Real Estate Investment
Second Homes and Vacation Homes in Switzerland
Second homes and vacation homes are very popular in Switzerland. According to housing statistics, this sector comprises around 419,000 properties. Or to put it another way: almost one in nine dwellings in Switzerland is only used on a temporary basis. At the beginning of November 2005, the Federal Council decided that, in future, foreign nationals will be able to purchase land or property in Switzerland without being subject to a complicated authorization procedure. However, the relevant law, the Lex Koller, is not expected to be abolished completely until 2010.
Vacation Homes in Switzerland Still Attractive
Around 1,400 vacation homes are purchased by foreign nationals every year. Since January 1, 1985, however, a law known as the Lex Friedrich, and as the Lex Koller since October 1, 1997 (cf. appendix), has imposed restrictions on the acquisition of second homes and vacation homes in Switzerland by foreign nationals. Between 1996 and 2004, a total of 12,150 transfers of ownership to foreign nationals were authorized. This corresponds to around 10% of the housing stock expansion in Switzerland during this period.
Tourist Areas Equal Expensive Owner-Occupied Apartments
The demand for vacation homes in selected tourist areas has increased again in recent years, a fact which is reflected by the rising property prices. Since 1995, the price of high-quality, owner-occupied apartments in many tourist areas has climbed to well above the national average. The biggest price rises have been seen in the Upper Engadine. Between 1995 and 2005, price increases for owner-occupied apartments in St. Moritz, Celerina or Silvaplana have been 42.5 percentage points higher than the Swiss average. In Pontresina, prices have climbed even faster.
Nowadays, high-quality owner-occupied apartments in St. Moritz are priced at around CHF 10,000 per square meter - a perfectly "normal" price which is comparable to those in the cities of Geneva or Zurich. In the luxury category, prices of CHF 25,000 per square meter are quite commonplace. Price trends in other key tourist areas, such as Gstaad, Davos, Ascona, Verbier, Villars or Zermatt, have also exceeded the average, though not to the extent of those in the Upper Engadine.
In recent years, investments in vacation homes at prime locations have enjoyed significant appreciation in value. However, this was by no means the case for all locations and properties. In areas where the infrastructure is less developed and where there is no guarantee of good skiing conditions, the price of vacation homes has remained the same over the last decade or fluctuated only slightly.
Abolishing the Lex Koller is unlikely to lead to an increased demand for vacation homes. First, the quotas defined by the Lex Koller are not being fully exploited even now. Second, we expect that the particularly popular tourist destinations will issue the necessary regulations based on the Spatial Planning Law in order to restrict an increase in supply.