“The Graubünden real estate market has dried up”, Südostschweiz from 20.12.2022

from Fadrina Hofmann

Ginesta Immobilien’s real estate breakfast in St. Moritz has a long 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 in terms of transaction prices for condominiums throughout the canton,” revealed Sascha Ginesta, Head of Marketing Graubünden, right at the start of the presentation. The real estate breakfast focused on the 2023 market reports for the Upper Engadin: “The price trend for residential property is still pointing upwards,” said Franco Giovanoli, Head of Marketing Engadin. The supply rate, on the other hand, is still very low. “Very few properties are coming onto the market, especially a few larger properties and also few properties in the higher price segment,” explained Giovanoli. The owners seem to be holding on to their properties. “There is no reason to sell a good property in a good location,” said Giovanoli. The housing market in the Engadin tends to be very dry, for detached houses as well as condominiums and rental apartments.

Normalization has begun

Since the start of the pandemic, Ginesta has recorded an extremely high increase in demand for residential property in the Engadin. “The curve went through the roof in 2020,” Giovanoli said. Since then, there has been a continuous decline, albeit at a high level. “We have fewer requests for properties, but the quality of those looking has increased,” said the expert. In general, after the corona peak, a trend reversal, i.e. normalization, must be expected in the market in the medium term. In the Engadin, rising interest rates are not yet having a major impact. Only when it comes to investment properties is there less interest than a year ago. “You can tell that the market has become cautious,” says Giovanoli. The average marketing period is becoming longer again. He expects that it will take longer to sell a property in the future than it has in the last two years. “However, I am convinced that the real estate market in the Engadin in particular will continue to develop very well in the future,” said Giovanoli.

Guest speaker Andreas Ammann from Wüest Partner outlined the situation in the canton of Graubünden and throughout Switzerland. “Inflation has arrived in Switzerland in 2022,” he said. Another topic of the year is the vacancy rate, i.e. the available apartments in Switzerland. Just three or four years ago, the vacancy rate was still high in many areas of Switzerland. 2021 saw a turnaround with falling vacancy rates. On the one hand, the pandemic has triggered a surge in demand, while on the other, construction activity has slowed. In Graubünden, demand for rental properties is very high and the housing market dried up even further in 2022.  

Behavioral positive outlook

The Real Estate industry has been predicting a turnaround in interest rates for years. This year it has happened. Key interest rates are rising continuously. In spring 2022, the key interest rate in Switzerland was still at -0.75 percent and is now at 1.00 percent. “That’s a substantial change,” said Ammann. Mortgage interest rates have risen accordingly and terms have been extended. Nevertheless, the real estate market was not so strongly influenced by the interest rate turnaround. The reason for this is the intact real economic environment with an increase in job vacancies and the number of people in employment. The forecasts for 2023 also look good. Despite inflation and an increase in interest rates, the forecast for gross domestic product is +0.9%. The figures for employment, the 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 and rental apartments. The costs per property, on the other hand, have risen, which has to do with sustainable construction, construction costs and inflation. According to searches on internet platforms, the demand for rental apartments has risen and so have prices. This trend is even more pronounced in Graubünden. The increase is particularly marked in the tourist municipalities. “From 2019 to 2021, people literally fled to the mountains,” says Ammann. The situation had calmed down somewhat by mid-2022, but the demand for second and first homes is still high. “Space for the permanent resident population is very limited and that is the downer this year.”  
 

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