THE PRICE BUBBLE
Almost, each and every developed country, at least once, has suffered from the Real Estate Bubble that has moved both cheap and normal prices of property to extremely high prices in a relatively short period of time. The most common causes are: low-interest rates which create an over-expansion of the money supply; demand-pull inflation, created through asset price rise due to the sudden popularity of such a business; and a supply shortage connected with a panic purchase of the property before it will run out. Generally, these causes can appear after legislative reforms, accessible technological innovations or/and favourable conditions for the business establishment.
At the end of September 2018, the UBS Bank has published its report about the Real Estate Bubble Index (the UBS Report) around the Globe which provides a clear indication of price-to-income levels. For instance, in Zurich, the Real Estate price is almost as twice more expensive than in Geneva, which shows that the skilled service worker who lives in Zurich and earns higher than average salary will be required to work for 5-7 years in order to buy a personal apartment while in Geneva he will need a twice less time. In addition, the UBS Report has shown that Zurich is one of the most expensive cities for apartment renting due to the fact that one will spend 34-38 years to raise enough money for the purchase of the personal apartment. The above-mentioned UBS Report has shown up that the Swiss Real Estate is more accessible for purchase rather than for rent, however, the prices have always been very high in Switzerland. Nevertheless, there are no legal restrictions or special requirements concerning rental opportunities in Switzerland, in contrast, to the purchase of Real Estate.CONCLUSION
The Lex Koller legislation has protected Switzerland from the uncontrolled Real Estate ownership by the abroad residents. At the same time such mechanism has created disbalance in the opportunities to buy the property between the EU/EFTA citizens and citizens of the Third Countries. Nevertheless, there is no disbalance in case of commercial property purchase. As for the prices, there are 26 cantons in Switzerland where you can establish your business and purchase the Real Estate for acceptable price basing on your personal needs and understanding of your business.OUR SERVICES
Of course, our company can fully assist you with your business establishment in Switzerland and provide you with an appropriate legal consultation/opinion regarding your questions or concerns. Links:
L'Assemblée fédérale de la Confédération suisse, "Loi fédérale sur l'acquisition d'immeubles par des personnes à l'étranger", du 16 décembre 1983 (Etat le 1er mars 2013),211.412.41, https://www.admin.ch/opc/fr/classified-compilation/19830373/index.html
UBS Bank, "UBS Global Real Estate Bubble Index", 27 of September 2018 – https://www.ubs.com/global/en/wealth-management/chief-investment-office/our-research/life-goals/2018/global-real-estate-bubble-index-2018.html?campID=SOME-CIOGREBI2018-CH-ENG-FACEBOOK-UBS-GREBI-WORK-20180927-BANNER-ANY-PAID
Legal disclaimer. This article does not constitute legal advice and does not establish an attorney-client relationship. The article should be used for informational purposes only.