The corona pandemic triggered a boom in demand for Swiss luxury real estate. This upward spiral continues to this day. Properties in the most luxurious locations in Switzerland were offered at around 10 percent higher prices in 2021 than in the previous year.
This is shown by figures from the latest real estate study by UBS. The increase was three times as high as the average for the last decade. Compared to the market as a whole, real estate prices in the luxury segment rose around twice as much in 2021.
Nouveau riche provide new impetus
According to the study, luxury real estate has become more expensive in all regions. Above-average price increases were on the Top locations in Central Switzerland to record. In and around Geneva, prices rose by around 10 percent on average. In Zurich and the surrounding area, they even rose by 12 percent.
“The considerable increases in assets due to a very good year on the stock market were largely responsible for the strong market development in the luxury segment,” explains UBS real estate economist Katharina Hofer (34). According to the real estate expert, this led to an increase in interest in the price category in the mid to high single-digit million range.
The Upper Engadin is the most expensive
However, prices did not only rise in the big cities. Some mountain destinations also made a leap. In the Upper Engadine, for example, the strong price increases continued for the second year in a row. It will thus reach the highest prices for Swiss luxury real estate in 2021. Properties in prime locations there currently cost over CHF 31,000 per square meter.
For comparison: in the primary home markets in and around the cities of Geneva and Zurich as well as in Central Switzerland, the luxury segment starts at a level of just under CHF 24,000 per square meter.
There are bargains in Ticino
If that’s too much money for you, you should opt for a luxury property in a sunny location in Ticino. There, prices for single-family homes fell last year. Only condominiums became slightly more expensive in Ticino. Luxurious objects changed hands from around 19,000 francs per square meter. According to UBS, prices in the Valais Alps were also below average in some cases.
According to UBS, the corona pandemic has permanently changed the demand for luxury real estate in favor of Swiss destinations. “Especially in times of geopolitical uncertainty, Switzerland, with its stable institutions, offers a coveted retreat,” says Hofer. “That should generally maintain interest in properties in the best locations.”
Nevertheless, rising financing costs, asset losses and economic uncertainty will put a damper on the willingness to pay for luxury real estate. The turbulent stock market year to date and the weak euro, which is dampening demand for Swiss luxury real estate from the euro area, are also to blame. UBS only expects prices to rise slightly in the current year. The upward trend in the Swiss luxury market, which has now lasted four years, is therefore likely to lose momentum. (dvo)