Illusion No. 19: Property owners on the “Pfnüsel Coast” always have a cold!

The real estate market on the left bank of Lake Zurich (as of 2011)

Location factors speak in favor of the Silver Coast

The proximity to the city of Zurich, a moderate tax burden and a very impressive view of the lake contribute to the attractiveness of the real estate market on the entire left bank of Lake Zurich. In recent years, the western ring road, the highway link to Lucerne and the Zimmerberg railroad tunnel (in 2003) in particular have created an excellent transport infrastructure for the left bank of the lake that is second to none. The municipalities in the district of Horgen have become much more attractive in recent years. The region’s increased self-confidence is also reflected in the new nickname that has become popular: “Silver and Platinum Coast” instead of “Pfnüsel Coast”. The Platinum Coast primarily refers to the region of the canton of Schwyz bordering Lake Zurich, which begins after Richterswil.

The price levels on both sides of the lake are similar

Banks and real estate valuation companies have been pointing out for some years now that the price level on the left and right banks of the lake is rising synchronously and that land and house prices are practically the same. Kilchberg has found its counterpart in Zollikon, Rüschlikon in Küsnacht, Horgen in Meilen, etc. Some large transactions were observed in the municipalities of Kilchberg and Rüschlikon in particular, with land values of around CHF 4-6,000/m2 of building land. Prices for owner-occupied apartments in these two municipalities have also risen to highs of CHF 15-17,000/m2, and in some cases even over CHF 20,000/m2 in prime locations. Oberrieden and Horgen have also seen incredible price developments. For a long time, these municipalities struggled to break through the CHF 2,000/m2 price barrier for building land. In the meantime, CHF 2,200 to 3,000/m2 is already being paid in good locations. There is very lively building activity in Horgen, Wädenswil and Richterswil. This is where there is still the best chance of acquiring residential property at comparatively favorable conditions. However, taxes in these municipalities are somewhat higher than in municipalities close to the city center.

Low taxes, proximity to the city and a view of the lake are the winners

A market survey by the IAZI also confirms that prices in Kilchberg are the highest and have also risen the most (42 % within 5 years). The neighboring municipality of Rüschlikon is already 12 % cheaper and has “only” seen growth of 31-35 % in condominiums. In the district capital of Horgen, the price level is around a third lower. Richterswil is at the bottom of the price scale with a price level around 40 % lower, after which prices on the Platinum Coast rise sharply again. This is certainly the biggest difference to the Gold Coast, where land prices are cheaper the further you move away from Zurich.  By comparison, the average price increase in the canton of Zurich over five years is only around 20 %. The price differences between the various municipalities can essentially be attributed to three influencing factors: The distance to Zurich city center, the tax burden and the view of Lake Zurich. A residential location close to the city center with a view of the lake and peace and quiet is the absolution for which a buyer will dig deep into their pockets. A study by the statistical office of the canton of Zurich has shown that reducing the travel time to the city center of Zurich from eleven to ten minutes increases the property price by 3.8%. This figure should be treated with caution, as too many other factors such as utilization, tax situation, immissions, south-west orientation, etc. have a greater influence on the property value.

High real estate prices with low taxes

The same study by the statistical office found that 10% lower taxes increase the price of building land by 2.5%. Because attractive residential locations attract good taxpayers, these municipalities can afford lower tax rates, which further increases their attractiveness. It is therefore not surprising that the four municipalities with the lowest tax rates in the district, Rüschlikon, Thalwil, Oberrieden and Kilchberg, have the highest real estate prices.

Lake view as a price driver

After all, the lake view has a considerable influence on the price level. For the left bank of the lake, it should be added that the view of Lake Zurich from the Silver Coast and the Platinum Coast is much more impressive than from the right bank of Lake Zurich. The lake opens up and appears larger and wider to the observer. The view of the shimmering yellow Gold Coast in the evening is also very impressive. For us, the value of the lake view cannot generally be quantified in figures. It can certainly be stated that high collector’s prices are paid, particularly for properties in good locations with attractive lake views.

The Platinum Coast

In the municipalities of Bäch, Freienbach, Wollerau, Pfäffikon and the neighboring municipalities of Altendorf and Feusisberg, prices have been going crazy for several years now. The main reason is the very low tax situation, both for private individuals and companies. In these regions, prices for apartments start at around CHF 10,000/m2 and can rise to around CHF 25,000/m2 for absolute collector’s items in prime locations. The same applies to land prices, where land prices in Wollerau are sometimes as high as in expensive Kilchberg.

The detached house is becoming a rare commodity

One development that can be observed on both shores of the lake is the surge in prices for detached and detached single-family homes. Older single-family homes are often demolished due to the opportunities for densification that have been available since 1995 and built over with apartment buildings (condominiums). There are many reasons to believe that the single-family home will be one of the most valuable assets in the future. It should be able to survive possible market downturns relatively unscathed. The condominium market is more in balance due to strong new construction. In future, the trend here could be less dynamic than for single-family homes, although demographic trends predict an increase in demand for age-appropriate apartments. Demand is currently noticeably lower for older mid-terrace houses and rooftop maisonettes. These have gone somewhat out of fashion, but represent attractive purchase opportunities for buyers with a reduced purchase budget.

Sources: Statistical Office, Migros Bank, IAZI,
Transaction data from Ginesta Immobilien AG

PFD Illusion No. 19

Author: Claude Ginesta

Claude A. Ginesta is a federally certified real estate trustee and CEO / owner of Ginesta Immobilien AG. The company was founded in 1944 and specializes in the sale of real estate in the economic area of Zurich and Graubünden. With branches in Küsnacht, Horgen and Chur, the company acts as an estate agent throughout Switzerland for properties with a supra-regional character.

Publisher of the Illusions series: Ginesta Immobilien AG, www.ginesta.ch