No easy task: marketing Swiss luxury properties
The UBS Chief Investment Office GWM publishes the UBS Luxury Property Focus 2024, an annual survey of the luxury property segment. In the past year, the reality of rising interest rates has also reached the luxury segment and led to increased caution.
The price increase in the luxury segment in Switzerland, which reached almost 10 per cent in 2022, is coming to an end. Last year, prices for luxury homes rose by an average of around 2 per cent. Single-family homes in particular slowed down, with an increase of just over 1 per cent in 2023 compared to 8 per cent in the previous year. Growth in condominiums fell from 9 to 3 per cent. Overall, the luxury property market performed slightly weaker than the market as a whole, with prices currently 25 per cent higher than pre-coronavirus levels.
Little support
In the current geopolitical situation, Switzerland is considered a safe haven due to its stable institutions and high standard of living, which is a strong attraction. However, luxury property has become more expensive due to the strong franc and price trends, which has dampened international demand. The average wealth of Swiss households (excluding property) has remained unchanged in recent years. Economic growth is not particularly strong, which is affecting demand for high-priced property. According to UBS property economist Katharina Hofer, a slight decline in luxury property prices is expected for the current year.
Three out of four of the most expensive locations are in the mountains. St. Moritz tops the list with prices per square metre of over CHF 42,000. Gstaad is close behind in the luxury segment (39,000 francs per square metre). Cologny on Lake Geneva records prices of over 35,000 francs per square metre, similar to Verbier. In other municipalities with a high proportion of luxury properties in the Geneva region and on Lake Zurich, luxury properties are priced from CHF 25,000 per square metre. For a property in good condition on 1,500 square metres of land, a purchase price of eight to ten million francs can be expected there. In Ticino, luxury prices start at just under 20,000 francs per square metre.
Lower-cost locations are gaining ground
A decade ago, the renowned luxury resorts of St. Moritz, Gstaad and Verbier already held their place at the top of the most expensive Swiss municipalities and were able to defend this position unchallenged. Katharina Hofer explains: “In general, luxury markets, especially traditional ones, show remarkable stability over a longer period of time. Short-term price corrections have been largely offset over the last decade.” In the Lake Zurich and Geneva regions, there have been few changes on average in the ranking of the 100 most expensive Swiss municipalities. The situation is quite different in Central Switzerland, where the municipalities analysed in the canton of Zug have moved up an average of more than 30 places within a decade. This illustrates how attractive the low-tax strategy has long made the location, particularly for people with high incomes and assets. However, the biggest winner of the last ten years is the up-and-coming municipality of Andermatt in the canton of Uri, which is increasingly being perceived as a luxury destination thanks to the construction of numerous high-priced properties. In Ticino, on the other hand, price levels have not been able to keep pace with the other municipalities due to an oversupply of luxury flats.