Mark: Welcome to episode six of the SnowOnly Property Podcast. We are delighted here today to have Alex who is Senior Advisor for Athena Advisors. Alex, welcome to the SnowOnly Property Podcast.
Alex: Hi, Mark.
Mark: So what we're going to do today, we'll go through a nice series of questions for you. I'm sure anyone that's listening would love to hear your answers. So I think we just start off nice and easy. And if you just give us a bit of an introduction about yourself and about your company, and what you specialize in.
Alex: Yeah. Thanks, Mark. We are Athena Advisors, headquartered in London. We have satellite offices in the areas that we work in. So that's predominantly France and Portugal. I guess our real focus is working with [real estate] developers on new build projects, and really creating a sort of a one-stop shop. So this is for people/clients buying into for both France and Portugal, and giving all the necessary advice that's required, whether it be the right projects, the right locations or working with the right banks. We have an in-house finance team and also a client relations team that deal with all the contracts. It's something that we've been doing for over 15 years, and it seems to be working pretty well so far.
Mark: As we said, pre-recording, you said you are Advisors and not salespeople, which is obviously very important. So you guys have knowledge, right? So you have people calling you up just to get advice, predominantly on ski properties. And you have the experience, right?
Alex: Yeah, that's right, Mark. I mean, we're a team that's headquartered in London. Most of the time a client will come to us with a specific requirement, whether it be buying into Paris or buying into the French Alps or buying in Portugal. The bulk of our revenue comes from the French Alps, and that's really where we started. It's just a case of listening to what the requirements are, and we're not tied to any particular resorts or any particular project. We're really there to listen to what the client wants, and what they want to get out of the purchase, whether it be an investment, whether it be a mixture of an investment and lifestyle purchase. And depending on their budget and the number of bedrooms they're looking for, and the type of resort that they want to be in, it's up to us to find, and put them into contact with the right projects and the right resort.
Mark: That's really interesting, Alex. So as you said, predominantly, you deal with new builds and not resales, right?
Alex: Correct, correct.
Mark: So if someone was going to come to you and say, “I'm after this criteria of property in any particular location”, you will then go and find the property in that location?
Alex: Yeah. As I said before, we're not tied to any particular projects. Let's take a ski resort, for example: there are at any given time, a certain number of projects that are being built. For the most part, we will have contacts with those developers that are building them. And then it's a question of finding the right ones, making a shortlist. And then, we also have Charles-Antoine who's based in our Annecy office, and he will meet our clients on the ground. And something that's very useful for people to do when they are buying off plan is to actually go to the location and see it yourself and meet Charles-Antoine, who's extremely experienced in that regard.
Covid has meant that this has shifted somewhat. And we're extremely surprised to see that a lot of our sales now are being done remotely. So this is a video call with Charles onsite in a resort selling a project to someone in another part of the world. Over 70% of our sales last year were done in this way.
Mark: That's incredible.
Alex: Yeah. It's incredible to see how we've adapted and how the market has adapted and also how the clients have adapted because clients are now happy. If they know the resort well and they know what they're looking for, it's quite easy for them to make a decision on that basis. And we're very surprised how well it's worked.
Mark: Do you find predominantly that people will always buy in resorts that they are familiar with?
Alex: It's actually a big mixture, really. You will have clients that will want to buy one resort That obviously makes it easier, because they're already quite focused. And in that that sense it's easy for us to point them in the right direction, depending on what they're looking for. You will get other clients who have a budget, and they want us to suggest to them the potential resorts that might be interesting for them to look at. And again, that's something that we can do. So we get all types of clients and we're very used to dealing with that.
Mark: You only deal with new builds. Explain a little bit why you do that and why you don't do resales. What are the advantages for a buyer with a new build property?
Alex: I think maybe unlike other areas outside of the French Alps, new builds are a really good fit for alpine property. The types of materials that are being used at the moment, whether it’s wood or stone, in the new builds that are being built at this point in time are often a lot nicer than the existing stock. So straightaway when you're looking at new builds, for example, in the coastal south of France or new builds in Paris, it's not really comparable because they'd probably be not as desirable. Whereas in the French Alps for sure new builds really hold their own.
Also, there are advantages to buying new builds from a rental perspective, as the yields can be more attractive. And definitely to rent these properties will be easier because of the way they look and the way they present. Also from being able to influence the layout if you get in early on a project and you're looking at floor plans, you can discuss with the developer as to how you want the layout to be and also the interior finishes and that thing. So again, you can really tailor it to what you're looking for and make it more personal to you.
There are also guarantees on the build. French law means that there's something called the Garantie Decennale, and that's a 10-year guarantee on exterior elements of the building, which is obviously nice from a purchase point of view, that if anything goes wrong then you know you're covered. With regards rental, if you are actively looking to rent your property, there is the ability to reclaim the VAT of the purchase price.
It's also cheaper a purchase price to buy new builds. Your equivalent of stamp duty, which on a resale will be between 7 or 8%, on a new build will be normally between 1.5% and 2%.
Mark: Wow, that's quite a saving. I'm interested in the evolution of new builds in terms of meeting demand. Is it essential now that everyone has a gym, a pool, a spa, all that stuff? What's the next fad that's going to come now that will meet the demand?
Alex: Hot tub are very popular.
Mark: Yeah, I bet.
Alex: No. Actually, people love facilities for sure. And we do have projects that have spas and swimming pools. The one thing I would say is that the co-ownership charges, which are like service charges, tend to be higher with those types of projects. It is a bit of a balancing act in the sense that you have some clients that are willing to pay those high service charges in order to get those facilities. However, you get others that are maybe less inclined to want to go down that road. Especially French clients, I would say, they don't really like high service charges.
So what we sometimes say to clients is “look, even if there aren't the sort of facilities like a swimming pool, if you do have, let's say a swimming center within the resort, or a gym in the resort, it's sometimes also good to look along those lines rather than having to pay those high service charges”. What we are also seeing quite often at the higher end of the scale in terms of budget, saunas and hammams and that thing that have been put into apartments; actually built into the apartments. And then obviously high on the wish list are things like fireplaces, hot tubs on the balconies…
Mark: Do you think that actually has an effect on sales when you add on all those kinds of things? Is it easier to sell a property with all those things included?
Alex: Yeah, for sure. I think from a rental point of view, it makes a big difference. And I've have read crazy statistics where when you have a hot tub on your balcony, your rental price can go up by 20% or the desirability of your property suddenly becomes a hell of a lot more desirable. But I think new builds that can offer balconies, fireplaces, facilities, parking for sure, indoor parking like underground parking…
Mark: Parking is quite the big one, right?
Alex: …parking is hugely important. And there's very few new build projects now that don't have underground parking. For sure all those things make it a more desirable property.
Mark: Let's cover the 20% rebate. And maybe we can do another podcast so we can go into this in a little bit more depth. But for people that don't really understand the 20% rebate on new build properties, can you give us a bit of a summary of the advantages of it?
Alex: Yeah, sure. This was something that was put in place by the French government. Their biggest nightmare is for people to buy apartments or chalets, go there once a week, leave them empty, and therefore there's no one skiing in the resort. There's no one using the restaurants and no one buying lift passes. And it's just not a good economic model for them. So what they put in place in order to encourage people to rent their properties is the ability to reclaim the VAT off the purchase, which roughly comes out to 16% less the purchase price. This is something that you can do as a buyer if you actively rent your property. That's basically both signing a commercial lease with a local management agency and putting up your property for rent. That would be for at least I would say two months with the winter season and a few weeks in the summer too. This is something that you have to continue doing for a 20-year period.
If for whatever reason, after let's say 10 years you wanted to stop renting, you would need to pay back pro rata the amount of VAT that you'd saved. And so in simple terms, if you'd saved 100 Euros in VAT and you stopped after 10 years, you'd have to pay back 50 and you could keep the remaining 50 because you'd rented for 10 years.
Now, we at Athena have a client relations team that handle the whole process. It's fairly complicated to do on your own. I mean, it is possible to do on your own, but it's much easier if you go through someone like us. And actually, if anyone wants more information on exactly the mechanics of how it works, then by all means get in touch with the Athena Advisors Client Relations team, you can do this via our website. That's very easy to do. And we can explain in more detail how it works.
Mark: Good advice. How does this have an effect on resales? If you’re locked into 20 years of the lease agreement for the rentals, I assume there are no issues if you want to resell it. Because when you're selling it, the idea would be to sell it at a higher price than you bought it for.
Alex: Either the person buying it takes on the lease or if you're reselling it, then if they don't, you have to then pay back pro rata to the amount of VAT that you saved. So it's as simple as that, really. It's something that I would say a lot of our clients look at. It's interesting to do even if you do think that after five years you don't want to rent anymore, at least you lock in five years of VAT saving. It's up to you really whether you want to do the full 20 years. And I would say the vast majority of our clients rent their properties. There are very few clients that don't rent in the Alps. It's definitely something which goes into the investment case of buying in the Alps. I would say definitely a mixture between investment and lifestyle.
Mark: So you mentioned Covid before. (We don't really like to deal with it too much, but obviously we all know what's going on in Europe recently). What effect has that had on the business?
Alex: When this all started in March 2020, our feeling was pretty negative when it came to what we were going to do as a business. I mean, obviously selling chalets and apartments in the French Alps with the ability not to travel. Our business, you know, it wasn't looking great. Things did slow down but for a very short period of time.
And very quickly after that, as I hinted at before, the ability for people to adapt and to get used to working via Zoom and also doing visits on video really, really surprised us. And we had a busy 2020, and 2021 has been has been a record year for us. I would say that in some instances, Covid, and probably we're not the only business to see this, but has really boosted our business. Building in the Alps has exploded. The number of projects that are being released is extraordinary. And I think maybe people's attitudes at the moment are: “Life is short. I've been thinking about this for a while and now's the time to move”. And we're definitely seeing a lot of interest. And it's very, very busy. I mean, our bread and butter has been UK clients buying into the French Alps. But now increasingly, we're seeing a lot of Dutch, a lot of Scandinavians, and even some US clients, which we'd never had before. And we're even seeing US clients interested in buying in the French Alps, which is surprising.
Mark: Just for anyone that's listening and thinking that Alex is going on a bit of a sales pitch, I can completely concur with what he's saying, because we've seen exactly…
Alex: I'm an advisor, not a salesman!!!
Mark: Yeah, yeah, that's very true: Advisor. Yeah, we've seen a lot of increase from America for the Alps. The amount of inquiries and page views has gone through the roof. And I think, as you said, the desire for people to be in the mountains has grown so much stronger despite the lack of travel. And the fact that you're saying that 70% of people have bought through Matterport with those 3D images. And we've seen an incredible amount of demand come. So, if there's anything positive to come out of Covid, it's there's definitely a desire to be in the mountains, that's for sure.
Alex: Yes definitely. And I think that need for space and nature, across the board within the real estate market is what everyone's saying. So obviously, the French Alps has benefited from that. But even in London, for example, apartment prices with no balconies and no outside space have suffered. But then family houses with gardens or any outside spaces, and the country market in England is exploding as a result of that too.
Also just on the remote working bit, I think that's also really going to change things quite a bit when it comes to ski resorts. I already saw that when I skiing over Christmas and New Year. In the resort that I was in, I think now more and more people are not just going on holiday but they're either living there or they're spending extended amounts of time in the resorts. And that's because people can now work remotely, so they don't have to necessarily commute back and forth, but they can actually spend two or three months with their family and live there.
Mark: I think with skiing in general, there're so many things that are driving people to the mountains at the moment. I think that's such a good thing.
So you touched a little bit about UK buyers. I assume before, you were heavily reliant in the French Alps for UK buyers, but now that seems to have fundamentally changed?
Alex: Yeah. UK clients are still extremely strong buyers in the French Alps, and that's historical. I mean, since we started the business 15 years ago, and with our headquarters in London, the UK element is very important. I would say that since Brexit there have been some complications as to UK buyers buying into France, and that's definitely on the finance side of things. French banks are becoming a little more conservative when it comes to lending money to UK buyers.
As I said before, we have an in-house finance team that work with a panel of banks, so it's definitely keeping them busy. And I would encourage any of your listeners if they wanted more information on the finance side of things, then our sister company French Private Finance, they're very interesting and useful. And Matt who runs that is very happy to discuss any questions that your listeners may have.
But UK clients still very important. Obviously from our point of view, French buyers also have been very active. And with very low interest rates and borrowing rates low at the moment, borrowing money is easy, or is cheap in France, so, French buyers have been very active.
We're always looking for new for new clients, and we're not restricted by territory. We have partner agents that work in Scandinavia and that work in the Netherlands and we're seeing an increased interest from them.
Mark: We will include links for French Private Finance and Athena Advisors to the description of the this podcast in SoundCloud so you can speak to Alex and anyone else that can help.
Just segueing a little bit, in terms of opportunity in the French Alps at the moment, where do you see it? Any resorts that are up and coming that you're looking at or any particular properties that are of interest?
Alex: The resort that we've loved for a long time, and in fact, we ourselves are starting to develop our own projects in this resort is called Chatel. It's part of the Portes Du Soleil area.
Mark: The last time I went skiing was there.
Alex: Really? Good. Did you like it?
Mark: Yeah. I really, really loved it. Yeah, super good!
Alex: It's a little hidden gem. It's definitely becoming much more popular. When we actively started selling in Chatel around five years ago, it really was pretty unknown. The investment case there has been really strong because prices per square meter have increased over that time. So, the first buyers have done some good deals. And it ticks all the boxes. It has good views. It's about an hour and 15 minutes from Geneva, so the connectivity time is good. It’s part of a big ski area. It's retained its small Alpine charm. So it's still like a farming village with people that live there year in, year out. It's not too much like a holiday destination with people coming in just for one week and leaving and with no soul.
We've already developed a chalet project there, which was a plot of land which consisted of two chalets that we built. And we're now working on another project, which is a small collection of apartments and also semi chalets and detached chalets. So that's definitely an interesting one to look at.
I have another resort that has a lot to offer at the moment in terms of new projects. Again, it's close to Geneva and part of the Portes Du Soleil ski area. Les Gets. I would say Les Gets: dual season, so very strong in the summer, a lot going on in the summer with mountain biking and rafting and golf and everything that you could want for the summer. And then obviously the winter, part of the Portes Du Soleil ski area, so massive ski area.
The interesting thing about Les Gets also is the level of choice when it comes to price range, anything from apartments at 300,000 EUR to chalets for 6 to 7 million EUR. So you have a huge wide range of options. And I would say it's a good resource to look at at the moment.
Mark: Do you find that there is increased demand for connectivity to Geneva, considering you're getting more international buyers now?
Alex: I think connectivity has always been important. I think also when you speak about connectivity, and also maybe the ability to go for a long weekend, and that's perfectly doable if you're in a resort that's an hour or two hours away from Geneva.
It obviously gets more complicated the further you are away. The flipside being is that you get less weekenders going to those resorts so there's always pros and cons. But for sure for people that are looking for resorts that are close to the Geneva, I would say Chatel and Les Gets are very good ones to look at. Great ski areas, very pretty, no high rises, and some interesting projects and some good quality developers that are looking at these resorts and are building within these resorts. So, there are some good choices. And then for the higher budget level, so in excess of maybe a million euros, if that's the budget that we're looking at, Meribel is very strong at the moment.
Mark: It's funny with Meribel. I always had a love-hate relationship with Meribel. I've been there many, many times and it's right in the middle of the valley, isn't it, but everyone loves it. It's such a strong brand, isn’t it?
Alex: Yeah. It's a little bit like I was saying with Chatel. In the summer it's beautiful because it's not too high up. So you do have trees, you have incredible views. You have the largest ski area in the world, which is a three valley ski area. It's a pretty resort, so it's not as if you're surrounded by high rises, it's chalet style. And the existing buildings, the old fashioned hotels, '60s style hotels, which aesthetically not actually the best looking are all being redeveloped and are all being converted into luxury apartments. There's a real boom in terms of building work and action that's happening in Meribel. And that's only a good thing. It's attracting more buyers. There's more investment into the resort, and it's just becoming prettier.
Mark: I think there'll always be demand for Meribel. It's such a flagship resort, isn't it?
Alex: Yeah. I would say the top tier of resorts in the French Alps are composed of Val d'Isere, Meribel, Courchevel, possibly Megeve. Those are the tier 1 resorts, and will always be desirable. But the prices per square meter reflect that, and they have increased quite a bit over the years.
Mark: You talked about Les Gets before and Chatel, would you say that Meribel is just more for lifestyle rather than an investment? Where's the angle there? Do you think there's still appreciation or rental income to be had in Meribel?
Alex: I think yield-wise in the Alps, like you said before, it's a mixture of lifestyle and investment. So, the yields are never going to be crazy, they're never going to be 10%, 15% buying into a ski resort. Conservatively speaking, you're looking at between (net of management fees) probably around the 3-4% mark.
Mark: But the evolution of dual season has definitely helped that. Before, I remember when I started skiing, there wasn't such a thing.
Alex: Yeah, a little bit. But then the summer season is short. It's August, maybe a few weeks in July. There are some quite long dead periods between summer and winter, and obviously, spring and summer, so nothing's really going on there. I would say that the yields that I'm giving you there are for winter only. So if you're renting in the summer, which is possible, it's going to be a bonus not something to count on, in my opinion, yet. The summer season in the resorts is definitely becoming more popular but it's still mainly winter.
But going back to your question about capital appreciation, in places like Meribel and Val d'Isere, there's a limited amount of space, there's a limited amount of buildings that can be developed. There's a lot of demand, and there's a lack of supply. And so it follows that if you don't have enough supply and you have a lot of demand, prices are going to go up. I can't see myself that skiing would become less popular in the next 10 to 20 years. They can't build another Meribel, another Les Gets and another Chatel. These are resorts that for reasons like avalanche risk and that kind of thing, can only be so big. I think, actually, from an investment point of view, it's very strong buying into the French Alps.
Mark: Yeah. And I also think that people will go to the mountains just to be in the mountains rather than that they have to ski now.
Alex: That's definitely becoming the case.
Mark: So the lifestyle of actually just living in the Alps means you don't have to take your skis, or you might just want to ski when the sky is blue. But there's a demand, I think now, just to be in nature again.
Alex: I would agree. And I also think that it's a growing market. My colleague Charles-Antoine mentioned the other day that I think there was a stat that said something like 9% of people in France ski, which is not a huge amount when you think about it. So it's still quite a niche sport, with the ability to grow in terms of the numbers of people that are going to go skiing. So I think for sure the skiing part can increase, but I think you're right, I think people will want to just be in the mountains, and it's a beautiful place to be in. And also, that's why the summer season that we've just had in the French Alps was a record season for them in terms of bookings and people actually going out to the resorts in the summer. And that has definitely been, like you say, as a result of Covid and wanting to be in nature.
Mark: Alex, I think that's a great way to end. But before you go, as I ask everyone, I don’t know if this budget is enough for you, but if you had saved 500,000 EUR, where would you put it?
Alex: At this point of time, given the options available, I would look at Les Gets. It's a dual season ski resort, it's part of a big ski area, it's close to Geneva, and there are options at 500,000 EUR. And it's extremely popular from a rental point of view. So that's probably where I would look.
Mark: If you are interested in Les Gets or any other places in the French Alps for new build properties or just asking for some advice, please contact Alex at Athena Advisors. I will put all his details below for you to contact him. Obviously, French Private Finance can help with any financing.
Alex, thank you so much for your time today. I'm sure everyone will find it extremely useful and I'm sure they will get in contact with you. Thank you very much for your time.
Alex: Thank you, Mark.