The markets are known to be differently affected by the Corona pandemic. The real estate market in Switzerland seems to be relatively stable. We at Wüst-und-Wüst magazine have asked Beat Hürlimann, CEO of Wüst und Wüst, how he sees the market for high-end residential real estate, in which his company is active.
Beat Hürlimann: This market has completely dried up on the supply side. The demand for villas, single-family houses and condominiums in the upper market segment has risen sharply in recent months. Because this demand pull has met with too little supply, a bottleneck has developed that has led to rising prices. Currently, there are still too few offers coming onto the market, which further reinforces the trend towards higher prices.
What trends do you see in the market segment of higher-quality residential properties also as a result of Covid-19?
B.H.: After a short period of uncertainty in spring 2020, caused by the shock of the outbreak of the pandemic, the conviction that residential real estate would not be referred to by the crisis in terms of value quickly prevailed on the market. In our April 2020 newsletter, we reassured readers that there was no need to worry too much about the value of their homes in Switzerland, even if other things were to happen in the short term. For some months now – and not only in Switzerland – there has been an increase in the search for detached properties and generally for properties in close-to-nature locations. There is a strong urge to spend time in the safety of nature, which is also shown, for example, by the boom in demand for bicycles.
To what other factors is the scarce supply in this sector attributable?
B.H.: High-quality real estate in good locations has been a rare commodity in small Switzerland for a long time, even if prices were stabilising in certain places before the pandemic. The covid crisis has shown that Switzerland, with its efficient healthcare system and various other locational advantages, guarantees a high quality of life, which is especially appreciated by wealthy foreign immigrants. According to our observations, the strong demand in recent months was also driven by interested foreign parties. The planned development of spatial planning in Switzerland will tend to limit the supply of residential properties in the upper market segment, which is why the value of existing properties should continue to rise in the medium term.
What are the implications of the scarce supply of high-quality residential properties for buyers and sellers?
B.H.: Anyone looking for a suitable residential property now will have to be very patient or be prepared to compromise on the object of purchase and probably pay a higher price than in 2020. Conversely, owners who are willing to sell can very likely expect to reach a better price for their property in the coming months than they did a year ago.
How stable do you consider the current development to be? Will prices remain high, even after the pandemic has subsided?
B.H.: How long the current market situation will last cannot be predicted. It is quite conceivable that the situation will ease somewhat with the foreseeable weakening of the pandemic in the coming months. Some owners known to us have postponed their intentions to sell for the time being because they wanted to wait and see how the pandemic would develop and have an effect; they did not want to leave the safe haven in the middle of the crisis.
In your opinion, what should potential buyers of such properties do to find a suitable offer?
B.H.: You should observe the market carefully, draw up a requirements profile with mandatory criteria and submit it to various marketers. It may make sense to give an exclusive search mandate to an established real estate service provider in the luxury segment. This approach can be an option if you do not have the time to follow developments on the market and check new offers, which is time-consuming. If the search is successful, a commission for the mandated service provider must be calculated in addition to the purchase price.
How good is the current market situation for sellers of upscale residential properties and what procedure do you recommend?
B.H.: Those who have planned to sell their property in the medium term should perhaps consider whether now is not the time to think about selling in the next few months in order to benefit from the market situation. In this case, it would make sense to promptly obtain a market value estimate from a reputable marketer and discuss a sales mandate. Owners are often reluctant to offer their property on the market before they have found a new home for themselves. This problem can generally be solved by drafting the purchase contract accordingly, by contractually scheduling the transfer of the property according to the seller’s wishes, so that there is enough time for the transition.
Thank you very much for this interview.