The global elite are not only hobnobbing in Davos, they are also prospecting for retirement homes. -- The fortunes being won in the era of globalization will be invested in many cases in the mountain fastnesses of Switzerland, where property has the character of an insurance policy against Peak Oil, global warming, and a host of other calamities. -- As Haig Simonian put it in the Financial Times of London on Friday, "The appeal of economically stable and politically secure Switzerland is even greater for people seeing second homes that may become primary residences when they retire. 'The sort of people attracted to Switzerland want safe, stable markets, not a gamble,' [Sean] Collins [head of London-based Pure International] says. 'In most cases, they are buying for the longer term.'" ...
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A WARMER WELCOME IN THE HILLSIDES
By Haig Simonian
Financial Times (UK)
January 27, 2006
http://news.ft.com/cms/s/8a082dc8-8e6c-11da-ae63-0000779e2340.html
For many, the Matterhorn, Jungfrau, Bernina and the rest of the Swiss Alps symbolize all thats best in skiing. Until recently, however, Switzerland has been a virtual no-go zone for foreigners looking to buy property on the slopes. Prices were deemed prohibitive and, more important, arcane legal barriers prevented all but the most affluent -- and patient -- non-Swiss buyers from securing a home.
Slowly, however, the market is changing. From Davos to Disentis, resorts are trying to open themselves to new residents and developments while still maintaining their historic, local character. Even in St. Moritz, which recently voted to restrict the building of second homes for rich foreigners, the number of cranes towering above the rooftops is striking. Lord Norman Foster, a part-time resident, is converting two former hotels into a complex with 40 luxury apartments; another development with 32 units is rising up next to the lake; and Indian steel baron Lakshmi Mittal recently bought into a three-villa development high above the resort.
One reason for the shift is Switzerlands gradual alignment with the European Union through bilateral treaties that have reverberated as much in real estate as cheese and chocolate. Since the middle of 2003, rules on residential property ownership have been relaxed, and although restrictions still apply to second homes, purchases are immeasurably easier for foreign, especially EU, buyers. EU citizens who reside in Switzerland are now treated just like the Swiss themselves.
More changes may be coming, too. The law banning residential property purchases for investment is being reviewed and although abolition seems unlikely amid growing concerns about overdevelopment, revisions are probable, says Peter Flury of the federal agency for property in Bern.
Meanwhile, prices of ski homes in Switzerland are beginning to seem more reasonable. No one who knows Swiss cafés or hotels would ever claim the country is cheap. But property prices have, with local exceptions, climbed less steeply than in many neighboring countries. Switzerland has been relatively stable, [which] means resorts are now comparable with many French counterparts, says Sean Collins, head of London-based Pure International.
The appeal of economically stable and politically secure Switzerland is even greater for people seeing second homes that may become primary residences when they retire. The sort of people attracted to Switzerland want safe, stable markets, not a gamble, Collins says. In most cases, they are buying for the longer term.
In spite of all this progress, Switzerland remains a complicated market, with a weak central government that pushes decision-making power to the lowest administrative level. Each year, the federal government decides how many non-resident foreigners should receive permits for second homes -- currently stable at 1,420. The total is then divided among the 26 cantons.
Some, such as Zurich, still discourage all foreign buying. Others, like Valais in the south-west, with little industry and relative dependence on tourism, see things differently. Regulations also determine the maximum size of homes, as well as resale and tax provisions. Even within a canton, rules can differ from village to village. Zermatt, for example, is in Valais, but famously allocates no permits to outsiders; Verbier is much more accommodating.
Matters are further complicated by the lack of big, national real estate agencies, says Peter Frigo, residential property partner in Switzerland at Engel & Völkers, the big German agency. It is very much a local market.
But broad trends are evident. When it comes to the demographic make-up of buyers in each resort, language and relative proximity are key. So eastern Switzerland, including St. Moritz, Davos, and even Gstaad, appeal to Germans, while French-speaking areas, such as Verbier and Villars near Geneva, draw the British and, to a lesser extent, the Dutch. Resorts offering year-round attractions are increasingly more popular than strictly winter locations, appealing both to buyers thinking of retirement as well as those anticipating the eventual relaxation of rules on foreigners letting.
The types of homes available tend to fit into two categories, subject to sharp local distinctions: one-off chalets and converted apartments. Traditionally, if someone wants to build a chalet, they buy their land and then find an architect to build it, Frigo explains.
Buyers in search of something smaller have been helped by a crisis in the hotel sector that has resulted in many older, privately owned, mid-market establishments being turned into residences. Such projects are often regarded favorably by local authorities eager to save buildings that are architecturally significant landmarks. Increasingly, these are linked to the lavish in-house spas and recreation facilities, and the most luxurious can include hotel-like services, such as restaurants and room service.
The fragmented nature of the Swiss market makes it difficult to determine pricing trends. But as a rule, they have been stable or gently climbing after the sharp boom and bust of the early 1990s. In St Moritz, probably Switzerlands costliest location, along, perhaps, with Gstaad, homes cost up to SFr25,000 (16,000 euros) per sq meter, and easily average SFr15,000. By contrast, you could pay SFr8,000 in Flims, a perfectly good, but much less fashionable and internationally known resort, Frigo says.
Most agents expect gently rising prices in the future. Demand for top-end villas, costing into the millions, is likely to remain strong, although some express greater caution when it comes to mid-priced apartments.
But, again, all such comments are qualified by the impossibility of generalizing too much in Switzerlands piecemeal property market.