Geneva - where property's so good they don't want to sell it

Restrictions have eased for foreigners buying property in Switzerland, but in Geneva, there are still obstacles - notably a lack…

Restrictions have eased for foreigners buying property in Switzerland, but in Geneva, there are still obstacles - notably a lack of properties for sale, writes Orna MulcahyProperty Editor

PITY THE Russian oligarch who decides to move to Geneva, having heard that the Swiss city offers a favourable tax regime, terrific lifestyle and easy access to the capitals of Europe and beyond.

With CHF10m-CHF30m (€6.2m-€18.5m) to spend he expects to find a villa in the posh enclave of Cologny overlooking the lake, or a luxurious bachelor pad in the Quartier de L'Eglise Russe - Geneva's Belgravia.

It is this kind of customer that makes estate agents like Sergio Martinez shrug their shoulders in a gesture that says "What can we do . . . there are rules." Because before the Russian can even contemplate viewing properties in Geneva, he needs to have some serious documention. While it has become substantially easier in recent years for foreigners to buy in Switzerland, the rules governing property purchase are complex and time consuming.

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Russians, in particular, are finding it difficult to buy themselves a base in Geneva, with EU citizens getting first preference for the necessary "B Permit" without which one can neither work nor buy.

Once our Russian has gained a permit - by declaring an income sufficent to prove that he will be no burden on the Swiss - then he can start looking at property but again there are obstacles. He can't expect to see colourful brochures or virtual tours. Quel horreur!

Vendors at the top end of the market would not dream of putting their home on show for anyone, particularly their neighbours, to see. There are no virtual tours and an actual tour can only be arranged with at least 72 hours notice, and, sometimes, a bank reference. The most that he can expect to see is an aerial view of the property on a site controlled by the canton.

Throughout the process he may be viewed with some suspicion, as an interloper who wants to to snatch a prize property away from a Swiss national. However, in all this the Russian buyer has a distinct advantage over the local buyer - he is prepared to offer the asking price.

Traditionally, this is unheard of in Switzerland where a price is suggested and is then whittled down through furious negotiation. Now, with Russians, British, Canadians, Asians and even some some Irish buyers dipping toes in the Geneva market, the local buyer is being squeezed. For foreigners just getting to grips with the system is daunting.

Enter the British estate agency Aylesford, which specialises in the upper end of the London market and which has now opened an office in Geneva to service overseas buyers who want either a home in the city, or a chalet in the Alps.

"The primary reason to be here is fiscal," says Christian Woolard, who joined Aylesford last year from the banking sector. "After that, it's quality of life."

Corporation tax can be negotiated canton by canton, and companies can work out a bespoke fiscal deal. Big companies like Proctor Gamble pay as little as 4 per cent in corporation tax which makes it very attractive to move whole operations to Geneva and the surrounding villages and towns.

Yahoo and Cadbury Schweppes are just two of the companies which have recently made the move, and the city is also bracing itself for an influx of so called "non-doms" from the UK, wealthy tax exiles fed up with looming levies and less attractive living conditions in London.

Sergio Martinez, who was headhunted by Aylesford, says that developers hoping to cash in on the influx of foreigners will be disappointed. When asked how property people from overseas can make a profit in the Swiss market, he is frank. "They cannot. I have had some guys coming in, some Irish too, who want to start developing and making money here but it doesn't work like that." Most Genevans will never buy a property - the city has one of the highest tenancy levels in Europe, with around 83 per cent of the population happy to rent, forever if necessary.

"If they do a buy a property, it is one they intend to die in," said another agent in the Aylesford team, while explaining the Swiss attitude to renting. Tenant protection is exceptionally high and most families rent from large institutions such as insurance companies or pension funds rather than from individual landlords.

Rents are reasonable and properties can pass from one generation to another with ease. Should a landlord want to retrieve a property from a tenant, it can take up to five years to get vacant possession.

This makes it difficult for outsiders to either buy or rent apartments, and increasingly those planning to move to Geneva have to consider living outside the city in the surrounding towns or in Lausanne, a 40-minute drive way. According to relocation agent Odile Reyes, it is becoming harder to meet the demands from families relocating.

"People planning to come to live here with their families should be planning a year in advance. There are waiting lists to get into the five international schools here and then finding accommodation in the city is extremely tough.

There are ways around this of course. According to Sergio Martinez, some Russian buyers have bought small hotels, converted the top floor into a penthouse for their own use, allowing the hotel to tick over.

Despite the difficulties involved, there are still investors willing to try to crack the local market, like Irishman Eugene Brady, who has built up a portfolio of property in central London and who would like to relocate to Switzerland. "You need to have a lot of money to live there and to do a deal with the tax man." he said. "Money is cheap there, but banks are conservative and returns are small. It is a very interesting place to be if you have made your money, but it is not a good place to make money."

So what can you buy? We viewed an exceptionally large penthouse in a 1950s block with superb uninterrupted views over Lake Geneva. It needs total refurbishment and was priced at CHF12 million (€7.4 million). This included just one parking space.

In the chic neighbourhoood of Vaud between Geneva and Lausanne, CHF20 million (€12.4 million will buy you a large villa with grounds running down to Lake Geneva, while in the ski resort of Villars, you can buy a newly-finished and fully-furnished four-bedroom chalet for around CHF5 million (€3.1 million), according to John Barclay Smith who heads up Aylesford Alpine.

With rules and regulations varying between cantons and communes, potential purchasers need sound good local advice, according to lawyer Patrick-Etienne Dimier.

Dimier, a mine of information on local affairs as well as on hard fiscal facts.

Aylesford0041229069966

Patrick-Etienne Dimier00 41 22 320 3881

Odile Reyes0041 217210287

GENEVA FACTS

GENEVA is the capital of the Swiss canton of Geneva - population 440,000 - located in the westernmost corner of Switzerland. The city is on the banks of Europe's largest lake, Lake Geneva, at the mouth of the Rhone River and is bordered by the Jura Mountains to the west and the French Alps in the east.

The city is easily reached within two hours by plane from most major cities in Europe and is the hub of Europe's highway network. There are high speed train connections to Paris and Milan as well as fast trains to Spain and Germany.