Top-end homes in and around Zurich surge to record levels
(KUESNACHT, Switzerland) While home prices have exploded in cities like London and Madrid in recent years, a quieter but nonetheless significant boom is taking place in the normally staid property market in Switzerland.
Foreign buyers are flooding into places like the town of Kuesnacht, just a few minutes by car from the banking and insurance centre of Zurich, driving prices for top-end properties to record levels.
‘We are looking at this situation with concern,’ said Kuesnacht’s local council president, Max Baumgartner. ‘The price of apartments is rising fast. You can’t create more space so it’s getting harder to find affordable places.’ Rich Germans, Russians, Britons and Americans have all recently snapped up homes in Kuesnacht, which offers tidy houses and pricey restaurants and a top-band income tax rate of just 10 per cent.
Villas and apartments along the sunny bank of Lake Zurich, Switzerland’s Gold Coast, command a premium.
Buyers shell out anything from around three million Swiss francs (S$3.8 million) for a Gold Coast house, as opposed to a starting price of around 800,000 francs for a city centre apartment.
At the end of June, the price of large apartments on the Gold Coast was 70 per cent higher than at the start of the century, according to Zurich-based property consultancy Wuest and Partner. Prices for large houses were up 60 per cent.
But Kuesnacht is not the only place experiencing a boom. Prices for large houses in the city of Zurich itself rose over 50 per cent in the past seven years while sizeable apartments gained 82 per cent in value, say Wuest and Partner.
According to Fredy Hasenmaile, a property analyst at Credit Suisse, the price increases have not yet reached the kind of growth seen in Madrid, London or Paris in recent years.
And yet they are significant because of the relatively static nature of the property market in Switzerland, where over 70 per cent of the population rent the roof over their heads.
Mr Hasenmaile said: ‘The Gold Coast especially is an area where real estate is in high demand and therefore prices are rising.’ With hundreds of banks registered in Zurich alone, not to mention the extensive insurance and wealth management industries, there is plenty of money sloshing around.
‘We are currently seeing increases in salaries and high bonuses being paid, as the economic situation, especially in the financial sector, is sound,’ Mr Hasenmaile said. ‘So there are a lot of people with high increases in total compensation.’ A recent relaxation in Switzerland’s restrictive immigration laws has led to an increase in the number of foreigners, particularly Europeans, seeking employment in Switzerland.
‘There are a lot of people, especially from Germany, pouring into Switzerland and getting good jobs,’ Mr Hasenmaile said. ‘They tend to be highly qualified workers with high incomes that allow them to buy residential property even when prices are high.’
Many Zurich-based firms are run by foreigners and several multinationals have their European headquarters there.
Google recently located its European engineering centre there.
Germans, in particular, top the charts. Around 6,000 Germans moved to Zurich in 2006, significantly more than any other nationality. The majority came to work in insurers or pharmaceutical companies, according to data from the canton of Zurich.
But it’s not only workers: German pensioners, keen to avoid inheritance taxes and any future changes to it introduced by German Chancellor Angela Merkel’s government, are also arriving.
‘We also have many so-called Merkel refugees who are trying to escape inheritance tax in Germany,’ said estate agent Claude Ginesta, who deals in Gold Coast properties. And these buyers are interested only in the very best.
Mr Ginesta attests to his clients’ deep pockets: ‘There are very few properties in this area that sell for over 15 million Swiss francs but recently we had interest from buyers looking to pay 20 to 25 million Swiss francs for the right place.’
Source: Business Time 16 Aug 07
