The state of real estate in Verbier

Already, a whole year has passed since the controversial Brexit referendum which sent waves of panic across the Channel. While the vote for Britain to leave the European Union has no doubt had an effect on our little corner of the real estate world, it is not the only thing. In fact, when it comes to real estate in Verbier, it may not even be the most significant. Let’s look a little closer.

The first thing to remember is that mortgage interest rates in Switzerland remain very low. This means that instead of seeing a big dip in prices, we have seen a reduction in the number of sales as owners are able to hold on to their properties relatively cheaply if they don’t feel they’ll achieve a sale price they find attractive.

Since Brexit, one Swiss franc has gone from buying £0.75 (close 24 June 2016 – source xe.com) up to £0.80 (close 30 June ‘17 – source xe.com). The Euro against the Swiss franc has been more stable and hovered around CHF 1.08 to the Euro.

What effect will this have on the demographics of property owners in Verbier? Pound sterling denominated vendors are benefiting from favourable exchange rates when selling a property, and Euro denominated buyers are benefiting from a more stable Euro against the Swiss franc when purchasing.

Another referendum, held here in Switzerland in 2012, referred to as the Second Home or Lex Weber initiative, has actually had a far greater impact on the local real estate market. This legislation governs the proportion of properties within a commune which are secondary (or holiday) residences. The intention is to limit the number of what is termed “cold beds” in a village. These are properties which are empty for the vast majority of the year, and the intention is to limit these to 20% of the village. Of course, in Verbier, we already have well over this percentage of homes which are secondary residences, and as a result, no new secondary homes are being approved for construction.

Additionally, since last summer, the Commune de Bagnes has been under scrutiny from the Canton du Valais about historical planning approvals. Putting aside whether this scrutiny is justified or not, one of the results is that the Commune is now considering that pools (among other things) are to be included in the calculation of habitable space. This is important because the amount of habitable space that can be constructed on a piece of land is governed by the coefficient attached to that land.  Now, the more pool area you want to build, the less living area and fewer bedrooms you can have. This has not always been the case and, as a result, developers are no longer submitting planning applications to the commune for chalets including a pool.

So what conclusions can we draw from all of this?

• Building a luxury chalet in Verbier to the specifications we have become accustomed to is very difficult for foreign purchasers. If you’re looking to move to Verbier permanently though, it’s a different story. You’re a rare beast and may well be able to find some great opportunities.
• Value is to be found in the refurbishment of existing properties. As far as real estate in Verbier goes, there is still plenty of spacious older chalets and apartments which will benefit from updating. Those chalets and apartment buildings with pools will become more and more sought after.
• As new construction falls, those owners looking to refurbish should see some benefit from builders keen to secure work.
• Now is the time for British vendors to try and find Eurozone purchasers.

Lastly, and perhaps unrelated to all of this, we are seeing more properties which are available for purchase not being marketed, but rather vendors preferring to be more discreet. If you’re looking for real estate in Verbier let us know, we can keep you up to date with property news, both on and off the market that may be of interest.