According to information from Ginesta Immobilien, a turning point is emerging in the real estate industry. In the Engadine, this trend is even less noticeable thanks to the many holiday properties.
from Fadrina Hofmann
The real estate breakfast in St. Moritz by Ginesta Immobilien has become a tradition. Early in the morning, the invited guests are informed about the current real estate situation over coffee and croissants at the end of each year. The family business has brokered thousands of properties since it was founded in 1944. Ginesta serves eight market areas, including locations in St. Moritz and Chur. "St. Moritz remains at the top of the list for condominium transaction prices throughout the canton," Sascha Ginesta, Head of Marketing Graubünden, revealed right at the beginning of the presentation. The real estate breakfast focused on the 2023 market reports for the Upper Engadine. "The price development curve for residential property is still pointing upwards," said Franco Giovanoli, Head of Marketing Engadine. The supply rate, on the other hand, is still very low, he said. "Very few properties are coming onto the market, especially few larger properties and also few properties in the higher price segment," Giovanoli explained. Owners seem to be holding on to their properties. "There is no reason to sell a good property in a good location," Giovanoli said. The housing market in the Engadine tends to be very dry, both for single-family homes and for condominiums and rental flats.
Normalisation has begun
Since the beginning of the pandemic, Ginesta has recorded an extremely high increase in demand for residential property in the Engadine. "In 2020, the curve went through the roof," Giovanoli said. Since then, he said, there has been a steady decline, albeit at a high level. "We have fewer enquiries for properties, but the quality of those looking has increased," the expert said. In general, after the Corona high, a trend reversal, i.e. normalisation, must be expected in the market in the medium term. In the Engadine, the rising interest rates have not yet made much of an impact. Only when it comes to investment properties is there less interest than a year ago. "You can see that the market has become cautious," says Giovanoli. The average marketing period is getting longer again. He expects that it will take longer to sell a property in the future than it did in the last two years. "But I am convinced that the real estate market in the Engadine in particular will continue to develop very well in the future," Giovanoli said.
Guest speaker Andreas Ammann from Wüest Partner showed what the situation is like in the canton of Graubünden and throughout Switzerland. "Inflation has arrived in Switzerland in 2022," he said. Another topic of the year, he said, was the vacancy rate, i.e. the available flats in Switzerland. Just three or four years ago, the vacancy rate was still high in many areas of Switzerland. In 2021, the trend reversal came with falling vacancy rates. On the one hand, the pandemic triggered a surge in demand, on the other hand, construction activity has slowed down. In Graubünden, demand for rental properties is very high, and the housing market dried up even further in 2022.
Behavioural positive outlook
The real estate industry has been predicting a turnaround in interest rates for years. This year it has happened. The key interest rates are rising continuously. In spring 2022, the key interest rate in Switzerland was still -0.75 and now it is 1.00 per cent. "That is a substantial change," Ammann said. Mortgage interest rates have risen accordingly, and maturities have been extended. Nevertheless, the real estate market was not so strongly affected by the interest rate turnaround. The reason for this is the intact real economic environment with the increase in job vacancies and the number of employees. The forecasts for 2023 also look good. Despite inflation and interest rate hikes, the forecast for gross domestic product is +0.9 per cent. The values for employment, number of households and inflation are also still in positive territory. Ammann spoke of a "cautiously positive outlook", which will also influence the real estate sector.
New construction activity, on the other hand, is declining in all three segments - single-family homes, condominiums, rental flats. The costs per property, on the other hand, have risen, which has to do with sustainable construction, construction costs and inflation. According to search queries on internet platforms, the demand for rental flats has risen and with it the prices. In Graubünden, this development is even more pronounced. The increase is very clear, especially in the tourist communities. "From 2019 to 2021, people have really fled to the mountains," says Ammann. By mid-2022, the situation has calmed down somewhat, but the demand for second homes and for first homes is still high. "The space for the permanent resident population is very limited and that is the downer this year."
