Luxury property in Geneva falls in price due to the intentions of the Swiss government to cancel tax breaks for wealthy individuals from abroad. For the same reason fewer foreigners comes to the city, reports portal ee24.com.
Koch de Gureyn, head of the Swiss branch of Knight Frank, said that the time when buyers were buying everything from the market, regardless of price, is over. Now customers are becoming more picky.
According to Bloomberg, the last year the number of luxury homes worth more than $6 million (€4.5 million), decreased in Geneva by 25%. With 13 consecutive years housing prices in Geneva grew, increasing by more than a factor of two. At the same time, the value of real estate in the rest of the country has increased by 53%, but in the first half of the 2013 price tag decreased by only 1%.
According to Robert Vinerta, a marketing analyst in the Zurich office Wuest & Partner AG, Zurich, and in the regions of Lake Geneva are experiencing stagnation or a slight decrease as the cost of housing has reached such values, which a lot of people are no longer able to afford.
Wealthy foreigners are less willing to come into the city, which has affected the demand for luxury housing, says Claudio Saputelli, an economist at the Zurich company UBS.
Previously, foreigners moved to Geneva because of tax incentives, political stability, and quality of life. Here are located the headquarters of more than 900 multinational corporations such as Procter & Gamble, Gunvor SA and BlueCrest Capital Management LLP. The youngest daughter of Kazakh President Nursultan Nazarbayev, Dinara Kulibayev, also moved here. She is one of the owners of Halyk Savings Bank. Dinara acquired a house in the suburbs of Geneva for a record 74.7 million francs (€60.4 million).
But in January 2012, the Socialist Party of Geneva was able to gather enough signatures for a referendum on the abolition of privileges, that pretty scared wealthy residents. However, in July of that year, the Government of the Canton and most legislators voted for the abolition of the referendum and the transfer of hearings on the issue to September 2014.
Geneva is predicted the fate of Zurich, which has already abolished the tax breaks for wealthy foreigners in 2009, which led to the fact that 97 of the 201 rich people left the canton. Most of them then settled in different parts of the country.
Prices of luxury properties in Geneva declined by 9% compared to the peak in 2011. In the eastern suburbs the reduction was 24%. And this is without taking into account the discounts that pushy customers get because of weakened demand.
Experts believe that this recession will last at least another 12 months.
Text: Ivan Ulitin, ee24.com