Ultra-High Net Worth Individuals Continue To Increase Their Investment Portfolio In The ‘Safe Haven’ Of Alpine Ski Property

Alpine Property Search founder, David Bhagat, says that there’s no better time for Ultra-High Net Worth individuals to invest in ski property as data suggests their assets continue to rise.

With interest rates continuing to be so low, property has become a more important component of ultra-wealthy individuals’ portfolios - the sort of people that do not typically rent their homes out so are not looking for income yield but rather safety and return OF investment rather than return ON investment.

During 2017, the number of UHNWI (Ultra-High Net Worth Individuals with assets of US$50m+) worldwide rose by 10% to 129,730 with total net worth of US$26.4 trillion. This is a significant rise, as during the previous five years the cumulative increase totalled just 18%. *

Bhagat, of Alpine Property Search, said: “In the case of Switzerland the restrictions on further new building will inevitably have an impact on supply and demand and should lead to higher pricing power for owners in future. Allied to the inexorable rise in the value of the Swiss Franc, a Swiss property can be seen as an important component of a UHNWI’s overall portfolio. Switzerland has a very favourable tax regime for wealthy foreigners looking to live in Switzerland and certain cantons also have zero inheritance tax, such as Valais.

“Kitzbuhel in Austria also demonstrates many of the characteristics of Swiss property as a safe haven. For example, prices here have risen every year in the past 32, even during the financial crisis. Kitzbuhel property was seen as a safe bet when asset prices everywhere were plummeting”.

In Japan, despite the lack of rising property prices over the past decade, 2017 saw the first national increase since 2008, with commercial property rising by 1.9% nationally. But, crucially in certain areas including around Niseko, Japan’s premier ski resort, commercial land prices rose by 36% and residential land prices by 33%.

Bhagat said: “Switzerland and Japan share the characteristics of large current account surpluses and safe haven currencies, both of which are strengthening against the USD - despite both countries’ other shared characteristic of record low interest rates and with 10-year Government bonds 0.01% in Japan and 0.11% in Switzerland. As wealthy foreigners from the US, Australia and Asia pile in, a virtuous circle is being created whereby local and Asian developers are responding with ever higher-end luxury offerings, driving interest from ultra-wealthy investors looking for a ‘safe haven' closer to home ”.

Some key facts:
  • UHNWI’s with assets over $30m (not including their primary residence) are the most important source of investment in prime residential and ski properties.
  • Investors from China* - mainland Chinese have increased their deposits in Hong Kong by $19.5bn to June 2017 suggesting that the US$50k/year capital control limit is being circumvented (most probably via the current account surplus). Chinese funds deposited offshore rose by US$172 billion, a 721% increase in the three years to June 2017. The population of ultra-wealthy is forecast to more than double in the next five years.
  • Investors from India* - India allows US$250k/head to be moved out of the country per year. The pace of transfers increased by 60% in year to Sept 2017 and by 1800% over the past decade. The population of ultra-wealthy is forecast to rise by 71% over the next 5 years.
  • Switzerland and Investors from the Middle East* – The Bank for International Settlements (BIS) money flows show that in the 3 years to June 2017 the amount held in Switzerland fell 8% (mainly due to bank secrecy changes and negative interest rates). However, the OECD-inspired Common Reporting Standard (CRS) is not having a negative impact for the Middle East countries, where Switzerland has delayed the exchange of information. Financial deposits from Saudi Arabia and UAE rose by 44% and 53% respectively over the past 3 years.
  • Primary residence and second homes form 24% of total asset allocation, second only to financial instruments (28%).*
  • Over the past 10 years 54% of wealth managers said their clients had increased allocations to residential property with 40% expecting it to increase over the next 10 years. 30% of their clients were considering a residential purchase in 2016*
  • The most important factors for purchase: as an investment for future sale (55%), diversification (46%), safe haven (47% – for CIS clients 80%), children’s’ education (19%).*
*source Knight Frank / Wealth X Wealth Report 2016 & 2018
Alpine Property Search is an agency specialising in the sale of mountain properties in Switzerland, France and Japan and launched during the 2017-18 winter season. The agency, headed up by former investment banker David Bhagat, offers a personal service and attention to detail that sets it apart from competitors.  David and the team are passionate winter sports enthusiasts and have intimate knowledge of the resorts where they have properties listed for sale. Their extensive network allows them to find out about properties prior to their release onto the open market as well as properties that are never released for public sale.

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