UK buyers have naturally been cautious in recent months about committing to substantial expenditure on property assets abroad. In July this year, sterling hit a 10-year low against the euro and the dollar and an eight-year low against the Swiss franc.
With such recent volatility, the FX rate for both vendors and purchasers is often a key factor in deciding whether or not to buy or sell. Correctly navigating the FX markets, or trying to second guess them, is a little akin to punting along a river with each foot in a different boat. At some point, the river splits and one has to decide which boat to put both feet in.
We have many clients with assets they wish to dispose of in both the French and Swiss Alps and a commitment to sell when sterling is at its weakest point in a decade could net a 100 per cent currency gain in the latter case. And yet, with Brexit uncertainty, some clients have chosen to maintain exposure to the euro or Swiss franc, until they have greater visibility of the UK’s future trading relationship with the EU.
Meanwhile, we are pleased to report that the Alpine property market does not freeze just because of Brexit. Domestic buyers in France have been keen to profit from the lack of British purchasers and have been eagerly acquiring new build apartments in Val d’Isère, where prices are up 61 per cent in five years, and in Morzine and Les Gets, in the Portes du Soleil, where prices are up an astonishing 70 per cent in the same period.
Buoyed by the strong Swiss franc, Swiss buyers have also been active in the French Alps, picking up comparative bargains across the border in resorts such as Chamonix and Megève. Belgian and Dutch buyers are also active in France, unfettered by any exchange rate dilemmas.
In Switzerland, foreign transactional volumes are down across the board, largely on account of the continued strength of the 'Swissy'. As in France however, domestic buyers have been taking advantage of the lack of overseas competition and using the opportunity to negotiate in a relatively uncompetitive market. Prices are nonetheless up by an average of 21 per cent in the ever popular resort of Verbier during the last five years.
Smart money from British buyers has been focused on the Austrian Alps where returns remain almost double those of either Switzerland and France. There is still no certainty that British buyers will be allowed to buy in Austria post Brexit. Kitzbühel and surrounds are particularly popular at the moment, given the year- round lifestyle, build quality and comparative affordability relative to the big name resorts of France and Switzerland. Gross rental returns of in excess of 5 per cent in Austria are easily achieved.