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Despite the
sub-prime crisis, the value of Swiss real estate has
risen.
Switzerland's real estate market (Gstaad
market overview)
is experiencing positive trends, suggest Andreas Rötheli
and Cécile
Berger of Lenz & Staehelin
It currently seems unlikely that the Swiss residential
real estate market will become seriously agitated in 2008.
Both
demand and supply of residential houses are in good shape.
Supply is driven by the large number of houses under
construction (more than 42,000 units are likely to be placed
on the market this year, versus 35,000 on average
between 2000 and 2006). The number of construction permit
applications filed in the first quarter of 2008 does appear
to have slightly declined in comparison with previous years
however.
Demand is driven both by increasing immigration from EU
and EFTA countries and by a positive outlook in terms of
income for 2008, for which no major changes are expected.
The Swiss residential rental price index, established by
the
Federal Office for Statistics, shows an increase of 2.3%
for 2007.
Commercial real estate
The Swiss commercial real estate market is experiencing
positive trends after its previous years of overcapacity.
2008
is expected, like 2007, to be a year in which office supply
will decline thanks to the increase in office-based
employment (2.7% during the last quarter of 2007 – that
is, 76,000 jobs). Zurich's unoccupied office spaces are
estimated to be about 250,000 square metres, compared with
only 36,000 square metres in Geneva.
In Geneva, worth noting is the increasing office supply
outside the city centre. Generally speaking though, the
Geneva
region is undergoing a supply stagnation, due to increasing
demand and the small number of construction plots
available on the market, as well as the decision-making
process, which is still too heavily politicised, at least
for large
construction projects.
Foreign real estate investment funds and investors have
shown, these last years, a growing willingness to increase
their real estate investments in Switzerland. They have,
however, sometimes been prevented from doing so due to
a
lack of investment opportunities and high competition for
few opportunities. Switzerland is a relatively small territory,
with a rather small market.
Even though the sub-prime crisis is not expected to have
direct consequences on the real estate market, one must
stress that financing and refinancing of real estate used
for commercial purposes (that is, office space, hotel facilities,
industrial buildings) has considerably slowed down since
the second half of 2007. During the first half of 2007,
foreign
investment funds took advantage of the rising value of
Switzerland's real estate commercial properties to increase
their
leverage, at the same time bringing down their interest
rates.
Swiss property law
Swiss property law is regulated by the Swiss Civil Code,
dated December 10 1907 (the CC). These provisions are to
a
large extent provisions that entered in force with the
CC in 1907. Indeed, Swiss property law has not undergone
any
major revision since its enactment, its system proving
to be efficient and clear in practice.
Real estate ownership can take any of the three following
forms in Switzerland: land ownership, ground lease
ownership, or condominium-principled ownership.
Land ownership
Land ownership is the most standard form of ownership,
and encompasses the ownership of the land and its integral
parts (that is, mainly the constructions erected on the
relevant plot), in accordance with the so-called accession
principle (principe de l'accession) prevailing under Swiss
property law.
Ground lease ownership
The ground lease (droit de superficie distinct et permanent)
is a form of ownership that enables the owner of a plot
to
dissociate the ground ownership from the ownership of the
constructions erected on the plot. Technically, the ground
lease under Swiss property law is an easement, authorising
its beneficiary to make or own constructions above or
under the relevant plot (the so-called base plot), restricted
by the easement, and whose features are the following:
It is distinct, meaning that the easement has been granted
neither in favour of a particular plot, nor in favour of
a particular person. Such a right can hence be freely assigned
or transferred.
•
It is permanent, meaning that the easement has been granted
for at least 30 years or an undetermined
duration.
•
It has been registered as a separate entry in the land
registry.
• The ground lease
being registered, by definition, as a separate entry in
the land registry, it can be sold as
a plot to a
third party (subject to the consent of the owner of the
base plot), and can benefit from and be covered by all
the various
types of easements which Swiss property law permits. The
most interesting feature of the ground lease is the
possibility to use it, as can be done with a standard plot,
in mortgages, and hence to enable its owner to benefit
from its
enforcement value.
The ground lease is a form of ownership frequently used
for industrial zones in Switzerland. The canton of Geneva,
for
instance, has made extensive use of this form of ownership
by creating six industrial zones composed of 277 ground
leases and regulated by special regulations, enacted by
the state of Geneva in light of the specificities of each
of the
industrial zones. Generally speaking, the state or the
city of Geneva, either directly or through an entity controlled
by it,
keeps the ownership of the base plot. The relationship
between the ground lease owner and the base plot owner
is
regulated by a so-called ground lease agreement (contrat
de superficie), the main terms of which can be essentially
summarised as follows:
The duration of the ground lease is 90 years, with a right
to renew it for an additional 30-year periods.
•
The ground lease can be assigned or sold to another entity,
subject, though, to the prior written consent of the
base plot owner. Since the state of Geneva usually owns
the base plots, a written decision of the State Council
of the Canton of Geneva is required. The requirement for
such a decision needs to be taken into account in a
transactional context, since it might affect the timing
of the ground lease sale.
24.07.2009
http://www.iflr.com/Article/1984025/Switzerland-Untouched-by-sub-prime-fallout.html
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