Feb 08, 2020 / INVESTMENT / CURRENCY / BUYING

Diversify your investments with a ski property

We explore how a ski property could be a good opportunity to diversify your investments and spread currency risk.

Buying a property to rent out – either full-time or when you’re not using it yourself – is a big investment, and one you want to be as confident as you can be that the risk is not high. While there is always the potential that an investment will go up or down, one method that you can use to control the risk is to diversify your portfolio – and a ski home could be an excellent way to do so.

Diversifying your property portfolio

The idea behind diversification is simple – it essentially comes down to the old adage of not putting all your eggs in one basket. If all your savings, especially for large investments, are concentrated in one place, then there is a greater risk of an overall loss. One downward trend would impact your investments all at once.

Chalet in Verbier. Click on the image to view the property.

At ski property could be the perfect choice to spread your risk, whether that’s between currencies, markets, letting periods or more. Here’s how.

Spreading currency risk

First off, depending on where you’re based, a ski property could give you an asset in another currency. The Swiss franc, for instance, is largely considered a safe haven – so a Swiss asset might be a good counterbalance to assets in riskier currencies.

If your assets in one currency fall in value, that won’t necessarily be the case in the other currency. In this way, while the risk of the exchange markets remains, you have managed to spread it somewhat.

Three-bedroom chalet in Andermatt. Click on the image to view the property.

If you can also secure yourself a fixed exchange rate for sending the income from the asset’s currency to your home currency, then you’ve doubled down your protection against risk. Imagine that you receive the same monthly rental income in euros, or francs, but you want to spend it in pounds. You need to transfer that income every month – and, without a fixed exchange rate, its value will end up changing every time you transfer, making it impossible to budget. This is something we discuss at length in the Property Buyer’s Guide to Currency: download your copy today to find out more.

Tapping into a different market

If you already have a rental property, the chances are that it’s in a very different markets to the ski world, whether it’s a long-term residential flat, or a holiday home in a sunny hotspot like the Mediterranean.

A ski home means you don’t just spread the currency risk, but you also enter a different market with different demand swings and demographics. The ski ‘high’ season, for starters, extends across the months that would typically be ‘low season’ in much of Europe. In other words, you could balance out your rental income, with higher rents on a holiday property in the summer and higher rents on a ski property in the winter. Likewise, if you buy in one where you have a good record of dual seasonality, you could also attract the separate market of hikers and bikers in the summer months.

Fifteen-bedroom residence in Alta Badia. Click on the image to view the property.

Likewise, the demographics of skiers shows a growth in Chinese tourists, providing a huge and largely untapped market. European skiers, too, tend to have a broader demographic profile than those renting holiday homes in Spain or France, with more in lower age ranges and with higher disposable income.

Getting started

To get started with your purchase, download your free Buying Guides today, covering the key points of the purchase process, legalities and more for all the major skiing countries.