Why Should You Invest in Luxury Property in Switzerland?

 Switzerland's luxury property market has remained appealing among investors, despite public-health and economic challenges of the past few years. A steady rise in prices, demand for ski properties, and investment limitations allowed Switzerland’s real estate market to boom. Investors have been more busy buying assets due to the exclusivity of luxurious properties and the rigorous homebuying policies. In this article, we will discuss the compelling reasons to invest in luxury property in Switzerland.

1. Consistent Price Growth Over the Years

CEIC Data reveals that property prices in Switzerland have grown at an average rate of 2.5% between March 1971 and September 2024. The last significant price drop occurred in December 1975, with a record-low depreciation of 9%. A strong Swiss franc has been a crucial factor in supporting price growth since 2020. According to some private banks, property investors have taken advantage of the Swiss franc's status as a high-value currency during COVID-19. 

In 2015, investors were worried when the Swiss National Bank removed the fixed exchange rate with the euro, causing a slight drop in property investments. However, these investments quickly rebounded as buyers recognized the advantages of a stronger currency amidst the challenges of Covid-19. Notably, Zurich real estate for sale has maintained high average prices for the past 40 years.

2. High Demand for World-Class Ski Properties

Market experts attribute the steady price growth in Switzerland to the high demand for ski properties. For instance, the price per square meter for ultra-prime properties in Gstaad hit EUR 30,600 (approximately US $35,386) as of October 2021. Gstaad ranks as one of the priciest ultra-prime markets globally, with average property prices reaching CHF 33,000 (about US $36,000) by January 2022. 

Some properties can even exceed US $71,000 per square meter. As a leading destination for ski properties, Switzerland's resilient resorts have been instrumental in supporting the luxury real estate market. It’s vital to note that even if you meet the requirements to buy a home in Switzerland, you must reside in the country to gain approval for any potential transaction. 

3. Strict Industry Standards

The general consensus for purchasing luxury homes for sale in Switzerland is that you typically need to be a Swiss passport holder or a permanent resident. Since the Lex Koller legislation was enacted in 1983, non-residents have been restricted from buying properties. Switzerland’s regulations are stricter compared to other markets, like Singapore, where only citizens and permanent residents can purchase good-class bungalows. In Switzerland, most foreigners can qualify for property transactions if they are:

• Citizens of the EU or the EFTA

• Holders of Swiss B or Swiss C permits

Swiss C permits allow EU and EFTA nationals to buy properties as either investments or residences, while Swiss B permit holders are limited to residential purchases. Even if you qualify, living in the country is necessary to secure approval for a transaction. Experts suggest that non-residents consider prime properties in “holiday zones,” mainly located in ski resorts. The Swiss government permits each non-resident investor to purchase one property under specific conditions:

• Up to 200 square meters of living space

• A land area of up to 1,000 square meters

It's important to note that married couples fall under the individual buyer category, and non-residents should avoid trying to establish a Swiss company to acquire luxury residential properties. Luxury property investors are particularly interested in Switzerland’s prime developments, especially well-equipped properties in emerging ski villages.

4. Switzerland Is One of the Safest Nations

Investors in luxury real estate in Switzerland are drawn to Switzerland not only for its appealing growth potential but also for its safety. In 2020, Switzerland scored impressively on the Covid-19 safety index, ranking fourth overall. The index evaluated various factors, including economic, medical, and political aspects related to the pandemic. Only Germany, New Zealand, and South Korea ranked higher. Additionally, Switzerland’s low crime rate is a major factor in its reputation as among the top 10 safest countries worldwide. 

5. Infrastructure Development and Investment

Switzerland’s economy faced challenges when it imposed restrictions on property transactions for non-residents. In response, the country focused on enhancing infrastructure development, particularly within ski resorts. Notable projects in 2020 included a CHF 27 million (about US $29.3 million) investment in Verbier’s public transportation system, as reported in 2021. 

Between 2021 and 2022, the Zermatt ski resort initiated a cable car project to connect to Cervinia in Italy. Furthermore, the report highlighted the establishment of the “world’s longest treetop walkway” in Switzerland’s Flims-Laax region for the 2021-2022 period. By prioritizing infrastructure development, Switzerland’s ski resorts have successfully mitigated the effects of strict regulations.

In Closing

Investing in luxury property in Switzerland is a smart move for wealth preservation and portfolio diversification. With its strong economy and stable real estate market, Swiss properties offer lasting value that can be passed down through generations. Platforms like WENET AG provide valuable insights and opportunities in the Swiss luxury real estate market, ensuring that your investment aligns with your long-term financial goals.