Geopolitical tensions, global recessionary pressures and stock market volatility are keeping investors on their toes. Despite the current economic situation, alternative investing is gaining momentum among high-net-worth investors as real estate with a high potential for appreciation remains a good hedge against inflation. Instead of putting their money into equity and fixed-income returns, they are willing to stretch the dollar and invest in private properties to make the biggest impact, while reducing volatility and exploring new growth opportunities.
For them, overseas properties are an attractive proposition, fuelled by the reopening of international borders. In Malaysia, many high-net-worth investors are looking beyond domestic borders to diversify their portfolios as the country’s residential property market continues to face headwinds, with declining prices, weak demand and a property glut. In particular, Swiss properties are turning out to be bright spots for Malaysians who are searching for more stable and profitable prospects.
The allure of Switzerland
Unlike many property markets around the world which have taken a beating on the back of surging inflation and tightened monetary policies, Switzerland remains a safe haven for property investors.
The Swiss Franc remains strong and continues to appreciate well despite the current economic climate. Even though interest rates have risen above zero for the first time in seven-and-a-half years, the cost of debt is still lower than other European countries. The country also has a stable political and financial and economical environment which provides a sense of security for investors. Additionally, Switzerland’s tax advantages, high standard of living, good schools and excellent healthcare systems make the country an attractive place for Asian investors.
In particular, up-and-coming destinations in Switzerland such as Andermatt Swiss Alps, a small village nestled in the heart of the Swiss mountains, have caught the eyes of luxury buyers who are searching for the best deals. Although property values in the town have gone up by more than 50% in the last 10 years, they are about 35% more affordable than other large-scale ski resorts in the country.
The hidden gem is uniquely positioned to offer international investors an opportunity to own a property in Switzerland, given its exemption from the Lex Koller law that governs the purchase of real estate by non-Swiss citizens, allowing international investors to purchase 2nd home properties without restrictions and make this quaint village their home.
Also, the supply of second homes in Switzerland, especially in the upscale, new-build segment, remains low. However, Andermatt Swiss Alps is one of the few projects in the country that can bring new second homes to the market, so investors can expect good capital appreciation in the long-term. Those who join their rental programme can rake in up to 3% in annual returns too.
Andermatt Swiss Alps’ sustainability efforts also contribute to better investment values on its properties. All developments are constructed to meet the Swiss’ Minergie standard of energy efficiency, which means buildings are well-insulated, and heat and electricity are powered by renewable sources. These measures not only improve the overall performance of the buildings but also ensure the longevity of the properties – desirable for investors who are keen to put their money to good work while generating long-term returns.
Additionally, Andermatt has one of the most advantageous tax treatments in Switzerland and is only about half as high as those in the UK, Germany, France and Italy. All properties are also freehold and there are no stamp duties.
Post-Covid investor priorities
For Asian investors including Malaysians who make up 10% of buyers, the prospect of living amidst unspoiled nature is another attractive proposition.
This is due to the change in priorities post-Covid. Asian investors now place a greater emphasis on the lifestyle aspects of their investments. They seek a home away from home, where they can enjoy living amid nature in the countryside while remaining connected, rather than stay in the city centre. The lush, scenic landscapes in Switzerland give them the opportunity to enjoy the fresh mountain air while working remotely.
Year-round activities also help boost the attractiveness of the destination, and thus the value of
properties. For example, Andermatt Swiss Alps provides homeowners and visitors with a wide range of outdoor activities from winter to summer, from golfing on the award-winning 18-hole golf course, skiing on the largest pistes in Central Switzerland and hiking over 500 km of trails in the summer. It also offers many gastronomical and cultural activities as well as world-class facilities, such as hotels including the exclusive five-star The Chedi Andermatt, a new world-class 700-seater concert hall and three Michelin-starred restaurants.
Additionally, its strategic location at the crossroads of Switzerland’s north-south and east-west passes means that Andermatt is easily accessible to other cities and European capitals – Zurich is only 1.5 hours away, while Milan is 2 hours away.
Given its strong fundamentals, the allure of Switzerland and up-and-coming destinations like Andermatt Swiss Alps continue to beckon Asian investors who want a slice of the safe haven to build their wealth for the long term.
Future prospects of the property market in Andermatt Swiss Alps remain positive as new investments and developments in the pipeline not only increase the attractiveness of the year-round destination but also bring much value-add for discerning investors.
