Swiss luxury market

Luxury is a new trend in Swiss property market

The pandemic slowed the Swiss ultra-luxury real estate market down, but not that dramatically – according to UBS, luxury property prices rose 1.7% during the first 5 months of 2020 instead of 6% a year before. According to, real estate prices in Switzerland will still increase during 2021, and potential buyers will also extend their property search radius to new Swiss destinations. It’s notable that Switzerland is mostly an outer-city country where people live outside of cities and the suburban infrastructure is better than anywhere in the world.

Home is the hub of the world

The trend of the last year has been quite clear, that more and more people are working from home and understand that a comfortable and spacious living place is something worth paying for. So it's not a surprise that searches for owner occupied accommodation in Switzerland have increased significantly the last months of 2020 as renters to look to move to the periphery or out of the cities entirely and to decide for their own property.

In the third quarter of 2020, Hausinfo noticed a significant increase in buyers' activity, and most Swiss regions were able to register higher prices than a year ago. Around the country the transaction price for a house increased by 5.1% on average compared to the previous year, and the rise in the PPE apartment segment for its part, is 3.1%. Selling prices have grown above average, particularly in areas located somewhat away from the major centers which is also proving the current trend – people are choosing properties in the countryside to have access to nature and get comfortable work and life environment.

Rich people getting even richer

One thing that’s been observed in the news is that in contrast to the fortunes of the middle classes, many ultra-high net worth individuals have become even wealthier throughout the pandemic. That's been particularly the case for those who own technology or e-commerce businesses, or investors who took a bet putting more cash into stocks right at the bottom of the market.

So, the luxury market may well outperform the middle of the market. In fact, one of the areas that observers consider most vulnerable is the built-for-rent apartment market, which has been over-supplied; the top end of the market, on the other hand, is not overbuilt. The same is true for Alpine properties - market conditions in the mid-market have been challenging in some resorts, with few properties available to foreign buyers and little demand for second homes from Swiss residents. But in prime resorts, demand has been constant.

What can we expect in middle and luxury property market of Switzerland this year?

At a guess, 2021 could see further polarisation both between prime and mid-market properties, and between the top cities and ski destinations and the rest. Valais is the bargain ski area, and could see a nice bounce, but if we talk about luxury villas the locations with higher potential will be Gstaad, Verbier, Davos, Zermatt, and Saint Moritz.

Property trends in Switzerland for 2021

1. Switzerland is at the forefront of responsible investment (according to the study of AXA Investment Managers).

2. Real estate prices will remain stable.

3. The demand for single family houses will stay high (Hausinfo mentions Fahrländer Partner’s forecasts)

4. The crisis has made people re-think their current residence (Barnes survey report confirms this trend)

Now let's take a look at what locations luxury buyers choose, and why this is a segment that we think will be very interesting in 2021.

A look at Zurich first

Despite the trend to look for larger out-of-town properties, there are still some ultra-wealthy clients who love the city life and want to buy themselves a slice of it. And Zurich looks pretty good when it's compared to other global cities.

Julius Baer's Global Wealth and Lifestyle Report gives Zurich a great rating. It assesses Zurich as only the ninth most expensive city for a luxury lifestyle - well behind Hong Kong, Shanghai, Tokyo or New York, as well as London. (Intriguingly, Paris comes just three ranks below Zurich.) It's the second most expensive city in EMEA - though interestingly, not because of the cost of real estate, which is higher in London, Paris and the tiny principality of Monaco.

But in Zurich people get what they pay for. Knight Frank agrees with Julius Baer - its City Wellbeing Index shows Zurich and Helsinki tied behind Oslo as the most liveable cities in the world. Properties at over EUR 6m in the Zurichberg area, for instance, and lakeside properties are always keenly sought after.

Geneva: stick to the left bank

Geneva is another good option for luxury city dwelling. In Geneva prime properties sell at CHF 27,000 a square metre. The price goes up further when looking at the most prestigious areas, like Cologny, a ten minute commute from the centre of the city and where prices top CHF 35,000 a square metre.

Demand for left bank property - quieter than the right (airport and motorway) side of the lake - is high, particularly for those who want property with access to or views of Lake Geneva. Collonge-Bellerive is also fashionable and highly priced; further out, Hermance has slightly lower prices but is still easily commutable into the city. EUR 4.8m would is a normal price for a four bedroom lake-view house in Hermance, whereas in the centre of Geneva it’s about EUR 3m for a new one-bedroom apartment.

An amusing aside - Hermance gets given the cold shoulder by some Swiss who think a 20 minute commute is way too long. New Yorkers, Parisians and Londoners, eat your hearts out!

Ski areas

One area that Knight Frank picked as an up-and-coming ski destination is Crans-Montana. It's upmarket, but not as 'jet set' as, say, Verbier or Gstaad - and not yet quite as expensive. Until recently it suffered from an overhang of rather dreary 1970s development, but the last decade has seen investment in refreshing its rather dated building stock, and it benefits from having practically cornered the market in new-build permits for property that can be sold to foreigners in Valais canton. Knight Frank believes that investment in refreshing the resort should push prices ahead, and points out that Crans-Montana's market suits both investors and residents.

Sport Club Residences has transformed a former hotel into apartments, starting at more modest prices - from EUR 2.5m up to EUR 6.5m for the penthouse with its hanging gardens.

Savills, which deals with luxury property across the French and Swiss Alps, believes that many resorts are currently undersupplied with luxury property. That's the case in Verbier, and also in Andermatt, which should benefit from its exemption from foreign buyer restrictions till 2030. Andermatt is also a resort where luxury branding has made a huge recent impact. The Chedi Andermatt was the first luxury branded hotel and residence development here, the hotel opening in 2013. Radisson Blu has now entered Andermatt too, with the Gotthard Residences, selling for more than a third more than other new build in the area.

But… Covid

It still remains difficult to see quite how long the pandemic's effects will last. Vaccinations are beginning to be rolled out, but supply and logistics difficulties have hit quite a few countries' programmes. Will there be more lockdowns? That's certainly possible. But despite many uncertainties, one thing that does seem likely is that by late summer 2021, things should be opening up again across the world.

Source of the image: property listing of Cardis SA

Still, the disease has made some impact on the property market. One trend is that many people have shown demand for larger properties with more open space. In Switzerland, it's likely that this will lead to even more demand for properties close to good hiking and skiing. According to Knight Frank, some ultra-high net worth individuals are now choosing to make their main residence in the Alps, which may include upgrading their ski property and perhaps downsizing their previous main residence. Switzerland's generous tax break for the ultra-rich - a lump sum tax based on their living expenses or rental (equivalent) within Switzerland rather than a tax on global income - can make that a financially advantageous decision for foreign buyers as well as a good lifestyle choice.

City centres might see some price weakness. If we do see city prices fall, though, that's an opportunity for buyers to grab with both hands - it's very doubtful whether the pandemic will break a centuries-old desire for city living with its cultural and social richness.

So why the international UHNWI choose Switzerland?

Switzerland as a destination for luxury investment is interesting. First of all, the Swiss Franc has a reputation as a 'safe harbour' currency, which in times of uncertainty is a potent attraction. And secondly, unlike some governments, the Swiss administration appears to have ruled out tax rises as a way of paying for its recovery programme. There's also the tax break we referred to; while many countries charge residents tax on their global income, Switzerland doesn't care if you just made millions in Hollywood or selling your tech company - it will tax you on how you live in Switzerland, which may be a much more modest sum.

Demand in the Swiss luxury market is becoming more diverse, too. Middle East, South East Asian and South American interest is apparently strong, and even if the Chinese are not buying in great numbers, they're certainly heading for the slopes. And of course there are plenty of Swiss buyers in the luxury segment; after all, a country with 36 billionaires - almost as many as France, and with a much smaller population - isn't short of a crust!