The Stacked Homes Editiorial began in 2017 to provide the latest news and analysis on property in Singapore.

Russell and Reuben

EP. 8 17 NOV 2020 | 32:27

More Singaporeans Buying Homes in the Alps?

Over the past 18 months, we've been seeing an uptick of Asian investors - Singaporeans specifically, investing in mountain homes abroad.

What's the real reason behind this, and is it really as glamorous as it's made out to be from an investment perspective?

Reuben speaks to Russell Collins, head of Andermatt Swiss Alps to find out more.

Available on

Guests

Russell

RCRussell Collins is the Sales Director of Real Estate in Andermatt Swiss Alps in Switzerland. Andermatt Swiss Alps AG is responsible for the development, planning, realisation and operation of the new integrated holiday destination in the Swiss mountain village of Andermatt.

Reuben

RDReuben is the producer and talkshow host of the Stacked Podcast Series.

Transcript

Reuben  0:00  
On today's episode,

Russell  0:02  
We are an hour and 20 minutes from Zurich. Similar similar journey by car to Milan. And we are really accessible, which is which is really unique for for an Alpine destination.

Reuben  0:31  
You're at home, with Stacked

Hey guys, welcome back to another episode of At Home with Stacked. Last episode we explored a volcano in Mexico. This week, we're heading to the Swiss mountains. And no, it's not just a single unit this time around, we're talking about an entire project that spanning 1.4 million square metres at the top of the Swiss Alps. Now you're probably wondering Reuben, why on earth are you talking to me about this? Fair enough. You see, just a few days ago, I stumbled across an article that spoke of how Asian investors, Singaporeans specifically have actually been flocking to purchase mountain homes abroad. Now, I was a little bit curious. So I read more on the subject. And what I realised was that one of the main reasons for this was really the solid ROI that these investors were getting on their homes. I know ROI on a mountain home sounds a little bit hard to believe. But you see that so in light of the current pandemic, many are now looking more than ever to fulfil their dreams of living outside of major cities. Now, I don't know about you, but I've always been a fan of nature areas. Although I do sometimes question the convenience, livability and to an extent the investment returns on these types of homes. Now to address some of my concerns and queries today is Russell Collins. He's the head of real estate at Andermatt Swiss Alps with over 20 years in the field. Now as always, if you like what you listen to, you can hop on to stackedhomes.com/editorial for more of us right after the show. Russell, welcome to show.

Russell  2:27  
Thanks very much Reuben

Reuben  2:28  
Thanks for joining us. So I guess before we begin, for those of you guys listening in, Russell and I, we've never met before, which is to be honest, most of the cases with our interviews so far, mainly because of the circuit breaker and our global outreach as well. So what happened was, I was very interested, I was reading about Andermatt Swiss Alps, and I was interested to find out more so I sent him an email, and the next thing I know, Russell very graciously accepted my offer to join me on the podcast. So here he is today. Thanks Russell for joining me. Now, I guess before we begin, have you ever been to Singapore by any chance?

Russell  3:12  
Yeah, sure. I've, I've spent quite a lot of time in in Singapore. Both both with with Andermatt and also various other leisure trips and my wife's Australian, so it's makes a good stopover for us in on the way down under, but so yeah, I've spent a lot of time there.

Reuben  3:34  
And where are you about? Right now? Are you in Australia? Or...

Russell  3:38  
No, I'm in Switzerland right now. Yeah, in Andermatt.

Reuben  3:43  
Very nice. Well, perhaps if you could start off with an overview on what Andermatt Swiss Alps actually is, I think they would help to give our listeners a clearer picture of our topic today.

Russell  3:55  
Sure, I mean, so in summary, we are building a really large scale, all-year round destination in Andermatt. So we are, as you say, halfway up a mountain, just in the crossroads of Central Switzerland, and through a very substantial investment. We have built series of different infrastructure projects, like a new skiing area, new golf course, restaurants and amenities. And we tie all that together with a range of hotels and real estate which is available for people to live in as their first home. Buy as a second home or as a rental investment property. We started the project about 10 years ago, and now considered to be one of the prime destinations in central Switzerland. We have sold in the region around 500 million euros of real estate, in Andermatt about... since the project began.

Reuben  5:06  
Wow, and this was back in 2010, right? So about a decade ago.

Russell  5:11  
We started the infrastructure projects at around that point. The real estate businesses is newer than that. So we really only started to, to build and sell real estate in the last six or seven years. And we've, we've really built up that business, we have a number of different categories of real estate, some of it is hotel service real estate, which I'm sure your listeners, Reuben will be really familiar with it in Asia, it's a relatively new concept for European buyers. And then also it more private apartments that smaller and smaller buildings, but in total, we're building we're building around 500 apartments. So from an Asia standpoint, it's probably considered to be quite a quite a small project. For a European and specifically from a from an Alpine standpoint, it's considered to be enormous this is the largest mountain real estate project probably anywhere in the world.

Reuben  6:17  
Just alluding to your point previously, when you said 500 apartments is it 500 different buildings or 500 different units,

Russell  6:25  
So so approximately 500 units, which is spread over over 42 apartment houses, and then a series of of hotel service residences, and we've built about about 25 to 30% of that is now built out. So we're kind of in a transitional phase where we're moving out of being, let's say, a builder into really a resort and destination operator now. So have it still a really exciting point in the project. Good thing is that a lot of the foundation, the cornerstones of the project are now there and in operation. So yeah, we've got this really substantial skiing area, which is the largest now in central Switzerland. And then great facilities all year round.

Reuben  7:17  
Right. So definitely a long term construction process. And it makes sense, right? Because you will have to all building on a mountain. So yes, yeah getting resources up you know, and getting the foundation's in that's, that's going to be a lengthy process. Now, before we get into perhaps the deeper financial aspects, because I want to learn a little bit more about the ROI as well. But before we get there, let's perhaps talk about the necessities, especially for homeowners who are looking to live there and not just rent out the the apartments, are they any like hospitals around groceries, airports, that kind of thing?

Russell  7:51  
Sure. So with Andermatt, what makes Andermatt a really attractive proposition for a lot of people is that, as you rightly said, we're based up in the mountains, but it's super well connected. So we are an hour and 20 minutes from Zurich, a similar journey by car to Milan. And we are really accessible, which is really unique for an Alpine destination. So for of any of your listeners that have maybe gone to various resorts in the Alps and spent three, four hours winding up mountain roads, with Andermatt, you get this very easy connection both by road and train. And as a result of that you have really good access to hospitals, shopping, all sorts of kind of facilities that you would expect in your normal everyday life. And of course, most importantly the airport as well too. For those who are coming from Singapore. So it's very well connected in that respect. And then within Andermatt, a big part of the development project is, it's about infrastructure. So real estate, yes, but we have really big range of restaurants which we manage and operate ranging from a small deli where you can get a coffee through to a Michelin star Japanese restaurant,

Reuben  9:24  
Any Indian food in the area?

Russell  9:27  
As a Londoner, I'm always... Indian food is this is our national cuisine. So we have one of our flagship Hotel in the Andermatt is called The Chedi. It's now widely recognised as being the the most premium hotel anywhere in the Alps. And in there we have we have a fantastic fantastic Indian food offering, great Asian food and yeah Michelin star Japanese restaurants as well. So, for those who are looking for for something, which is, you know, fondue is great. And we offer some fantastic, fantastic, fantastic fondue in Andermatt, both through the restaurants that we operate and the independent ones as well in the in the old town but yeah, certainly some some tastes of the orient available in Andermatt.

Reuben  10:23  
Very nice. Yeah, I think that's gonna be a big one. Because I mean, you've been to Singapore, you know how the food is we are. That's literally what we do. Like, you know, we look for good proper food. And it's very comforting to hear that. But perhaps one of the concerns that I had as well, you mentioned that it's, it's relatively simple to get up to Andermatt. But what about weather issues? So I reckon it's heading towards December now. So it's winter, it's going to be cold, you're going to get snow storms? Is it a hazard perhaps too, to be driving to your homes, in conditions like that?

Russell  11:00  
Sure. And it's certainly a good point that you make in terms of, of accessibility. And I come back to my original point, which is to get to Andermatt from Zurich, which is that let's say the closest central hub, you've got an hour and 10 minutes on a highway, which is, of course, always clear of snowed in operation, and then you've got a really short mountain roams around 10 minutes, on the very worst days when it is snowing, like there is no tomorrow. There we are accessible by train as well. So that's easy, and runs in virtually any condition. So it's easy to get to and it's safe as well.

Reuben  11:44  
Very nice. What about language perhaps is the last one that's on my mind. I understand in Switzerland, so I was there a couple years ago, I was in Ubele Berg in Zurich. And I think we went down to the Black Forest, it was a beautiful time, but I did have some issues because I understand that a large percentage of this is speak French if I'm not wrong, French German and then this little bit of English here and there.

Russell  12:09  
Sure. Andermatt is is based in central Switzerland, where they speak German and Swiss German is a local dialect and we are the last Swiss German speaking town when you go over the mountain heading south, the south speak Italian which makes which makes it really cool and and very dynamic. What I would say is that if you speak English, you can you can live in this country and certainly visit it without any problems at all, I think in terms of the competence competency of English, Switzerland will be amongst the the highest in the world for a country which is not a native English speaking country. So yeah, it's it's super easy to to get on in English here. And I think the Swiss, generally always very apologetic about their English but tend to speak virtually perfect English in in every in every scenario. So as a native Englishman that lived in Switzerland now for coming up to six years. I probably admit the my my German needs, some still need some improvement. But I I've managed to manage to get with my family, live and work here. So I think if you can speak English great. And also, you know that there is an international community here and suddenly, language is not does not present an issue for for homeowners or visitors.

Reuben  13:51  
That's wonderful. I mean, at least you speak a little bit of Germany, I speak barely any other languages apart from English and Chinese. But you know, speaking of international, perhaps let's draw the topic over to investor demographic so one of the reasons I actually reached out was because I saw this particular statistic online, which said that one in four buyers of the real estate project actually from either Singapore or Hong Kong, that's 25%, perhaps if you could share a little bit more about that. Have you gotten many Singaporeans buying homes this year? From Adermatt Swiss Alps?

Russell  14:34  
Yeah, so with Andermatt, what makes Andermatt unique from a real estate standpoint, well, one of the factors is that we have an exemption from the Lex Kollar law, which is designed to prohibit our people from buying and owning property in Switzerland. So because of the size of the of the of the of the development that we're doing, we have an exemption for that. So that means that as a foreign person Then you can buy an item property. And that's been really appealing to a lot of people as a as a value proposition. So we have sold around 50%, of our of the real estate to Swiss buyers, and the balance has been sold internationally, a large proportion of that has been European. But as you rightly say, we have so quite a lot, especially in the last last two year or year and a half to two buyers from Asia. So the figure that you're quoting refers to our latest development called Frame, which was a range of really nicely designed studio one bedroom apartments with a very cool shared communal lobby lounge area. And around 20 to 25% of that was sold in in Singapore and Hong Kong. But yeah, overall, we have a really wide range of international buyers, but we're seeing particularly a particular uptake in demand coming from Asia, in in especially over the last 18 months, especially during the current crisis that I think we're experiencing all around the world, then people started to think bit more about having a plan B. And having that assurity of somewhere which is not necessarily in a highly densely populated area. So I think that that's, that's certainly something which is being part of the decision making factor for buyers coming from Singapore. Right.

Reuben  16:36  
So I guess while we're on that topic, if you could share a little bit more about the prices of units here as well, perhaps a rough ballpark on prices for units from the lower range of the skill towards the higher end of the trade shows.

Russell  16:53  
Our entry level stock, let's say is at we build and sell studio apartments, which are really, really cool little mezzanine studio apartments, a great little base to have in the apps, when he wants to come up go skiing, spend a few days exploring the mountains in the summertime, and they start at around 350,000 Euros, we then have a really good range of, let's say, family type of apartments, which are one, two, and three bedrooms, which range between around 800,000 euros up to around three or 4 million euros. And from from there upwards, we have penthouse apartments and chalets available to buy, which go up from, let's say five to 25 million, depending on what kind of fit out you're looking for. But as I said, it's a very wide ranging portfolio and kind of a wide variety of services with have a owner service department as well. So if you're not there, want to make sure that you didn't leave the fridge door open. Those kind of things we were there to were there really to, to manage manage the property in that way. And of course, this is all done with to a Swiss standard, which I think for, for anyone who knows Switzerland, it's we have a real attention to detail in everything that we do, ranging from the building work that we do, which is really exemplary through to our, our customer service and the way in which we try to make our owners feel at home there.

Reuben  18:37  
Right. So I mean, you mentioned studio apartments. So I reckon the people who are buying it probably invest is because when you buy a studio apartment, a one bedroom apartment in Singapore, most of the time it's to rent it out and get some rental yields coming in. So perhaps tell us a little bit more if I mean of course if you be open to sharing, what are the average rental yields that you would expect? Let's begin with the Frame perhaps per year.

Russell  19:08  
So with with rental, I think we certainly offer a really attractive investment opportunity. A -  from a rental returns point of view, but also in terms of capital, appreciation and capital value due to the really big investment that we've that we're making in Andermatt and from a rental standpoint, you've got two options. We offer fixed a fixed return on some of our hotel service products, which at the moment that the offer that we that we can give is a 3%. net rental guarantee over three years on our hotel service product or alternatively there's a variable rental scheme where 75% of the rental is is returned to the to the owner and 25% is held with the, with the management company for that. So, we find that for those that are looking for a assurity at the 3% rent guarantee is great. You also get a few weeks personal usage to prove your skiing or, or play golf for a few weeks a year or for those who want a bit more flexibility, maybe to come and use the apartment for three, four months a year, then the variable rental programme works really well.

Reuben  20:30  
So three years that means 9%. And, understandably, for investors who are stepping abroad for the first time, we have Singaporeans who have never invested in a home overseas ever. There's going to be a little bit of concern, a little bit of fear on market stability. Right. So in Singapore, we have thankfully had a relatively stable property market with no major crashes. But that is a fear that I feel many Singaporeans or perhaps external buyers could have of Andermatt for example, not to say that it could happen. But perhaps if you could share a little bit more with us about market stability, in terms of Swiss residential real estate,

Russell  21:18  
I think for for those that make the choice for Andermatt, there's probably two key factors that come into that decision making. Firstly, investing in Switzerland for anyone that knows Switzerland, this is a place of certainties. It's offers assurance, assurity from an investment standpoint, stability economically, that probably very few other countries do. And with Andermatt, what we have is really exciting local growth story in Andermatt where there is a very dynamic opportunity to invest. So what we find is that it offers a really nice combination of this very grounded macro picture for Switzerland with a very nice dynamic story in Andermatt. And I think that gives people quite a lot of confidence to, to buy in to invest their money. So yeah, I think it's a combination of both. And then on a real estate level in Switzerland, the Swiss market is, is is very, very measured, you don't need it's not it's not it doesn't have that that the dynamic qualities of say London for example, where you see huge price increases in in domestic property, and then something like Brexit happens, and then the demand falls out of the market. Stability is the key for Switzerland at large on the real estate level. And particularly as as we have this Lex Kollar exemption, what you find is that it doesn't have so many external factors. So in Switzerland property is really built for people who live here in order for them to use the property. And so that creates a very nice stable market. And then yeah, with Andermatt, we have this this exemption and, and this very nice growth story. But I think one other factor is obviously if you buy property in Andermatt or anywhere in Switzerland, it's a Swiss Franc denominated purchase and the Swiss franc are known for again for its for its stable qualities as well. So I think that that gives especially sort of investors who are who are looking at different options internationally, a good mix of some, some some dynamic element without them and then yeah, the the assurity of stability of a good robust economy in Switzerland.

Reuben  23:55  
Very well, that's a very beautiful answer, I wasn't expecting such a comprehensive answer. So one of the questions that I might have is do you see room for capital gain, specifically for the studio or one bedroom apartments? With regards to the frame that you mentioned a lot of Singaporeans are investing in.

Russell  24:21  
I think, I think capital growth is is a big part of the motivation for a lot of our owners, and yeah certainly that there's there's room for growth. In our view Andermatt Swiss Alps offers a prime Alpine destination which is comparable with the very best ski and Alpine resorts across across the country and the Alps. In general, price wise, we are substantially cheaper. So right now is that there is an opportunity to buy in Andermatt at a comparatively low price compared to what you would pay In a very well established resort, we're seeing prices going up. It's hard to be absolutely conclusive because the different products that we build, carry different prices and then go up in different rates. But we certainly have a clear price trajectory in terms of our ambition. And we, we believe that Andermatt right now presents really a lot of value for for investor buyers. And certainly, with regards to studio apartments and one bedroom apartments, there's a lot of room there for for growth if we if we compare it on a on a on an equal basis to what is available in other other similar destinations. But we think that the infrastructure that we're putting in at the service element that we have to end them and our overall offering all year round, really makes it a good, a good investment.

Reuben  25:56  
Lovely. Well, we're gonna dive into one final kind of dry topic and after which we will wrap up with perhaps the plans for Andermatt this topic really revolves around the process of purchase. Now, assuming that I would like to pitch chase Mountain Home myself as a Singaporean complete foreigner, how would the process be like in terms of foreign a fee certain laws etc, etc.

Russell  26:27  
We have a variety of different purchases, some of them come through Andermatt spend some time there love to ski love to play golf decides to buy property firsthand. And, and others will will have bought it without visiting. So the process is really, really quite straightforward. We, if you want to buy a property from us, you need to notarize a purchase contract. So for those who are familiar with the, with the the process in Singapore or in the UK, for example, you would exchange a purchase contract and pay based on a based on a payment schedule, depending on if the apartment was completed or if it was being sold off-plan. And yeah, that's that's how it works. So it's relatively easy. Everything is available. In English, we have an English speaking, legal team, notaries, sale team, and it's pretty, pretty easy, easy thing to do.

Reuben  27:27  
Very nice. Do you supply loans, by the way as well? Swiss related loans.

Russell  27:33  
So mortgages are available for a variety of different banks. So UBS and Credit Suisse Well, in some cases, provide mortgages to Singaporean buyers. It's always a bit, it does tend to change depending on on the bank's profile at the time, but certainly, a lot of our Singaporean buyers have have taken mortgages. Interest rates are really low in Switzerland. So you can take any you can you there is borrowing available for for under 1%. In some cases. Yeah, it will. It varies. It varies a bit depending on depending on on the kind of product that you buy. So I'm, I would probably leave that topic for sales guy. Banks, which I'm sure would be happy to talk on it. Fair enough. Yeah, that's which is available. Yeah, let's

Reuben  28:28  
Let's not deep dive into that. Well, Russell, thank you again, perhaps the last question that I have then shows, what are your upcoming plans like for Andermatt Swiss Alps? What can we expect to see in the coming years?

Russell  28:42  
Well, we're we're we're focused now on, on building out the the balance of our real estate project. So that involves far more consideration into the different types of real estate that we're building. What we're seeing now is a shift in terms of how people are using our properties and an amount. So initially, it might have been that we the first 25 30% of real estate that we start with people that were real, hardcore skiers that just want to have a place in the mountains, we then started to gain traction in terms of product for rental investment. And now more recently, especially in this year, we're seeing more and more people using the properties as a place to live and to work for a period of the year. I think the the common crisis has resulted in a lot of people getting out of the city and coming up the mountain and basing themselves there and it's not so necessary to be geographically immediately next to your office anymore. And I think that we're seeing a growing community of owners that are really using the property and really loving what they're that the lifestyle that they're in. they've, they've carved out for themselves. And now no matter. So, for us as a developer that's given us a cue in terms of what kind of factors we need to build into our product in the future. So we're considering, alright, two bedroom apartments, having a small, small study where you can set up your home office, that would be a really nice feature. So we're doing things like that. And we're also working on a few new hotel projects as well. And yet expanding our our service offering, and really trying to now carve out the sense of community in unimat. And I think that that's something which is really for us a central focus, we know that the products really appealing to people to come, use it, invest, but what we really want is to build that that nice, Alpine community and try and enhance that and we feel that our role as the operator in that centrepiece to try and really kickstart that we will be really proud of building an international community with people who have this shared love for the mountain. So yeah, we're well on our way and lots of exciting things to come in the future.

Reuben  31:15  
While working from home in the mountains, sounds like a dream come true. Well, Russell, thank you again for your time today. I hope you guys didn't find it too content heavy. It really really helped to answer so many of my questions today. I wish you all the very best and enjoy this note. Hopefully I'll see you in the near future.

Russell  31:34  
Thanks very much. Will do, hope to see you here soon.

Reuben  31:41  
Once again, that was Russell Collins from Andermatt Swiss Alps. I do hope that you guys were able to take something from the broadcast today perhaps learn a little bit more about all these Swiss mountain homes. Now as always, if you like to listen to you can always hop on to stackedhomes.com/editorial for more of this. And if you have any comments, queries or suggestions, feel free to drop us an email at hello@stackedhomes.com. Once again, my name is Reuben Dhanaraj, thank you so much for joining me today and I'll see you on the next podcast.

Other episodes