Why It Is So Hard For Foreigners To Buy Property In Switzerland
In addition to its charm and beauty as a holiday destination, Switzerland is appealing to the international community because of its overall economic and political stability, well protected natural sceneries, world-class education system, and low crime rates.
But how hard is it to actually buy a residential or holiday home in Switzerland if you are not Swiss? Very hard. In fact, almost impossible without a permit. Unlike other Alpine countries such as France, Italy, Austria or Germany, Switzerland is not part of the EU, and has therefore enacted laws restricting foreign property acquisition.
The Lex Koller rule in Switzerland is a long-standing law that essentially bars foreign property acquisition subject to a permit. Lex Koller distinguishes between categories of real estate such as a commercial and residential as well as types of purchasers. A person looking to relocate to Switzerland is in regarded differently than a person wanting to buy a holiday home. Alpine holiday homes are slightly less difficult to purchase, but even then, only 1500 permits shared between the 26 different cantons are granted to foreign buyers each year. Other restrictions differ from area to area. Certain areas prohibit the reselling of a property owned by a foreign national if it has been owned for less than five years. In other areas, foreign buyers can only buy residences from other foreign buyers. And in the third type of area, a foreign buyer may acquire an apartment only if foreign occupancy is less than 50%.
Subsequently, Switzerland passed the Lex Weber Referendum in 2012. This law prohibits new builds of holiday homes where 20% or more of the residential properties in the area are already holiday homes. This basically means that new holiday homes cannot be built in popular ski- resorts as these areas already have a high number of second homes. Since this law led to less second homes being built, further restrictions were imposed on foreign acquisition to ensure that Swiss buyers are not pushed out of the market.
The bottom line is, buying a residential property in Switzerland is an exclusive once-in-a-lifetime opportunity for foreign buyers due to the existence of these laws. It certainly is difficult, but this article is the bearer of excellent news.
A renowned Swiss developer has transformed a scenic mountain village in Central Switzerland into the ultimate year-round Alpine destination. Nestled within a striking valley in the heart of the Alps and boasting a 18-hole championship golf course, luxury hotels, apartments, and exclusive chalets, it is an unbeatable skiing destination in the winter and an impeccable summer retreat. Alongside this project, a major redevelopment of the ski area is taking place, which will connect this mountain village to its neighbors. In a seamless blending of old and new, this resort has been flawlessly integrated into the historical village, resulting in world-class facilities set in rural mountain charm.
And now for the excellent news! This development has managed to secure an exemption from the Lex Koller Law, thus allowing foreign nationals to buy residential properties within the resort without the need for a permit. Property restrictions that exist throughout Switzerland with regards to foreign buyers have also been lifted for this particular project. There are no quotas for foreign owners, no size restrictions, nor is there any minimum holding time before foreign buyers can resell. To top it all, this development is exempt from the Lex Weber Referendum, which puts a cap on the construction of second homes at the 20% mark of the total number of properties built. This means that local interest in this development is also high.
These exemptions are special because they were never granted before by the Federal government and it is predicted that they will not be granted again in the near future. This essentially means that the development in question is the only area in Switzerland where foreign buyers are free to buy Swiss properties without any restrictions whatsoever.
As a result of these exemptions, interest in this particular development is, understandably, sky-high and a large percentage of investors are foreign nationals. So, why is this Swiss project extremely valuable within the international market?
Here are 8 compelling factors non-Swiss investors are considering when investing in this development:
1. Switzerland as a safe haven for real estate investments
The stability of the Swiss housing market as well as the solid Swiss franc are appealing factors when considering a property investment opportunity. Further, the Alpine town in question has seen a highly dynamic growth since the inception of this project.
2. Low density and natural areas are high in demand
The increasing demand for properties in low density locations with more green spaces and less housing units on a piece of land is a result of COVID lockdowns and the trend is growing. Considered a low-density area, this project is set in a mountain village in the middle of the Swiss Alps and gives homeowners and visitors alike direct access to nature in both summer and winter. With sweeping views of the valley, residents will be able to experience a snow-blanketed Alpine winter and a vibrant summer amidst endless greenery.
3. High demand throughout the Pandemic
Sale prices have increased by 16 % since 2018. Further growth is forecasted as sale prices remain favourable compared to competing resorts. The increase in sales volume and prices were also evident in 2020, in spite of the COVID pandemic.
4. A once-in-a-lifetime opportunity
This is the only Swiss project within the country that allows foreign buyers to buy residences without a permit or any other restriction. Irrespective of nationality and residency, foreign buyers may buy and sell apartments and houses freely within this project, which is particularly rare. They may also sell with no minimum holding time.
5. Long-term value growth of assets
The demand for real estate in this Alpine village has grown exponentially since the inception of the real estate project in 2012. Ninety percent of the completed inventory is sold with over CHF 500M in sales to date. The result is a steady capital appreciation of 6% within the last 5 years.
6. Upside potential for rental yields
Due to a substantial undersupply of rental accommodation, this project offers a unique investment opportunity for investors wo are seeking yield-generating properties. The developer offers guaranteed Return on Investment for selected properties ensuring steady returns.
7. Strategic Location
Supported by a robust road, train and air travel infrastructure, Zurich and Milan are reachable within 1.5 to 2 hours. Transfer times from Luzern and its neighbouring private airport are available within 45 minutes.
8. All year-round destination
Listed as the best performer in the Savills “Ski Resilience Index”, this project is a snow-safe resort with a long ski season throughout the winter. Combining a state-of-the-art skiing infrastructure with the elegant simplicity of endless meadows and hiking trails, this charming Alpine village is rightly a year-round destination, attracting visitors throughout the seasons for both leisure and business.
A rare window of opportunity – the time is now!
The combination of this rare buying opportunity with the picturesque nature offered on the table makes this development a winning combination. Further investments, designed to create value for property owners and visitors alike, are planned across the different sectors within this destination that has already seen a transformative change over the last 10 years.
The properties on offer include chalets, luxury apartments, penthouses, and world-class hotel-serviced apartments and can be bought freehold. There is also a rental scheme with guaranteed rental yields available to buyers seeking an investment opportunity.
For investment inquiries, please contact:
Slim Habli, IMCM
Founder & Chairman
Bellevue Zurich Advisory AG
Bahnhofstrasse 10, 8001 Zürich, Switzerland
T (Office): +41 43 456 2577
M (CH): +41 79 840 00 01
M (UAE): + 971 50 655 6001