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More international property buyers attracted to Switzerland, report suggests

The new Swiss Residential Development report from Knight Frank also says that Switzerland’s benign tax environment has heightened its appeal for the world's wealth investors.

Switzerland's attraction lies as much in its lifestyle offer as its economic performance and its reputation as a safe haven. The country's accessibility, its financial centres Zurich and Geneva, as well as its mountainous scenery provide High Net Worth Individuals with the means to work in a global city and live in a breathtaking environment while also taking advantage of an unrivalled range of outdoor pursuits. The country's excellent schools and universities have also been a motivating factor for HNWIs looking to relocate with their families, it points out.

Against this backdrop and with Switzerland now home to 573,000 millionaires, a figure that is forecast to rise by 52% to 872,000 by 2020, a number of developers have reviewed the level of product being offered in Switzerland's up market resorts and its key cities.

Until recently buyers in Switzerland, many of whom had a portfolio of homes in London, New York and Hong Kong, were unable to match the quality, finish and specification they were accustomed to when looking for a Swiss residence. Evidence suggests the bar is now being raised and new developments such as 51 Degrees in Leukerbad and Du Parc Kempinski Private Residences near Lake Geneva have made significant inroads when it comes to addressing this issue, the report also points out.

Demand for Swiss luxury homes is increasing with foreign interest being a key driver. The number of foreign permanent residents living in Switzerland increased by 23% between 1995 and 2009. After Europeans, Asian nationals represent the largest number of foreign residents, increasing by 40,000 over the 14 year period.
‘We expect demand, given the scale of wealth generation in Asia and the emerging BRIC economies to continue an upward trajectory. Forecasts suggest Switzerland will have one of the highest densities of millionaires at 24% by 2020, exceeded only by Hong Kong and Singapore,’ says the report.

On the supply side, land in Switzerland is severely constrained with 60 to 70% of land now protected and the planning process is known for being protracted, for example it can take a developer of a large scale scheme 10 to 15 years to obtain a permit.
‘Although the economic fundamentals provide in themselves a sound footing for the Swiss market, perhaps the largest boost came in the form of the Swiss National Bank's (SNB) decision to cap the Swiss Franc in September of this year. This decision had, almost overnight, a dramatic implication for British buyers wiping millions off the purchase price for those looking at the top end of the market,’ the report explains.

‘The SNB's main goal was to boost exports and tourism, although the country's second homes industry could end up being as big a beneficiary,’ it adds.