Geneva’s future mayor says multinationals based there should invest in property for their staff to help resolve the city’s “disastrous” housing situation.
Over the past ten years local real estate prices have exploded as the region has attracted new businesses and workers and housing construction has failed to keep pace. Yet observers say targeting multinationals is not the cure.
“It’s illogical for transnationals to set up in Geneva and make tax savings without making an effort to become involved in the community and ensure that the employees they bring can be housed,” Rémy Pagani, the city councillor in charge of construction, who takes over as mayor in June, told a press conference recently.
Pagani, a member of the leftwing ‘A gauche toute’ coalition, described the housing situation in Geneva as “disastrous”.
“Our citizens and their children can no longer find places to live,” he bemoaned, adding that the shortage was damaging the city’s international status and attractiveness.
The councillor highlighted two cases involving consumer goods giant Procter & Gamble and oil trader Trafigura.
Procter & Gamble, which established its headquarters for Europe, Africa and the Middle East at Lancy in 1999, is apparently keen to move 300 staff into new offices in the Praille-Acacias-Vernets district. Meanwhile, Trafigura is interested in creating offices next to the Eaux-Vives station for 450 staff.
Pagani said these projects should only be possible if they respect a strict ratio - one new job equals one new home built – which was approved by the city of Geneva authorities in their 2009 urban master plan. The 2011 rate stood at seven new homes for ten jobs created.
In reply, Procter & Gamble said it had not received any formal request to help build homes for expats.
“While attentive to the authorities’ concerns, both cantonal and municipal, the group does not have the vocation to invest in real estate, and usually rents buildings it occupies,” company spokeswoman Irène Kämpfen told the Le Temps newspaper. “We are currently not planning to create more jobs.”
Pagani’s proposal has met a barrage of criticism that has served to highlight on-going problems.
Christophe Aumeunier, secretary of the Geneva Real Estate Chamber, described his demands as “ridiculous”, since granting building permits or approving local urban plans were cantonal responsibilities, not those of the city or communes.
“And it’s not the lack of investors but the availability of land which is one of Geneva’s construction problems. It’s down to the politicians to resolve it and not the multinationals, to whom Mr Pagani seems to be saying ‘go look elsewhere’,” he commented.
Jacques Jeannerat, director of the Geneva Chamber of Commerce,said Geneva’s problem was linked to lengthy administrative procedures and appeals rather than finance.
“The day procedures are make more flexible I’m convinced Procter & Gamble will be ready to invest via their pension scheme,” the centre-right Radical parliamentarian told national radio.
Last year only 1,018 apartments were built in the canton – less than half the 2,500 needed to meet demand.
“This is half of what was built 20 years ago, one fifth of the amount in the 1960s. It was possible then, why not now?” Marco Salvi, a housing expert with the Avenir Suisse think tank, pondered.
“We have space – Geneva has a huge green belt – we could build higher densities. That’s not difficult but it’s about political will and new solutions,” he told swissinfo.ch.
The Avenir Suisse specialist felt multinationals had become easy scapegoats in the current debate following Pagani’s “curious” proposal.
“Big discussions are needed when making new land available for construction or densifying areas,” agreed Hervé Froidevaux, director of real estate analysts Wüest & Partner. “It's difficult to get these things accepted for agricultural zones.”
The director criticised the authorities, saying they had underestimated housing project timeframes and had failed to anticipate trends over the past 20 years.
Both experts were pessimistic about finding immediate solutions to Geneva’s housing problems.
The benefits of on-going projects to provide 3,300 additional homes will only be felt in five to 15 years, said Froidevaux.
“I think it’ll take lots of time and possibly a recession or two before they start to solve things,” said Salvi.
They highlighted Zurich as an example of what could be achieved through talk and pragmatism.
“In Zurich banks have left the city centre for the outskirts and this has had a big impact,” said Froidevaux. “This could happen in Geneva but there are no major movements at the moment. We've just heard about small job losses here and there among major firms.”
Salvi agreed: “Zurich has experienced similar problems and through a culture of speaking together and consensus they have found a solution. That seems to be what’s lacking in Geneva. Maybe it’s just a question of mentality.”
Growth forecasts for 2012
State Secretariat for Economic Affairs (Seco): 0.8% gross domestic (GDP).
Swiss Economic Institute (KOF): 0.8%
BAK Basel: 0.7 per cent.
According to BAK Basel, central Switzerland will be the main driving force in 2012 with growth estimates of 1.5%, followed by Lake Geneva region (1%), eastern Switzerland (0.9%), central plateau region (0.8%), southern and Valais regions (0.6%) and Zurich (0%).
According to the Geneva cantonal statistics office, in 2008, 931 multinationals out of a total of 21,213 firms were registered in Geneva providing 76,177 jobs out of a total of 224,922.
This compares with 569 multinationals out of a total of 19,385 firms, which provided 56,812 jobs out of a total of 260,005 in 2001.
Some 130 multinationals have a headquarters based in Geneva, including Caterpillar, DuPont, Procter & Gamble, Richemont, Rolex, Serono and SGS.
Multinational figures are not available for the rest of western Switzerland, but according to the Greater Geneva Bern area economic promotion agency, which covers Bern, Fribourg, Vaud, Neuchâtel, Geneva and Valais, the total number of multinationals set up in that region is probably “2.5 to three times” the Geneva figure, or up to 2,700.
Overall multinational figures are not available for the Zurich area, but according to the Greater Zurich area promotion agency it helped 92 firms set up shop in the region in 2011, compared with 102 in 2010, 103 in 2009 and 95 in 2008.
The balance sheet of migration movement to Switzerland stood at 79,000 immigrants in 2011, compared to an annual average of 58,000 since 2001.
By Simon Bradley, swissinfo.ch