Ski Property in the Swiss Alps

Negative interest rates, is cash no longer king?

In 2019 property prices increased by 2% in Switzerland. It is fair to say that the largest gains were in the cities such as Basel, Zürich and along Lake Geneva. This is mainly due to a lack of supply and to ultra-cheap financing. Currently there is a cost advantage of 15% for new owners (including associated costs) over renting. Prices for luxury properties (the top 5%) increased by 7%. Out of the top 25 most expensive areas, 6 are ski destinations, with Gstaad, Verbier, Davos/Klosters and Villars among those increasing over 5%.

If all this sounds rather typical of an ultra-low interest rate environment, it is. But are there additional factors in play?

The Swiss Francs in your bank account, should you have one, are now ‘costing money’. Even APi’s meagre Swiss account is debited every month. The ‘negative’ interest rate can be up to 0.75%, depending on the bank and the balance. There is much talk of bank clients now storing cash in secure vaults. But an alternative is property, which can be rented out and generates low single digit returns, with the prospect of capital appreciation. An appealing option, especially if you can use it yourself from time to time.

Of course, there are plenty of other excellent reasons to invest in a ski property in Switzerland and specifically in the mountains. But it is the combination of these factors that, anecdotally at least, seems to be changing the behaviour of property investors in Switzerland in our patch, the ski resorts.

Do many anecdotes make a trend? We have asked our partner agents in a handful of well-known Swiss resorts what they are seeing in terms of buyer behaviour, and how this is affecting the attitude of sellers, and what this all means for pricing.

VFP in Verbier – Michael Fellay
In the case of high-end properties here, the phenomenon does not seem to be leading to price increases however what we are seeing is sellers’ willingness to negotiate is virtually zero. And, where there is a good rental income, there is a trend to hold off on a sale altogether, or for at least a couple of years. This is the most significant change we are seeing, in this context, with little effect visible with regards to buying attitudes.

Gérance Service in Villars – Fred Ernand
What we hear from our buyers is that the exchange rate is the most important factor, with non-resident investors looking for a ‘safe haven’. The Swiss Franc has been steadily gaining against the Euro, Dollar and Sterling for 30 years. Of course, one of the perpetual downsides is property tax which can be somewhat higher than the negative interest rate on cash in the bank.

Annimmob in Grimentz – Tarcise Genoud
Indeed, negative interest rates have a large influence on our future buyers. Owners, for their part, are now tending to keep their property even if they had decided to sell it. Several of our potential buyers have a portion in cash in their bank account and, with the arrival of negative interest on balances above CHF 100,000, they decided to invest in a property in the mountains for their ski holidays.

We concluded several sales at the start of the year, in particular with Swiss customers because people in no circumstances wish to pay negative interest, hence an investment in property. Even those with modest budgets are delighted with their acquisition in a ski resort. In the medium term, we believe property values will trend higher.

4vallées4saisons.com in La Tzoumaz – Percy Kirkman
In La Tzoumaz, we have seen a 50% reduction in the number of luxury properties on the market during the past 12 months, with the number of sales roughly twice the number of new properties coming to the market. As a result, sale prices now are much closer to the asking prices than they were previously.

Thoma Immobilien in Flims-Laax-Falera – Silvia Toma
I think low/negative interest rates affect sellers more than buyers. They don’t want to sell, because they don’t know what to do with their money afterwards. They are not keen on paying interest to their bank just to have their money there and losing value due to negative interest, taxes and inflation.

You see a lot of advertisement from real estate agencies looking for new properties to sell. The ones I take on are sold quickly. The market is rather dry. Some potential sellers I have been in contact for years have decided not to sell although they hardly use their property. Therefore prices are increasing again, slowly.

Alpine Homes in Les 4 Vallées – Cassandra Levene
We have certainly noticed a difference and the market seems to have changed. Last year some British owners were selling and it felt to us that prices were a little weaker as a result. But with more Swiss buyers than ever before, and Swiss owners not willing to accept low offers, the market is now rather tight. The exception is perhaps Crans Montana, where a few Italian owners have been selling and it seems there is more supply on the market there. We are also active in Nendaz, and there, Swiss sellers are not willing to negotiate at all. The sales cycle has also slowed, due to negative interest rates Notaires are no longer accepting deposits, these now have to be processed by the banks.

IZ Immobilier in Nendaz – Ingrid Zumkeller
Most people buy for their personal comfort and the pleasure of having family home in the mountains.
Our feeling is that negative interest rates have a limited impact on the market here. Swiss owners tend to buy property for the long term, and negative rates is increasing their tendency to hold on to their property even though ownership costs (if not rented) can be higher than the negative interest in the bank.

On the other hand, while interest rates are very low, our experience is that strict LTV conditions by the banks, especially for second homes, are making it harder for buyers. As a rule of thumb, a 55-65% mortgage is the limit (for non-residents, 60-70% for Swiss residents) and based on conservative property valuations.  Of course, this means buyers need to part with more cash, reducing their negative interest in the bank.


Is there a meaningful conclusion? Yes and no. On the one hand, we can say that the current environment is very supportive for asset prices in general, and this is feeding through to the property market In the Swiss Alps. How much ‘fuel is in the tank’ is anyone’s guess. Clearly it is becoming more of a seller’s market as new construction projects in the Swiss Alps are limited. Those looking to make the lifestyle choice of buying a ski property in Switzerland may need a little more patience, fewer bargains are available, with the likelihood of prices moving up. Skiers will just carry on skiing…


Property for sale in Verbier   ⇒ Property for sale in Villars 
Property for sale in Grimentz  ⇒ Property for sale in Flims-Laax-Falera
Property for sale in La Tzoumaz   ⇒ Property for sale in Nendaz
Property for sale in Veysonnaz

Thank you to our contributors:

Sources: UBS Real Estate Focus 2020, FT.
Image credit Offices du Tourisme des Alpes vaudoises

Written by Alpine Property intelligence, February 2020