Property hot in ski resort Davos

27 March 2017

Among several rival creation stories concerning the winter skiing holiday, British readers may favour the one that stars Sir Arthur Conan Doyle.

The famed detective novelist and creator of Sherlock Holmes moved to Davos in the Swiss Alps in 1893 to provide respite for his wife, Louise, who had been diagnosed with tuberculosis that year.

The mountain air seemed effective — she lived for more than a decade. Conan Doyle, meanwhile, was so enamoured with his skiing expeditions that he reported on them in the English journal The Strand Magazine. The secret — in England at least — was out, and the skiing holiday was born.

Louise wouldn’t get much peace and quiet these days. On January 17, more than 2,500 of the world’s great and good will descend on the small mountain town — and Klosters, its neighbour — for the World Economic Forum Annual Meeting. About 40 will be world leaders and there will be a healthy allocation of celebrities — last year guests included Leonardo DiCaprio, Bono and Will.i.am.

There may also be a few more chalet owners than usual among the throng. Like many other Swiss ski resorts, the town has seen a glut of new homes built in the past few years. The trend is a perverse result of a new rule intended to limit the number of second homes across Switzerland.

The Lex Weber law, enforced in January 2013, limits Swiss holiday homes to onefifth of an area’s total stock. When it was announced in 2012, developers scrambled to get planning permission for their projects while they would still be classified second homes. More than four years later, most of these have made their way on to the market, and there is a surfeit of supply.

The speed of development in Davos has lagged behind other Swiss resorts such as CransMontana or Villars, says Alex Koch de Gooreynd of Knight Frank. Buyers have a good range of smart new apartments to pick from, though.

 

Knight Frank is selling a two-bedroom apartment in the Stilli Park building, on the edge of Davos, for Sf1.7m (R22.9m). The development includes the InterContinental Hotel; residents’ service charge is set according to which hotel facilities they want to use.

In the centre of town, Engel & Völkers is selling a fourthfloor, three-bedroom apartment for Sf3.1m. For those looking for something larger, the same agent has a seven-bedroom home five minutes from the centre, on sale for Sf5.4m.

The volume of new homes coming on the market has made it a bumpy ride for existing Davos homeowners.

 

On average, the price of prime homes decreased 4.8% in the 12 months to the end of June 2015, according to Knight Frank. Over the next 12 months they recovered a little, with a gain of 1.8%.

For foreign buyers, currency fluctuations have added to the pain. Helped by the decision to abandon the Swiss franc’s peg to the euro in January 2016, the national currency has surged. The £2m that would have bought you Sf3.1m at the beginning of November 2010 would buy just Sf2.5m today.

Switzerland’s rental market has been squeezed by a strong franc and the country’s high minimum wage (which increases the running costs of a rental chalet), says Koch de Gooreynd. Those with top-end homes can still look forward to decent rental income, he says, but those with midmarket homes may struggle.

 

This lack of rental demand is strange given Switzerland’s elevated status as a ski venue.

“It boasts more prestigious ski resorts than any other country,” says Yolande Barnes, head of world research at Savills, who says it has five of the six most expensive resorts in Europe.

Davos’s reputation for exclusivity and prestige is buoyed by caps on foreign ownership. The Lex Koller law limits homes owned by nonresidents to a 200m² floor plan. Some of the world’s super-rich might bristle at being hemmed in.

However, if they are rich enough, there is a solution in the form of individually negotiated residency deals with the regional canton government, including a personal tax rate.

Lately, buying chalets for this rarefied international group has become even more appealing, says Koch de Gooreynd. Many bank in Swiss francs via the country’s private banking system, an activity that has become more costly since Switzerland’s central bank introduced negative interest rates in January 2015.

 

Some savers have responded by stashing cash in boxes since it is cheaper to insure these against theft than pay the bank to hold the money. For many super-rich, however, bricks and mortar make more sense.

● This year’s World Economic Forum meeting runs from January 17 to 20.

● Last year, delegates attending the WEF in Davos spent an average of €29,000 each.