PROPERTY - LUXURY PROPERTY PRICES IN GENEVA ARE FALLING

Since peaking in 2012, the average price of luxury residential property in Geneva has been steadily falling. This is due to competition not only from abroad but also from Lausanne. In Geneva, only three properties worth more than 20 million francs were sold in 2018, whilst the Vaud side of the lake boasted several sales in excess of 70 million.

We had actually noticed this for several years now... The number of villas for sale in Cologny at 30–40–50% of their previous “value” is proof of this... In short, it’s a market that has lost its appeal and will pick up again, as usual, but probably not straight away.

The future of the luxury property market is very sensitive, as people with this level of purchasing power have the choice to live anywhere in the world.

It is therefore essential for a country or a city to be attractive, and I wonder whether our politicians have fully grasped this requirement?

Alain Farrugia

Prices for luxury residential property have been levelling off in Geneva for several years and are expected to rise moderately in 2019, by around 1%, according to a study by the Naef Prestige Knight Frank network. Generally speaking, the City of Calvin remains popular with the very wealthy but faces increasing competition from the Vaud side of Lake Geneva. The relatively modest outlook for global economic growth in 2019 will have an impact on the property market, notes the Wealth Report by Knight Frank, the global leader in the luxury property market, presented on Tuesday in Geneva alongside its partner Naef Prestige.

The Lake Geneva region is not spared, but the impact varies. In 2018, 118 premium transactions involving villas and apartments (with a sale price exceeding 4 million francs) were recorded in the canton of Geneva, said Etienne Nagy, director of Naef Prestige. The average price of properties has been falling since the peak in 2012. It has dropped back to the level of around ten years ago.

“Competition is intensifying, both internationally and from the Lausanne region, which is highly attractive due to the presence of international universities and the EPFL, which draw expatriates,” Mr Nagy explained. In Geneva, only three properties worth more than 20 million francs were sold in 2018, whilst the Vaud side of the lake boasted several sales exceeding 70 million. “We do not believe that prices will rise significantly in Geneva in the future,” said Jacques Emery of Naef Prestige Knight Frank.
Geneva one of the most expensive cities

Knight Frank’s luxury property index (Prime International Residential Index, PIRI), which measures the sector’s performance across around 100 cities, supports these observations. It reports an overall average price rise of 1.3% worldwide for 2018 (the lowest rate in six years), but a decline in Switzerland. Prices fell by 2% in Geneva, 1% in Zurich and 7.5% in St Moritz. Conversely, they soared in Manila (+11.1%), Edinburgh (+10.6%), Berlin (+10.5%) and Munich (+10%). Generally speaking, a convergence in luxury property prices is observed across different locations on a global scale.

Geneva remains, however, one of the world’s most expensive cities in terms of price per square metre. With one million dollars, it is possible to purchase an average of 41 square metres there, compared with 48 in Zurich and 55 in Lausanne. In Monaco, the most expensive city, one can only purchase 16 square metres for this sum. Next come Hong Kong (22), New York and London (31), Singapore (36) and Los Angeles (39).

In 2019, prices for ‘luxury residential property’ are expected to fall in several major cities (Buenos Aires, Dubai, Hong Kong, Mumbai, Shanghai), whilst they are set to remain stable in New York and Singapore. Geneva, with a 1% increase, will see a modest rise, some way behind those in Madrid, Berlin, Paris or Cape Town (6%). The completion of the CEVA rail link at the end of 2019 is expected to boost the sector on the Geneva side.
44 new millionaires every day in Switzerland

Switzerland also continues to host a record concentration of wealthy individuals (proportional to the population) and ranks 8th globally in absolute terms. At the end of 2018, the country was home to a total of 331,686 millionaires – more than in India – surpassed in absolute terms only by the United States, Japan, China, Germany, the United Kingdom, Canada and France, in that order. Every day, Switzerland produces 44 new millionaires.

The country ranks 7th in terms of the ultra-rich or UHNWIs, i.e. individuals with a disposable income exceeding $30 million: 4,768 residents fall into this category (+149 in one year), which is also a world record in terms of density. Proportionally to its population, Geneva has the second-highest concentration of ultra-high-net-worth individuals (1,344 people) in the world after Monaco.

However, the country is expected to drop down the rankings in the coming years. By 2023, the number of ultra-high-net-worth individuals is projected to rise by 20% in Switzerland, compared with 24% in France, 27% in Germany and Hong Kong, 35% in China, 39% in India, 24% in Kenya, 38% in the Philippines and 25% in Sweden. For these individuals, luxury property remains a ‘safe haven’ in times of turmoil.

Source: Bilan