Billionaires buying homes away from home.
A court decision last month ordering Russian billionaire Dmitry Rybolovlev to cede half of his worth to his wife highlighted some high-priced properties the couple accumulated in Switzerland, and elsewhere. How are such homes acquired by ultra-wealthy foreigners, and are the buyers always in line with the law?
While wealthy foreigners have always been drawn to Swiss real estate, in recent years a steep hike in prices, particularly on the Lake Geneva shores, has continued to find buyers from abroad. In addition to the benefit of lump-sum taxation, Joachim Wrang-Widen, regional director at Christies’ Real Estate identified Switzerland’s central geographic location, its lifestyle, respect for privacy and security, as some of the country’s other draws for affluent individuals looking for a home in this country. “You can wear your expensive watch and expensive jewellery and not be concerned about it being stolen at knife- or gunpoint… and you don’t have paparazzi or anyone else harassing people who have a face with a known name,” he said.
The law regulating real estate, puts limits on the purchase of property by foreigners and formally prevents acquisitions in the name of others, and of properties larger than a specific surface area. But exemptions to the law can be conferred by cantonal authorities by granting residency permits to foreigners, often on the grounds that the wealthy individual would be good for business in the canton. Residency permits can be awarded if the cantonal authorities are able to demonstrate that an “important cultural, economic or fiscal interest exists in the granting of such an authorisation”.
Swiss property market
The areas surrounding lakes Geneva, Zurich and Zug are considered Switzerland’s “upmarket regions” where prices have risen most sharply in recent years.
The median transaction price for a single family home in Geneva in the first quarter of 2014 was $1.95 million, more than double the median for Switzerland as a whole. One reason for the appeal of property in canton Geneva is low supply, since the number of new jobs created has far outstripped new housing units coming onto the market.
Correspondingly, rental prices have soared; throughout the entire region around Lake Geneva, prices are more than 120% higher than they were in 2000. To draw a comparison, in the same period, rent prices for Switzerland as a whole have not even increased by 50%.
(Sources: Credit Suisse Real Estate Market 2014, Wuest & Partner, Property Market Switzerland)
Info from swissinfo.ch