Egyptian property developer and billionaire Samih Sawiris is confident his first venture in Europe, the Andermatt Swiss Alps resort, will be a success. But there are question marks. swissinfo.ch visits Andermatt to see an extremely large work in progress.
Naked concrete, exposed wires, and dust everywhere, yet little to indicate that the site will someday be a luxurious hotel. Each journalist gets a hardhat, but it doesn’t prevent some of them from stumbling as they try to get their bearings in chilly rooms labelled “Foyer” and “Wine Cellar”.
The head of construction leads them up a narrow and dimly lit staircase that looks like some sort of emergency exit for a car park. But then they turn a corner and practically tumble into an elegantly finished apartment that looks extra glamorous thanks to the contrast.
“Oooh, I’ll take it,” jokes one woman as she flops onto the burgundy sofa and admires the décor.
Prior to the site tour, Sawiris and his key partners had given the media a status report on the project – including the fact that Sawiris had just injected another CHF150 million ($158 million) of his own money into the billion-franc resort. Once completed, Andermatt Swiss Alps will feature hotels, chalets, a golf course, a spa and an enlarged ski area.
Asked by swissinfo.ch what would be the worst thing if the resort didn’t turn out as planned, Sawiris said that failure was out of the question.
“I’m not a person who works only if it’s going to be profitable. I enjoy success and the success here would be, strictly speaking, to have created a destination in Switzerland. That’s worth a lot of money to me, and whether it makes me even richer is not the issue,” Sawiris said. This is his firm Orascom Development’s first European project.
Despite slow sales, he and his colleagues insist that everything – from the construction of luxury hotel The Chedi to the creation of Skiarena Andermatt-Sedrun – is on track.
Andermatt Swiss Alps project plans
Investment volume: CHF1.8 billion
1.4 million square metres of land
6 hotels (4- and 5-star) and approximately 850 rooms
Approximately 500 apartments, 25 private villas
35,000 square metres of commercial space
Sports and leisure centre
Congress and concert facilities for up to 600 people
Nearly 2,000 parking spaces
18-hole golf course
Chedi Andermatt hotel due to open December 2013
First apartments ready in 2014
(source: Andermatt Swiss Alps)
Many have questioned whether Andermatt Swiss Alps is too large for a small and expensive country like Switzerland.
Urs Hirt, a journalist from the Swiss trade magazine TRAVEL INSIDE, has been following the developments in Andermatt. Initially, he thought it was too ambitious, but now he’s convinced, even if he thinks it will take years for the resort to establish itself.
“What’s key for the success of this project isn’t just the creation of the hotel, the apartments and villas. In addition, the right infrastructure has to be there. It has to work in winter and in summer.”
However, the infrastructure isn’t ready yet – a fact not lost on Simon Malster, managing director of the British firm Investors in Property. His company acted as an agent for Andermatt in the early days, but no longer – a mutual decision, as Malster told swissinfo.ch.
“Basically, the people expected to buy these apartments are expected to buy the infrastructure, too. The apartment prices are CHF18,000 per square metre, which is a lot of money. They’re subsidising the creation of all of these facilities,” Malster said.
In comparison, his firm offers property in Engelberg, central Switzerland – similar in terms of the ski area and proximity to Zurich – for about CHF8,000 per square metre.
Need for quality
On the other hand, Martyn Bell of British agency Swiss Property says there’s a demand for more high-quality accommodation in the Alps.
“In many resorts, hotel quality is an issue. But in Andermatt they’re addressing this and I think it will create real tourism activity there that is well needed, in particular in this area of Switzerland,” Bell told swissinfo.ch.
And while such a carefully planned resort might not appeal to everybody, Bell believes it could be just the thing for some.
“I think it would mainly work for those who are just specifically looking for properties to use a couple of times a year and the potential for rental. Those who like their properties to be managed for them and looked after for them whilst they’re not there,” he said.
A plus in this regard for Sawiris’ resort is the exemption he received from a law restricting property purchases by foreign investors.
The Egyptian billionaire could also benefit – according to one of his personal advisers, Hans Peter Danuser – from a new law that came into force this year imposing a 20 per cent ceiling on the number of second homes in any Swiss community. Danuser believes this will drive up demand for his property since the supply is being throttled.
When all of the hotels, villas and apartments of Andermatt Swiss Alps are built, the number of visitor beds in the central Swiss village will double, elevating Andermatt from one of the smallest tourist areas in the Alps to a mid-size Swiss resort.
Before Sawiris' announced his plans in 2005, Andermatt was losing people as good jobs became scare after the Swiss army - a key employer in the region - reduced its presence.
And even though the village boasts challenging skiing at an altitude that guarantees excellent snow conditions, its tourist industry was not able to compensate for the job losses.
Andermatt was at the time considered too small to have the clout to secure financing to expand or upgrade its tourist infrastructure, leading local officials to claim that Sawiris’ plans amounted to a last chance.