A Tale of Two Ski Hills

Whistler has better elevation, but Blue Mountain has a bigger market. Which resort is the smarter buy?

By Nick Rockel
Globe Investor Magazine, November 18, 2008
Illustration by Courtney Wotherspoon

Ontario's Blue Mountain can't match the global cachet-or the stunning verticals-of B.C.'s Whistler Blackcomb. But the two ski resorts have more in common than you might think. Both are four-season destinations that are two hours' drive from major centres: Toronto and Vancouver, respectively. Both are run by Vancouver-based Intrawest, and both of them are busy: Whistler hosts 2.1 million visitors a year, Blue Mountain 1.5 million. And, with Canadian real-estate prices flagging, it's a buyers' market for condos in both resorts.

WHISTLER BY NIGHT

Keeping resale in mind, the most soughtafter Whistler properties are those that allow both nightly and long-term rentals-and have no limits on how often the owner can personally use the space.

In July, a 1,000-square-foot, two-bedroom suite in Whistler Village's Symphony development sold for $674,000. After property taxes and other expenses, including a management fee that eats up 40% to 50% of gross revenues, the average net operating income (NOI) on nightly/long-term rental units, like this one, was only $9,000 last year.

Assuming a five-year, fixed-rate mortgage at 6%, you would need a down payment of about 83% of the purchase price, or $560,000, to break even. Your capitalization rate would be a meagre 1.3%.

CAN BLUE TURN GREEN?

In Intrawest's slope-side Village at Blue Mountain, each building's rental revenues go into a pool, of which the house takes 47.5% of the cut. Intrawest realtor Ellen Jarman explains that owners earn revenue each day their suite is available for rent; they can also use the place themselves 10 days a month.

Two-bedroom units in the Mosaïc at Blue condo hotel sell for an average price of $470,000. For the year ending in July, these 900-square-foot properties had an average net operating income of roughly $22,000. With a five-year, fixed-rate mortgage at 6%, breaking even would require a 40% down payment of $188,000. Capitalization rate: a more respectable 5.3%.

TOMORROW'S CONDITIONS

If you buy in either resort, how much will your condo likely appreciate in value?

Whistler is still undervalued compared to other top North American ski destinations. The 2010 Winter Olympics may help rekindle the resort's real estate market, but a municipal cap on development will ensure that accommodation is kept at a premium.

At Blue Mountain, which Intrawest began developing in 1999, space is even tighter. Mosaïc is the fifth of only eight buildings planned for the Village, with completion scheduled for 2014. Jarman believes the scarcity of accommodation could boost property values for buyers. "You have to hold on until the Village is built out," she says.

THE BOTTOM LINE

Whistler's profile may be miles higher and the powder far superior, but Blue Mountain is more affordable and offers better operating income on nightly rentals.