Photo: Jess & Peter via Flickr
Despite Europe standing on the edge of the financial abyss, it’s apparently not the worst time to buy property on the continent.In particular, if you’re a high net-worth individual, now might be the time to invest in some luxury European property. But where to find this? London? Paris? A few years ago, yes, but now Switzerland is entering the fray as a top location for luxury property.
According to research undertaken by commercial real estate firm, Knight Frank, Switzerland has sought to improve its luxury property opportunities in the past two years, hoping to put itself on a parallel with London, New York and Hong Kong as appealing locations for suggestions.
The firm notes that despite being a haven for high net-worth individuals, the country has struggled when it comes to building luxury properties when compared with other locations.
So, here’s how and why Switzerland is improving its luxury property market.
According to Knight Frank, Switzerland is currently home to 573,000 millionaires.
That figure is set to rise by 52 per cent by 2020, leaving the country with 872,000 millionaires. That mean by 2020, Switzerland will have the third highest density of millionaire households in the world. In all, 24 per cent of the country's population will be millionaires.
That means there's a big market for swanky property.
Switzerland may be behind in the number of luxury properties it has but it certainly is an attractive location.
According to residential research, Zurich's luxury properties are the third most desirable in the world in terms of their security and their taxes, as well as being well located for access to educational facilities.
One of the reasons that Switzerland's luxury property has only taken off in the past two years is due to the fact that it's hard to find sites to locate new developments.
However, application for new developments have risen in the past two years. In June 2011 there were 70,900 homes under construction in the country, that represents a 5 per cent year on year increase.
One side effect of the scarcity of locations for new property is that the potential for prices of developments to rise is huge.
The vacancy rate in Geneva, for example, is 0.23 percent. For the country as a whole, that figure stands at 0.94 per cent. Additionally, in Geneva, only 2.7 new housing units are being built per 1,000 residents of the city.
This low vacancy rate combined with the lack of new housing options means that any new developments could see their prices rise considerably as luxury property becomes more in demand.
Demand for property in Switzerland is largely driven by foreign buyers.
According to Knight Frank, while the Swiss national population has grown by five per cent since 1995, the country's foreign population has increased by 17 per cent.
The country is extremely popular with foreign buyers who can work remotely or buyers seeking a second home.
Switzerland has seen a big rise in the number of Asian citizens relocating to the country.
Despite facing competition from Singapore, which offers similar tax benefits to Switzerland, the number of people moving from Asia to the country has risen by 51 per cent in the last 14 years.
About a third of Switzerland's foreign population comes from Asia, amounting to about 600,000 people.
In order to attact high net-worth individuals, Swiss developers need to show that they are providing the very best. And that's exactly what they're doing.
New housing comes side by side hotels and spas and also offers unique and cutting-edge design. It is hoped that these addition will continue to attract potential buyers.
The decision by the Swiss government to place a cap on the rising Swiss Franc in September has created an incredibly appealing scenario for potential buyers.
Though Swiss property prices are rising, the decision to cap the currency means that a super luxury property that would have cost $28 million in August this year can now be picked up for $23 million. Not quite a bargain, but a discount none the less.
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