Restrictions already apply to foreign nationals buying res-idential property in Switzer-land but recent legal changes may make it more difficult, particularly if it is a second home.
Current regulations, known as Lex Koller, governing international buyers of Swiss property require international buyers to obtain a permit from the appropriate can-tonal and federal authorities.
The law restricts purchases by non-Swiss buyers to areas within designated ‘Holiday Zones,’ pre-dominantly in ski resorts and the immediate areas surrounding both Montreux and Lugano. In all areas, 200m2 is the maximum size of an individual property available to non-Swiss buyers.
Secondary residences
Following a recent vote, further restrictions will take effect from 1 January 2013. These will limit the number of secondary residences, for both Swiss and non-Swiss buyers, in all locations throughout Swit-zerland. The aim is for no village to have more than 20% of its properties registered as secondary residences.
The full details of the law are not yet finalised but, as it is due to come into effect in less than a year, we expect these details to become clear over the next quarter. The most obvious impli-cation is that far fewer properties will be available to non-Swiss buyers.
As far as we are being advised, it is anticipated that in the majority of cases, non-Swiss owners who cur-rently have a second home in Swit-zerland will be able to sell their property to another non-Swiss resi-dent without restriction.
However, t here is concern this may not be the case in every instance and this is naturally making some buyers nervous.
Should the law be arranged as expected and allow such transac-tions to take place without excep-tion, we expect to see a huge increase in activity by those looking to take advantage of the last few development apartments available to non-Swiss buyers. This, in turn, is likely to drive prices higher.
Prices
According to the latest figures from the Knight Frank Prime International Residential Index (Piri), as reported in The Wealth Report 2012, prices increased by 3% in Zurich in 2011 while they remained f lat in Alpine locations including Verbier, St Moritz and Gstaad, and fell by 5% in Geneva.
Switzerland has proved pop-ular with international investors and high-net-worth individuals (HNWIs) for many years. Its eco-nomic stability, relative isolation from the sovereign debt crisis encir-cling most of Europe and its benign tax environment have heightened its appeal for the world’s super-rich.
Switzerland’s attraction lies as much in its lifestyle as its economic performance and its reputation as a safe haven. The country’s accessi-bility, its financial centres (Zurich and Geneva) as well as its moun-tainous scenery, provide HNWIs with the means to work in a global city and live in a breath-taking environment, while also taking advantage of an unrivalled range of outdoor pursuits. The country’s excellent schools and universities have also been a moti-vating factor for those looking to relo-cate with their families.
Swiss Franc cap
The market received a further boost in the form of the Swiss National Bank’s (SNB) decision to cap the Swiss Franc in September 2011. This decision had, almost overnight, a dramatic implication for British buyers, wiping millions off the pur-chase price for those looking at the top-end of the market (£20m+).
Against this backdrop and with Switzerland now home to 573,000 millionaires – a figure forecast to rise by 52% to 872,000 by 2020 – a number of developers have reviewed the level of new developments being offered in Switzerland’s upmarket resorts and key cities.
Until recently buyers in Switzer-land, many of whom had a portfolio of homes in London, New York and Hong Kong, were unable to match the quality, finish and specification they were accustomed to when looking for a Swiss residence. Evidence suggests the bar is now being raised and new developments such as 51 Degrees in Leukerbad and Du Parc Kempinski Private Residences near Lake Geneva have made significant inroads when it comes to addressing this issue.
For updates on the prime prop-erty market in Switzerland and elsewhere in the world, visit www. [knightfrank.com/globalbriefing](http://knightfrank.com/globalbriefing).
