Zurich, 12 June 2017 – The vacation apartment market in Switzerland has lagged that of Austria and France in recent years. Residential property prices have stagnated in the Alpine tourist destinations here since 2011. The strong franc has weakened domestic and foreign demand. At the same time, the success of the second home initiative has led to a building boom in the Swiss Alps, so that average vacancy rate has almost doubled in recent years.

St. Moritz the most expensive destination in the Alps

The destination of Engadin/St. Moritz takes first place among the Alpine vacation destinations, with a price level of over 14,000 Swiss francs per square meter, closely followed by Gstaad and Verbier. Outside Switzerland, Courchevel (FR) has prices of over 12,000 francs per square meter, putting it ahead of St. Anton am Arlberg (AT) and Kitzbühel (AT). Square meter prices in excess of 10,000 francs are widespread in the Alpine region, including for example the Jungfrau region, Davos/Klosters, Laax or Lenzerheide. But even in the slightly smaller vacation apartment markets such as Arosa, Scuol or Saas-Fee, prices in excess of 8,000 francs are common. If you want to spend less than 6,000 francs per square meter, you should concentrate your search for a property in niche locations such as Ovronnaz, Disentis or Evolène.

Falling prices in top Swiss locations

The prices in the three most expensive vacation apartment markets in the Alpine region – St. Moritz, Gstaad and Verbier – are lower than in 2012. This is in contrast with the top Alpine destinations of France and Austria, where the prices have still been rising noticeably in recent years. However, price declines in Switzerland have not been restricted to the three luxury locations. The prices fell in all the top destinations of Grisons and Valais (with the exception of Arosa and Zermatt), in some cases quite considerably. The biggest drops in price occurred in Lenzerheide, at almost 10% year on year.

Low vacancy rates in the most expensive destinations

The success of the second home initiative has led to a building boom in the Swiss Alps, such that the average vacancy rate there has almost doubled since 2012 to its current level of 1.9%. But in the 10 most expensive Swiss destinations, the vacancy rates are for the most part considerably lower – only St. Moritz, Verbier and Laax are reporting relatively high vacancies. On the other hand, foreign vacation apartment markets such as Kitzbühel, Megève and Cortina d'Ampezzo are reporting significantly lower occupancy rates.

Further price falls expected

The demand for vacation apartments might well not keep pace with the overall demand for residential property in Switzerland in the coming years. Greater mobility in vacation habits and sharing economy platforms such as Airbnb are lowering demand for the ownership of vacation apartments. And the most important group of potential buyers, the 50–55-year-old age group, will shrink in the next few years. A generation change of vacation properties' original purchasers is also taking place, raising the availability of apartments on the market.

Market trends also point to more price declines for vacation apartments in the short term. Vacation apartments in Gstaad, Scuol, Saas-Fee, Lenzerheide, Anniviers and Engelberg could hold up relatively well. On the other hand, the market data give little reason for optimism in Davos, Crans-Montana and Zermatt.

A comparison of Alpine vacation apartment markets

The report also includes information about the destinations of Villars-Gryon-Les Diablerets, Val-d'Illiez, Leysin-Les Mosses, Nendaz/Veysonnaz, Aletsch-Arena, Ovronnaz, Anzère, Evolène, Leukerbad, Breil/Brigels/Obersaxen, Disentis/Muster, Wildhaus, Samnaun and Hasliberg.

Selected results by regions 

Eastern Switzerland and Grisons
Price levels: The square meter prices in Laax and Davos/Klosters are in excess of 10,000 francs, in Arosa and Scuol at around 8,000 francs. Vacation apartments in Surselva are more reasonable at between 5,000 and 7,000 francs. Price trends: We find the most noticeable price corrections in Lenzerheide (-9 percent) and Laax (-7 percent). But together with Arosa, these two destinations recorded the biggest price rises among the top destinations in Grisons over a five-year period. Market size: With just short of 10,000 vacation apartments, Davos/Klosters is the second-biggest market in the Alpine region, just behind Crans-Montana. Engadin/St. Moritz is also one of the biggest markets with around 8,500 properties. With 3,000 and 4,000 second homes respectively, Scuol and Arosa are among the smaller top destinations. Accessibility: Lenzerheide, Laax and Davos/Klosters are the most easily accessible destinations in the region. The journey times from airports and business centers are longer for Engadin and Arosa, but they are still around the average for all the destinations investigated. Tourist facilities: Engadin/St. Moritz has the most well developed tourist facilities. In accordance with the smaller market size, the range of facilities in Arosa and Scuol is rather less comprehensive when viewed over the whole year. Occupancy: Lenzerheide has the lowest vacancy rate of all destinations. Occupancy is noticeably lower in Arosa, Laax or St. Moritz. The vacancy rate in these towns is 2.5-3.5%. Rental capability: In the Upper Engadine, the ability to rent out vacation apartments is above average as a result of the large number of accommodation nights and expensive hotel beds. In Lenzerheide, Laax or Scuol there are on the one hand fewer hotel guests (potential vacation apartment guests), and on the other hand a relatively large number of competing apartments. Market outlook: Ongoing building activity is depressing price expectations in the Davos/Klosters region. Prospects are only average in most destinations.

Bernese Oberland and Central Switzerland
Price levels: The square meter prices in Adelboden/Lenk are around 9,000 francs, and just under 10,000 francs in Engelberg and Andermatt. In the Jungfrau region the prices are around 11,000 francs, while in Gstaad a square meter actually costs about around 14,000 francs. Price trends: With the exception of Adelboden/Lenk, the price trends for the destinations were positive year on year. In Gstaad the price correction phase of recent years seems to have ended. Over a long-term, 10-year perspective, the prices in Andermatt recorded the strongest rise of all the destinations examined. Market size: Adelboden/Lenk and the Jungfrau region are the biggest vacation apartment markets with around 5,000 units each. We count just short of 4,000 units in Gstaad. The market in Engelberg and Andermatt is significantly smaller with around 2,000 second homes in each case. Accessibility: All the destinations benefit from an above-average catchment area size. Engelberg has its nose slightly in front in that respect, thanks to the proximity of the City of Lucerne. Tourist facilities: The tourist facilities in Engelberg and Andermatt are around the average of the destinations examined.In Gstaad, the Jungfrau region and Adelboden/Lenk, the facilities are of above-average standard. Occupancy: Vacancies are below average and lower than 2%. The exception is the Jungfrau region, where vacancies are rather higher. Rental capability: Renting out a vacation apartment in the Jungfrau region is easier and more profitable than, for example, in Adelboden/Lenk, in view of the high overnight accommodation figures and hotel prices. Market outlook: Gstaad and Engelberg show an above-average market outlook in view of the stable vacancy rates and moderate building activity. An increase in the number of vacant properties is putting a damper on prospects in Adelboden/Lenk and in the Jungfrau region.

Valais and Vaud
Price levels: Price levels in the top destinations of Verbier and Zermatt are around 13,000 and 11,000 francs respectively. In Crans-Montana, Anniviers or Saas-Fee, we expect square meter prices between 8,000 and 9,000 francs. Price trends: At -6% year on year, Verbier and Crans-Montana recorded the biggest price falls. From a 10-year perspective, Anniviers stands out with a price rise of over 90%. Market size: With more than 10,000 second homes, Crans-Montana is the biggest market in the Alpine region. In Verbier we count around 6,000 properties, in Zermatt around 4,500. Accessibility: In Vaud, the destinations of Leysin-Les Mosses and Villars-Gryon have the best accessibility as a result of their proximity to the airports and population centers. The journey to Zermatt takes the longest time. Tourist facilities: Zermatt offers the most comprehensive range of touristic facilities. Saas-Fee and Verbier also have above-average tourist facilities. Occupancy: Zermatt and Verbier have few vacant properties. In contrast the vacancy rate in Crans-Montana and Saas-Fee is over 3%. Rental capability: In view of the high number of accommodation nights and hotel beds in relation to second homes, and the above-average willingness of the guests to pay, the vacation apartments in Zermatt can be rented out more simply and more profitably than in other destinations. On the other hand Anniviers, as well as Crans-Montana and Verbier, records only few overnight stays. Market outlook: Relatively low vacancies and low building activity promise above average price growth in Anniviers and Saas-Fee. As a result of the high number of vacant properties, the prospects in Zermatt remain subdued. The Aletsch-Arena has the best prospects in view of the low level of expected building activity.

UBS Switzerland AG


Contacts

Dr. Matthias Holzhey, Head Swiss Real Estate Investments, Chief Investment Office WM 
Phone +41-44-234 71 25

Maciej Skoczek, Swiss & Global Real Estate Analyst, Chief Investment Office WM
Phone +41-44-234 68 09

Claudio Saputelli, Head Swiss & Global Real Estate, Chief Investment Office WM
Phone +41-79-513 50 45
 

www.ubs.com