Real Estate

A Swiss Chalet Construction Ban Lifts Property Values


A Swiss Chalet Construction Ban Lifts Property Values

Photograph by Maxime Vige/Getty Images

Hollywood directors, central bankers, and other vacationers built about 400,000 holiday homes in Switzerland over the past four decades. Now their investments are getting more valuable as the Swiss clamp down on new chalets. Swiss voters, concerned that unbridled development will eat up too much of the Alpine landscape, approved a ban last year on the construction of vacation homes in towns where they account for more than 20 percent of housing. “We’ve already destroyed so much of our nature and landscape,” says Franz Weber, whose Helvetia Nostra, or “Our Switzerland,” group led the campaign for the ban. “We need to protect the last intact nature like it’s golden and holy.”

Owners of “cold beds,” as the part-time dwellings are known, also are facing criticism because the properties are vacant for much of the year. “We see the permanently closed shutters without a single geranium in front of the windows,” says Jürg Zollikofer, who shares a vacation home in Grindelwald that his family and friends use throughout the year. “They turn the villages into ghost towns.”

The law affects development in almost 500 villages, mostly in the regions of Valais, Graubünden, and Ticino, according to a study by the BakBasel institute. Switzerland’s Federal Tribunal decided on May 22 to void any construction permits issued for vacation homes by local authorities since the referendum, reversing previous rulings that allowed for a transition period from the March 2012 vote until the end of that year. Since the referendum, second-home prices have climbed by 10 percent to 15 percent, according to Yvonne Mettier, a real estate broker in Arosa in eastern Switzerland. “People came to Arosa like ants and wanted to see and know everything” about the ban, she wrote in an e-mail. Arosa and Davos, where the World Economic Forum is held, are among the five areas that have seen the biggest property price increases since the second quarter of 2012, according to data from Wüest & Partner, a real estate consulting firm.

Chalets cost an average of 3 million francs ($3.22 million) in Arosa, according to Mettier. Swiss vacation homes tend to be more expensive than those in other Alpine regions: about $1,830 per square foot in St. Moritz, compared with about $650 in Chamonix, France, and less than $372 in the Austrian ski villages of Lech and St. Anton, according to figures from London-based brokerage Alpine Homes. About 4,000 vacation homes were built each year in the Swiss Alpine region between 2000 and 2010, bringing the total to 513,000, according to BakBasel. About 75,000 jobs depend on the second-home industry and BakBasel estimates the ban may cost local communities about 8,600 jobs by 2015.

Hotel owners predict the building ban will help their business, according to Thorsten Knocke, manager of the Excelsior hotel in downtown Arosa. “Once the option of holiday homes is exhausted, we expect an increase in bookings,” he says. That could help offset the damage done by the strong franc, which led to a 15 percent drop in overnight stays between 2008 and 2012, according to figures provided by the Switzerland Tourism marketing group. The franc appreciated by 32 percent against the euro over the past five years. “Investments can now flow into the hotel business,” says Weber of Helvetia Nostra. “People will keep wanting to spend their holidays here, because of the spectacular landscape, and not because they want to buy ugly holiday homes.”

The bottom line: BakBasel estimates that the partial ban on vacation homes could cost 8,600 jobs by 2015.

Gretler is a reporter for Bloomberg News in Zurich.

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