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Sept. 5 (Bloomberg) -- Swiss curbs on immigration could threaten growth in the country’s property market, which in the past has been supported by an influx of high-skilled foreign workers, according to Thomas Wolfensberger, chief executive officer of Peach Property Group AG.

“The laws related to mass immigration are more worrying in the long term” than items including stagnating short-term economic growth, Wolfensberger said in an interview in Zurich, where the the property development and investment company is based. “We would have preferred to see that the borders remain more open.”

The Swiss government wants to limit the number of new immigrants from the European Union to implement the results of a vote on foreigners in February, even as a high inflow of foreign workers helped the economy compensate for anemic growth in the euro area, it’s biggest trading partner. An initiative on overcrowding in Switzerland scheduled for November would cap the immigration rate at 0.2 percent of resident population.

“Demand for bigger apartments is a major driver for the property business” and less immigration will be noticeable, Wolfensberger said yesterday. “In the middle segment demand is simply bigger if there are more people, and in the luxury segment we have benefited from the influx of for instance Germans, which is now slowing down.”

Prices in the Swiss luxury residential market have cooled on sluggish demand, Giacomo Balzarini, the chief financial officer of PSP Swiss Property AG, Switzerland’s second-biggest listed real estate company, said on Aug. 19.

For this reason Peach Property, which listed in Zurich in December 2010, has diversified its holdings. It doubled exposure to Swiss and German investment real estate such as residential properties, which will make up about half of its portfolio by year end, and has moved away from luxury projects, Wolfensberger said.

The approach is helping the company to boost net income, with first-half profit increasing 17 percent to 4.4 million francs ($4.8 million), while it plans to improve its capital ratio to about 39 percent by the end of 2014 from 21 percent.

To contact the reporter on this story: Carolyn Bandel in Zurich at cbandel@bloomberg.net To contact the editors responsible for this story: Andrew Blackman at ablackman@bloomberg.net Zoe Schneeweiss, Jeffrey St.Onge

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