Russian Alpine Splurge Dries Up

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With the dramatic fall of the Rouble, investors from the East are becoming very thin on the ground – a phenomenon being particularly felt in the upmarket ski resorts such as Courchevel

For the last few years, places like Courchevel have been having it good from the Russian market, with the rising middle and upper classes investing heavily in the Alpine resorts.

Over the last year, the Rouble has fallen spectacularly in value while the Americans have increased their spending power in Europe at the same time. The hope for many property owners in the middle of this volatile international currency market is that some American clients will replace the Russian buyers who are proving to be an increasingly rare sight in such high-altitude resorts. In Courchevel, they were the market trend-setters up to now but the value of the Rouble in December was about half of what it was worth in December 2013.

“The fall of the Rouble only partly explains this phenomenon. The slow-down began during the Ukrainian crisis,” explains Daniel Masnaghetti of John Taylor Corporate, who is in charge of international markets at the luxury property company. Last year, Russian buyers accounted for 29% of the company’s sales on the Côte d’Azur.

Certain market segments that have seen prices balloon in recent years have come to a virtual standstill at the upper end of the scale. This is the case in Courchevel. In the resort where a few years ago there were buyers who thought nothing of forking out tens of millions of euros to buy a second-hand chalet that they would then rebuild and extend, the boom has been put on indefinite pause.

“Vendors are still advertising very high asking prices but the sales are not happening,” adds Masnaghetti, pointing out that while in markets like Paris, people have adapted their prices to a changing market, certain micro-segments in the mountain have not.

Economists are predicting further appreciation of the American dollar against the Euro. While the American economy is stealing a march on the Europeans, property professionals in France are hoping for a substantial return of the American investor. The John Taylor agency is one that hopes to exploit the tendencies of the year ahead and has just signed a partnership agreement with the American east-coast-based Corcoran agency.

“It’s an important step for us. We’ll be working together and offering property in France to their clients and offering American property to our clients,” says Masnaghetti.

“With appreciation of the dollar, some of our clients are interested in property in Paris and the South of France – which remain the favourite locations for Americans,” says Pamela Liebman of Corcoran.

As for the mountain resorts, they don’t look like benefitting much from the predicted wave of American investment. US buyers have always had a strong preference for property in Paris, Provence and the Côte d’Azur. In any case, there is sense of realism about the state of the Russian market now and a firm feeling that the lofty prices paid by the Russian wealthy such a short time ago are already a part of the past.

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