The goal that less building will take place with the adoption of the second-home initiative has been achieved. But too little building activity is not good either, because there is a lack of housing for locals. The public sector is called upon. Real estate agent Sascha Ginesta is convinced of this.

Engadin Post: Mr Ginesta, the real estate market is going like clockwork, which must make you happy as a real estate agent?
Sascha Ginesta: Of course we are pleased. For us, however, it is less the price trends that are decisive than the fact that transactions are taking place. It would be worse if there were hardly any market at all, as was the case about five years ago ...

... but the higher the prices, the more commission you earn?
The volumes have a certain influence, that's true. But they can't be weighed against the number of transactions. If I have a ten per cent price increase, but I can close two fewer transactions, the bottom line is that there is less money in the till.

Wo sehen Sie die hauptsächlichen Treiber für die gegenwärtige Preishausse?
Es gibt drei wichtige Themen und zwei Nebenschauplätze. Das knappere Angebot, welches primär mit den Auswirkungen der Zweitwohnungsinitiative zu tun hat. Dann haben wir pandemiebedingt einen starken Nachfrageanstieg. Drittens ist die Finanzierung extrem günstig. Als Nebenschauplätze bezeichne ich zum einen die Diversifikation des eigenen Anlageportfolios. Wer beispielsweise an der Börse Geld verdient hat, geht jetzt vielleicht in ein Immobilieninvestment. Auch für den Anleger, der sein Geld auf dem Konto hat und dafür Negativzinsen bezahlt, kann die Immobilie eine attraktive Alternative sein. Zum anderen ist es das veränderte Reiseverhalten, Ferien in den Schweizer Bergen sind in.

Where do you see the main drivers for the current price boom?
There are three important issues and two side issues. The tighter supply, which has primarily to do with the effects of the second-home initiative. Then we have a strong increase in demand due to the pandemic. Thirdly, the financing is extremely favourable. One of the things I call secondary is the diversification of one's investment portfolio. For example, someone who has made money on the stock market might now go into a real estate investment. Real estate can also be an attractive alternative for the investor who has his money in the bank account and pays negative interest on it. On the other hand, it is the change in travel behaviour; holidays in the Swiss mountains are in.

Is the current development healthy?
Perhaps not healthy, but it also comes as little surprise. The trend was already apparent before the pandemic, but the fact that prices are now rising so sharply is due to Corona. Since the Second Homes Act came into force, hardly any new homes are being built, so there is a shortage of supply, which drives prices up. This corresponds to market logic and cannot be called unhealthy per se. But it is a development that probably cannot continue as extremely as it has in recent months forever.

You mentioned the effects of the Second Homes Act. Does the law also have negative consequences, especially for the market of primary residences?
You always have to keep in mind what the aim of the second-home initiative was: not to build any more holiday homes, and this aim has been achieved. But if there is no more building at all, that is not only good, especially for the primary residence market, where new flats are urgently needed. These were previously built in the wake of the construction of second homes. Today, this driver for a financially exciting project is missing.

It is not that there are no more new second homes, on the contrary. The law offers many loopholes ...
... I wouldn't call them loopholes. There are exceptions defined in the law, for example the expansion of buildings that characterise a locality or the additional construction of second homes to cross-finance hotel operations, there are possibilities for expansion. But significantly more is not being built. The building permits primarily apply to the replacement or expansion of existing buildings.

The fact is that a very large housing stock, the so-called old-law flats that existed before the initiative was adopted, have no restrictions on use whatsoever. In the case of a conversion into a second home, the local resident is left out in the cold.
This is the case when we talk about flats that were built before 11 March 2012. According to the old law, these can be used freely as primary residences, but completely legally also as secondary residences. Legally, no conversion takes place. However, this has always been the case and has nothing to do with the initiative. For primary residences built after this date, there are virtually no loopholes. If the municipality controls this seriously, no one who does not have a residence and tax domicile here is allowed to live in such properties. This is the responsibility of the municipalities, and they would do well to control this seriously.

But there are political efforts at the national level to soften the law on second homes. One example is the motion by National Councillor Martin Candinas, which demands that in the case of demolition and reconstruction, the living space can be expanded by 30 per cent, also for additional second homes.
This concerns existing buildings, which may be expanded by 30 per cent today. In the case of demolition, the 30 per cent may not be expanded according to today's regulations, there may also not be more units, and the building must be on the same site. This is in line with many other policy aspirations, such as densification or energy-efficient building. The buildings that already exist should be allowed to be renovated or redesigned as efficiently and sustainably as possible. This does not prevent a single primary residence, but is an improvement of the existing situation.

Where do you see the problem in the primary residence stock?
That flats are rented out as holiday homes in the long term, or that flats under old law that have been used as primary residences until now are sold. And when they are sold, it is clear what will happen: they will be used as second homes in the future. But that is legal, as I have already said. Another problem is the scarcity of building land. Where is there still a greenfield site where someone can put up a house with rental flats? For me, the greatest challenge is for politicians to enable the construction of primary residences and to provide the necessary building land.

But the public authorities would also have the possibility to intervene via the Secondary Residence Act. For example, it could restrict the unhindered conversion of old-law flats. Yes, the Secondary Residence Act could be tightened up to that effect. But I doubt that any municipality would take the necessary steps.

Why?
On the one hand, the added value from second homes is very important for the coffers of the municipalities, key words being taxes on changes in ownership and property gains. On the other hand, you have to ask yourself who would be directly affected by such a tightening: Again, the local resident who has lived and worked here for 30 or 40 years and suddenly would no longer be allowed to sell such an old-law flat as a second home. The destruction of value would hit precisely this local resident. In my opinion, the Secondary Residence Act is already very strict today. What was not taken into account at the time is that we still need building activity - for primary residences.

Where else could politics become active?
I think in the area of structure planning. The municipalities are currently challenged to revise this and to set the right impulses with the upcoming zoning plan revision. In my opinion, the municipalities should be very consistent in defining the residential zones that they still have in the habitable locations, namely for local housing, if possible in a central location with short distances and high utilisation. There are, however, plots of land that owners do not want to build on because they interfere with the view or impair privacy. This problem can be counteracted with well thought-out building legislation. What is absolutely needed is more rental housing. I have the impression that the Engadine has been out of the rental housing market for a long time. In other regions, on the other hand, nice rental housing estates are being built, in the Rhine Valley in Chur, for example. I'm not talking about residential silos or classic staff housing, but about attractive blocks of rented flats with perhaps twelve to fifteen flats. Little or nothing is happening in the Engadine. Also because the construction costs are higher than in the Chur Rhine Valley, which reduces the return.

They say it. Private companies do not build such settlements because the returns are not attractive enough. So it's up to the public sector?
I'm not saying that private companies don't build such housing estates. If attractive plots are available, I am convinced that investors can be found for such apartment buildings. I am fundamentally opposed to the public sector acting as a developer of housing and intervening directly in the market. For land owned by political municipalities, for example, there are possibilities to transfer them to housing cooperatives that operate independently and goal-oriented according to defined statutes and regulations. In the cities, such housing cooperatives work very efficiently against the housing shortage.

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