Friday 24 February 2017 4:06 pm

Holiday Homes: Legal changes that may make Swiss property purchases more costly in future – here's what you should be looking at

If you have a yearning to buy a Swiss ski home, you might want to get your skates on. Since 2012 a law has prevented resorts from allocating more than 20 per cent of its new build properties to second home buyers, be they Swiss or foreign investors.

Any development project already holding permission for construction prior to the changes was able to go ahead. That stock is now coming to market and, in some locations, there will be no more built. This means that in the most popular winter playgrounds, such as Verbier and Zermatt, where the quota was reached long ago, new second homes are effectively no longer available.

It’s still possible to buy resale properties, providing they have been approved for purchase as second homes or by non-Swiss residents. Developers have also found a loophole by selling projects in which the units are run as serviced hotel accommodation. Owners benefit from any rental yields, but have limited personal use, typically six weeks per year.

One such scheme is Grace St Moritz, a hotel and apartment complex with 17 one- to four-bedroom residences, selling from CHF740,000 to CHF9.9m. Properties have stunning views over the resort’s famous lake and the surrounding mountains, and are designed to be high-end serviced suites, rather than fully kitted-out homes.

A bedroom from a junior suite at Grace St Moritz

The Grace is a rare new-build scheme on the site of a former hotel, in a resort that is considered internationally chic and the grand dame of jet-set winter tourism. Like many Swiss resorts, St Moritz has reached second home capacity.

However, according to Barbara Derkson, of local agency Engel & Voelkers, the resort has a glut of properties on the market. “Over the past two years, prices have dropped 30 to 40 per cent,” she says, citing averages of CHF10,000 to CHF25,000psqm. “Right now, there is a lot of available stock.”

Derkson says this is mainly due to the state of change in international markets that means many owners are having trouble financing their ski properties and want to offload them. She also feels St Moritz was overpriced for several years and is now seeing a natural correction.

There is also a sense that younger buyers aren’t coming to St Moritz, preferring hipper locations such as Verbier.

The local authority is trying to counteract this by encouraging investment and has recently introduced new regulations that significantly relax restrictions for non-Swiss and second home buyers for the next two years. It’s one reason it also looks favourably on projects like the Grace development, which is owned by an international hotel brand associated with a younger, fashionable clientele.

According to Swiss property specialist Simon Malster, of Investors in Property, there is currently a window in which buyers might make a good deal in a number of Swiss locations. “Developers that had building permits when the 2012 law was introduced are keen to sell those properties before their permission runs out,” he says. “I’ve seen discounts of 10 to 20 per cent.”

In time, though, the lack of supply in some resorts could have two effects: to push up prices where second home stock is limited and to send buyers to resorts that are still developing. Malster points to Crans-Montana, which fell out of fashion but is now staging a comeback.

Future plans include new lifts and infrastructure, an increase in residential projects, and the arrival of international brands, such as the Six Senses hotels. Property prices in the resort average CHF15,000 to CHF20,000psqm, but Malster says he’s now seeing prime development reaching CHF30,000psqm.

Other good bets are Andermatt, where a huge residential and leisure development offers apartments and chalets, priced from around CHF309,000, with all permits for second and foreign ownership already in place.

Malster also recommends the high-altitude resort of Wengen, which he says is “always popular” and where prices hover around CHF10,000psqm.

But he cautions that such places have limited space. “As stock dries up and the amount of land is exhausted, it’s going to be more difficult to find good new projects in prime positions in the most sought-after resorts.”

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