Why the 1% may invest in luxury ski homes

Those with a few million dollars to spare should consider investing in luxury ski chalets, for which prices have risen by nearly 6 percent over the last year, according to a new report from international estate agency Knight Frank.

Knight Frank's annual Prime Ski Property Index,which tracks prices across 20 of the world'stop resorts, increased by 5.9 percent in the year to June 2014. This was led by North America, where luxury ski home prices rose by 13.3 percent, far higher than Europe's average growth of 1.0 percent.

Homes in New Zealand's Queenstown—an alpine-style resort surrounded by awe-inspiring peaks—posted the biggest price rise, of 24.8 percent.

"New Zealand's economic upturn, foreign investment and low interest rates are fueling price growth in New Zealand's top resort," Knight Frank said in the report.

Second-place went to Aspen in Colorado, U.S., where the cost of a luxury ski home rose by 20.7 percent.

The "lower-end" of the luxury ski home market generated the most interest in the European Alps in 2014. Demand for properties priced below 2.5 million euros ($3.2 million) rose by 25 percentage points, accounting for 72 percent of buyers.

The proportion of buyers interested in properties costing over 20 million euros shrunk from 7.6 percent in 2013 to 3.8 percent in 2014.

Sochi slopes

Oligarchs who purchased chalets in Russia's Sochi resort over the last year will have seen prices rise by a comparatively low 4 percent.

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"With the Winter Olympic snow over it remains to be seen whether the Russian city of Sochi will break into the big league of European resorts," Knight Frank said. "The suspicion is it will continue to cater almost exclusively for a domestic clientele."

Alternatively, snow-mad millionaires might like to rent rather than buy a luxury chalet.

"The rise of the'super-chalet' as a rental option is a recent phenomenon," Knight Frank said."Some are 800 square meters or larger and located in unrivaled positions in the top resorts such as Courchevel (in France)."

Rental properties with 14-week occupancies in swanky Courchevel Village returned a gross investment yield of 6.7 percent over the last year. This was more than the average property in London with year-round tenancy, which generated just 2.8 percent.