunities like this. Bargains are flying out, but interestingly it is largely the French rather than the British who are snapping them up. Because of the recession, the British, even if they can see a bargain, are dithering - while the French are exploring recent tax breaks to score as never before. To see the full selection of apartments for resale (studios up to four bedroom apartments), click on www.ernalowproperty.co.uk/arc1950

Example: an apartment in the final phase of the village when prices were at their peak. It is a one bedroom apartment measuring 42msq, west facing. It was originally sold (in 2007) at €285,000 and is now on the market for €189,000, offering a saving of over 30%.

In contrast, off-plan has been given a boost to French investors with the newly introduced Loi Scellier. This government backed plan offers tax breaks on off-plan property purchase to French residents. However, paradoxically it means that developers can inflate their prices and French off-plan properties have now become less attractive to British and international buyers (who are also fighting against a challenging exchange rate). Arc 1950 is in a more favourable position to consider offers from the international market and makes it a more attractive option for all with much more realistic prices for everyone.

For those buyers waiting for the best-ever bargain, now could not be a better time to seek out their perfect property at Arc 1950. With savings of up to 33% on the original sales price, potential buyers are in the best position to grab a bargain. We do not expect the prices to remain this low for long - it is simply a reflection of the world wide market, and we expect them to buck higher then stabilise next year - so our advice is to buy now at recession prices and be ready to occupy your apartment for the next ski season.

Joanna Yellowlees-Bound, October 2009