Source: UBS
The Swiss luxury real estate market has not escaped the reality of higher interest rates over the past year. After an increase of almost 10 percent in 2022, the price of luxury homes rose by an average of around 2 percent in 2023. In the case of single-family homes price rises were significantly lower in 2023 at around 1 percent compared to the 8 percent recorded in the previous year, whereas price growth among condominiums fell from 9 to 3 percent. Overall, the luxury segment grew somewhat slower than the property market as a whole, and prices are currently 25 percent higher than before the pandemic.
As a safe haven with stable institutions and a high standard of living, Switzerland is in a good position to remain attractive given the current geopolitical situation. This “safety”, however, has become notably more expensive due to inflation and the strong franc, which appears to have had a dampening effect on international demand for luxury Swiss real estate. The net worth of the average Swiss household (not including real estate) stagnated in both the last two years. The economy is growing slower than normal, and so doesn’t provide much support for the demand for high-end real estate. Properties listed on the market are not attracting as many potential buyers, who in turn are increasingly questioning the high prices. This year, we expect the price of luxury properties to fall slightly in the low-single digit percentage range.
Three of the four most expensive destinations are in the mountains. St. Moritz is leading the way at more than CHF 42,000 per square meter (using the 95th percentile of observed offer prices and transaction prices). Only slightly less in demand is the luxury segment in Gstaad, at CHF 39,000 per square meter. Prices in Cologny by Lake Geneva are more than CHF 35,000 per square meter, similar to Verbier. In the remaining municipalities with a high proportion of luxury properties in the Geneva region, as well as by Lake Zurich, luxury properties change hands for upwards of CHF 25,000 per square meter. This means that a property in good condition on a 1,500 square meter lot will typically cost between CHF 8 million and CHF 10 million. Prices of luxury real estate in Ticino begin at just under CHF 20,000 per square meter.
As a general rule, the luxury property market, especially traditional properties, is remarkably stable over a longer timeframe. By contrast, the locations in Zug which formed part of the study have climbed by an average of more than 30 places within the last decade to become some of the most expensive municipalities in Switzerland. This shows how the low-tax strategy has made it an attractive destination for those with a high income and high net worth in particular for some time now. The biggest winner of the last decade, however, is the up-and-coming municipality of Andermatt in the canton of Uri, which has been increasingly seen as a luxury destination since the construction of a number of expensive properties. In Ticino, on the other hand, prices have not been able to keep pace with other municipalities due to an oversupply of luxury apartments.
You can read more about this in our recently published study UBS Luxury Property Focus 2024 .
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