5 Reasons Behind Switzerland’s Resilient Luxury Property Market

The regions of Switzerland are some of the most beautiful and eye-catching in the world. (Comptoir Immobilier)

Switzerland’s prime residential property market has remained attractive among investors, despite economic and public-health problems since 2020.

A consistent increase in prices, demand for ski properties and investment restrictions allowed Switzerland’s property market to thrive even during a pandemic.

Property investors have been more active in acquiring assets, owing to the exclusivity of prime properties due to strict homebuying policies.

Other underlying factors include a potential change in corporate tax regulations, economic growth, and infrastructure development.

Fresh air and open spaces are often cited among the top priorities for ski property investors.

1. Consistent Price Growth Over The Years

CEIC Data recorded a 2.5% average growth rate for house prices in Switzerland between March 1971 and September 2021.

The last record-low price depreciation happened in December 1975 at 9%. A strong currency partly played a key role in sustaining price growth since 2020.

According to Barclays Private Bank, property investors have realized the benefits of the Swiss franc as a high-value currency amid a pandemic.

In 2015, investors initially balked when the Swiss National Bank decided to undo a fixed exchange rate between the euro and Swiss franc.

Property investments fell slightly, but rebounded exponentially as buyers realized the value of a stronger currency when Covid-19 affected the world.

snow-covered swiss alps meeting blue sky

Some Swiss resorts such as Gstaad have sustained high average prices over the last 40 years.

2. Strong Demand For World-Class Ski Properties

Market observers attribute Switzerland’s consistent price growth to its in-demand ski properties. Some resorts such as Gstaad have sustained high average prices over the last 40 years.

For example, the top-end price per square meter for ultra-prime properties in Gstaad reached EUR 30,600 (US $35,386) as of October 2021.

Gstaad is considered among the most expensive ultra-prime markets in the world. Average prices in Gstaad amounted to CHF 33,000 (US $36,000) by January 2022. Some properties may even cost more than US $71,000 per square meter.

As one of the top destinations to buy ski properties, Switzerland’s resilient resorts have helped with keeping the luxury real estate market afloat.

luxury stone and wood chalet in a swiss ski village

Even if you do meet the requirements to purchase a home in Switzerland, you must live in the country to gain approval for a potential transaction.

3. Strict Industry Regulations

The general consensus for buying luxury homes in Switzerland: you either need to be a Swiss passport holder or a permanent resident.

Non-residents have been unable to acquire properties since the enactment of the Lex Koller legislation in 1983. The country’s rules impose tougher restrictions than other markets such as Singapore.

For example, only Singaporean citizens and permanent residents qualify for most purchases of Good Class Bungalows.

In Switzerland, most foreigners could only become eligible for property transactions if they are:

  • European Union (EU) or European Free Trade Association (EFTA) nationals
  • Swiss B or Swiss C permit holders

Swiss C permits allow EU and EFTA nationals to purchase properties as investments or homes. Swiss B permit holders can only buy properties as residences.

Even if you do meet the requirements, you must live in the country to gain approval for a potential transaction.

Barclays Private Bank advises non-residents to consider prime properties in “holiday zones,” which are mostly found in ski resorts.

The Swiss government allows each non-resident investor to buy one property, subject to certain conditions:

  • Up to 200 square meters of living space
  • Up to 1,000 square meters of land area

Keep in mind that married couples fall under the individual-buyer category. A word of caution: non-residents must not think about establishing a Swiss company to acquire luxury residential properties.

Luxury property investors covet Switzerland’s prime developments, particularly highly amenitized properties in up-and-coming ski villages.

4. Switzerland Ranks Among The Safest Countries

Luxury property investors flock to Switzerland not only because of attractive growth prospects but also due to safety.

The country scored high based on Covid-19 safety index in 2020, landing on the fourth spot. The index reviewed several factors such as economic, medical and political aspects related to the pandemic.

Only Germany, New Zealand and South Korea ranked above Switzerland.

In terms of tourism, the country’s low crime rate became one crucial factor for joining the top 10 safest countries in the world.

1607 chalet charlix in gstaad switzerland

By investing in infrastructure development, the country’s ski resorts have withstood the impact of strict regulations.

5. Infrastructure Development And Investment

Switzerland’s economy took a hit when it introduced restrictions for property transactions among non-residents. The country responded by bolstering infrastructure development, particularly in ski resorts.

Several projects in 2020 included a CHF 27 million (US $29.3 million) development of Verbier’s public transportation system, according to a 2021 research report.

During the period between 2021 and 2022, the Zermatt ski resort launched a cable car project to connect the place to Cervinia in Italy.

The report also noted the “development of the world’s longest treetop walkway” in Switzerland’s Flims-Laax region for the 2021-2022 period.

By investing in infrastructure development, the country’s ski resorts have withstood the impact of strict regulations.

If you’re uncertain whether or not you meet the investment criteria, click here to find out how FGP Swiss & Alps can facilitate a smooth transaction.

Author

Randolf Santos has covered different segments of the real estate industry since 2014. He worked at S&P Global Market Intelligence before joining Forbes Global Properties as a contributor. You can reach him at [email protected]

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