How have Britain's financial elite been spending their £1-million (SFr2.4 million) bonuses earned on the surging stock market? By investing in Verbier, of course.This content was published on March 9, 2007 - 09:27
It's 9am on a crisp February morning and the Médran lift in the centre of the town is abuzz with British skiers and snowboarders waiting to hit the fresh snow.
Business in the Swiss ski resort is booming, largely driven by British investments. But young wealthy couples, eager for a pied-à-terre or business at the foot of the slopes, are pushing up prices and causing an exodus of locals.
"We have always had many British guests here," explains Pierre-Yves Délèze, deputy director of Verbier tourism, who estimates the current figure at around 15 per cent of all foreign visitors.
"The British are good skiers, ski addicts...but the impression of invasion or colonisation is wrong."
What is new is the growing number of British people who are investing in the resort and others wanting to catch the wave.
"The place has really taken off since the Millennium. There are lots of people either trying to buy a holiday home, set up residence, or start or buy businesses," said entrepreneur Marcus Bratter, who estimates the British at more like 50 per cent.
"As long as there is a strong economy in the City, we'll see an increase in demand," he added.
According to Daniel Guinnard, director of Guinnard Real Estate, the typical British client looking to buy an apartment or chalet is 35-45 years old, married, and often working in finance.
"They come for long weekends. At the beginning they rent for the ski season, but with their bonuses, they manage to buy," he explained.
And the average property sold by his agency is not cheap: worth SFr2.5 million "with an average eight per cent return on investment over the past 20 years".
Holiday home ban
Until last December, despite huge demand and high prices, it had been relatively straightforward for the British to buy property in the sprawling resort.
But a yearlong moratorium on sales of holiday homes to foreigners has caused sales of new homes to stall. It was imposed by the cantonal government at the end of 2006 in an effort to ease the pressure on lengthy waiting lists.
Local officials and developers are furious about the decision, which they consider hurried and unfair, and have lodged an appeal.
For now agencies can get round the ban by acting as a go-between to sell from foreigner to foreigner. Or if rich British people really want to buy a big chalet, they can always take up Swiss residence and take advantage of the tax situation.
But apart from holiday homes, the British have also picked up on the relative ease of buying and setting-up businesses.
"Local people either don't have any interest anymore in running businesses such as hotels, bars or cafes, or they don't have the money," said Délèze.
The problem is that Swiss banks consider winter activities and tourism a high-risk investment.
Known primarily for its challenging skiing and sunny location, the general feeling is that "Verbs" is also becoming more exclusive.
"It seems to have attracted many of the St Tropez scene," said Bratter.
The flip side is that rising prices are driving out the locals, who can no longer afford to live or work in the resort.
"People feel the town's losing its soul," said Bratter. "Through the day everyone is up here but in the evening a lot of the locals are gone."
"Socially, it's a difficult thing for the resort to digest - this massive increase of British investors and owners - but at the end of the day they are responsible for the success of the resort. There is a bit of resentment but appreciation as well. It's a double-edged sword."
swissinfo, Simon Bradley in Verbier
Verbier is located in Bagnes commune in canton Valais.
In 2006 there were 6,883 permanent residents registered in the commune, of whom 2,767 live in Verbier, but this figure rises to 35,000 in the winter season.
The seven Valais communes hit with the ban are: Bagnes (Verbier), Grimentz, Hérémence, Nendaz, Riddes, Val d'Illiez and Veysonnaz.
There are 153 communes in Valais.
Communes such as Zermatt and Saas-Fee are not covered by the ban.
According to a report by Credit Suisse Economic Research in 2005, there are around 419,000 second homes (238,000) and vacation homes (181,000) in Switzerland.
Since 1985 a federal law has restricted the acquisition by foreign nationals of second homes and vacation homes in Switzerland.
The report found that between 1996 and 2004, a total of 12,150 transfers of ownership to foreign nationals were authorised. This corresponds to around 10% of the housing stock expansion in Switzerland over that period.
In 2005, Verbier estate agents estimated total sales of SFr376 million. Guinnard Real Estate says that two-thirds of its clients are foreigners, 50% of whom are British.
According to the market research organisation Mintel, around 800,000 British households own second homes abroad (+45% over two years). Switzerland is ranked the 12th most popular destination for British investors.
Of the 164 foreigners paying favourable lump-sum tax deals in Bagnes commune, which includes Verbier, 50 are British.
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