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The soaring value of the Swiss franc has pushed a number of Swiss investors to take advantage of their increased buying power and buy overseas property in Europe. A London-based asset management firm that specializes in investments in prime properties across Europe has reported a vast increase in interest from Swiss wealth managers eager to benefit from the strength of the Swiss franc.
The increase in value of the Swiss franc is a direct consequence of the Swiss central bank announcing an end to the currency cap against the euro which was over three years old. This has led to the Swiss franc increasing in value by up to as much as 30 percent against the euro and by 25 percent against the US dollar. Suddenly, wealthy Swiss investors found their buying power going up higher by many notches.
As a spokesperson for the London based real estate investment fund LCP said, "Swiss investors taking the opportunity to capitalize on this windfall and hedge against increasing global uncertainty in the equity and bond markets are turning their attention to blue-chip tangible assets."
The Swiss are on the lookout for safe havens abroad. It is not that Switzerland is not safe enough – Switzerland is one of the richest countries in the world and also one of the most stable property markets. However, Switzerland is a very expensive country. Buying property here is unaffordable for a majority of Swiss families. An average apartment in Switzerland costs 800,000 Swiss francs, while an average family can afford to spend no more than 733,000 Swiss francs on a property.
For this reason Swiss buyers are looking to buy overseas properties in countries such as neighbouring France, Spain, Italy and Portugal. Properties in these countries are less expensive than in Switzerland and the standard of living is not all that different either.
The Swiss are big buyers of ski chalets in the French Alps. That’s just across the border from Switzerland and there really is not much of a difference between the French Alps and the Swiss Alps – except that the ski chalets in the French Alps are a lot less expensive than those in the Swiss Alps. Just a change of nationality makes all the difference here.
The Swiss are also big buyers of luxury apartments in the Spanish cities of Barcelona and Madrid, which are among the most expensive cities in the world. Swiss buyers love Spanish culture and everything it represents. They are buying not just apartments in Spain, but also high end villas and land. The Swiss are on an unprecedented buying spree, snapping up overseas properties across Europe.
The Swiss have shown a strong interest in Portugal as well. Portugal is attractive not just to non-EU investors from China and Russia, but also to European citizens such as the Swiss, French and Germans. The reason for this is that Portugal is one of the safest countries in the world, plus, it has one of the friendliest tax regimes, especially for foreign nationals living in Portugal.
The climate in Portugal is perfect for most of the year and the Swiss have always been crazy about Mediterranean lifestyle, which is why so many have decided to buy a second home in Portugal, especially in the Algarve.
Greece, Cyprus, Turkey and Bulgaria are popular too, because of how affordable the properties in these countries are. A Swiss investor would discover that their money goes a long way in these countries - this despite the fact that the quality of life here is not bad at all. In fact, Greek islands such as Mykonos, Crete and Rhodes have been largely unaffected by the crisis that has hit Athens.
Bulgaria is another country that has its attractions. The cost of living here is very low and the pace of life is much slower than what one gets in Switzerland. So Bulgaria is another great overseas property destination in Europe that Swiss investors are looking at very closely.