13 instead of 25 million: the value of luxury real estate drops

For 25 million francs, had to sell the owners of the time in 2013, his luxurious Villa in Erlenbach ZH, in vain. About four years later, it came to foreclosure, but again, no one was willing to pay the 17 million reduced the minimum price for a terrace house, which has, according to a report, about 600 square feet of living space, nine bedrooms, five bathrooms, an Indoor Pool, a Sauna and a large garden with stunning views over the lake of Zurich. In the last year the property has changed, finally, for alleged 13 million.

How critical is it must be the luxury segment in the real estate market, one may conclude that if an object at the Zurich gold coast loses within six years almost half of its value. But Fredy hare Maile, head of real estate Research at Credit Suisse, says "In the premium segment failed real estate sales are rapidly an issue, because they are suitable for a Story." Thus, hare Maile, "there is a certain amount of distortion of perception".

Before jumping to conclusions, Jan Eckert, head of the Swiss branch office of a real estate consultant JLL warns: "The sale of luxury objects is less a question of price, but greatly from the individual taste. Basically, there were not enough buyers for such a property, says Eckert, but it need his time until the right one was found. "Because, quite simply, the lid must fit on the pot."

prices recover after the crash

Oversized property, such as the introduction described, or objects with lovers of character are more difficult to sell, admits Bunny Maile. "This has partly to do with changes in status symbols," the Credit Suisse expert, "they are also subject to certain fashion trends." If in the luxury market there were problems, especially in the Alps, with luxury apartments and houses, supplemented hare Maile. In the urban and peri-urban communities, or real estate with Lake access would occur with little difficulty.

but it is also true: high-priced real estate, experienced already better times. And you are a few years back. According to hare Maile this exclusive Segment had – it makes 1 to 2 percent of the total market – 2012/13 cooled it down. "Currently, a recovery is felt, says the real estate expert if equal to "are not given to the old conditions of seven years ago." He doesn't like anyway, talk of a sale jam: "purchases continue to take place, and there is cash-rich buyers, such as entrepreneurs or top managers of medium-sized and larger companies."

However, the objects would be tested today by the buyers in-depth, and notes of the Credit Suisse man. He sees this as a good sign, it means that "the market is unlikely to be determined by speculative elements". If Jan Eckert speaks, nevertheless, of an "enormous range" in the prices of luxury villas, this is mainly due to the extremely tight market. Add to that: In the Canton of Zurich no transparency in real estate transactions, because the Public can not view the corresponding data. This is in contrast to Geneva, where manual changes must be disclosed. Jones Lang LaSalle sees of estimates for luxury objects in the Zurich area.

"The Zurich gold coast is not for all of the wealthy apartment seekers the ultimate." Fredy hare Maile, head of real estate Research at Credit Suisse

Why, in particular, foreigners are noticeably more cautious when buying property in the top price segment, it is still a couple of years ago? From the point of view of hare Maile, there are a number of different reasons, Ranging from the strong appreciation of the Swiss franc since 2011 on the strategy of domestic banks, with higher transparency requirements in relation to foreign buyers – up to the fact that the bonus payments in the financial sector turn out to be less lush and to a smaller recipient of the circle are limited.

The real estate expert of Credit Suisse also refers to country-specific barriers, such as the sanctions against Russian individuals (which can complicate financing) or the introduction of an additional Stamp duty on second homes in the UK. Demand-absorbing for high-priced real estate, the, hare Maile, "the noticeably lower number of commercial settlements acts" in this country, resulting in less foreign top executives in Switzerland are sent.

Not to mention regional characteristics, such as the abolition of lump-sum taxation in the Canton of Zurich are finally. This is according to the hare Maile "unattractive for very high net worth individuals" become, especially as the neighbouring cantons of sticking to the flat-rate taxation. "Add to that the Zurich gold coast search no more for all of the wealthy apartment the ultimate", as the real estate expert is running. "In addition to the Ageing, particularly the insufficient development of the motorized transport for the municipalities on the right Bank of lake Zurich, had a negative impact."

No depreciation wave in sight

The above-described case, the luxury Villa in Erlenbach also provided for headlines, because the lending banks as a result of the drastic price had to collapse to write off ultimately, approximately 4 million Swiss francs. When asked about this, hare Maile left: "single cases are not excluded, but we do not expect a wave of write-downs on luxury real estate."

Jan Eckert is of the same opinion, although the risk of mortgage lending for high-priced objects is usually bigger. This is because of the narrow and largely opaque market and the resulting greater Price swings – especially if sales have to be handled under time pressure. In this Segment, banks would usually wear due to more restrictive credit conditions, such as, for example, a lower mortgage loan-to-value of the object. "Nevertheless," said Eckert, "it can happen, that credit must make the donor the one or the other of millions of copyist." (Editorial Tamedia)

Created: 12.02.2019, 14:53 PM