While the residential market in Geneva is in decline, the hyper-luxury real estate niche is still going strong after two exceptional years. Traders are no less influential in this craze.
A total of 284 million francs: that's the value of transactions in Geneva for private residences worth more than 20 million francs, completed by October 1, 2023. In this ultimate prestige segment, which accounts for just 3% of the market, only around a third - in terms of both numbers and volume - is accounted for by commodity traders, all of whom are active in the city at the end of the lake, a world center in this field. "This new caste of ultra-rich buyers has nevertheless significantly warmed up this niche," point out brokers specializing in luxury real estate. "From 2021 onwards, traders who have reaped superprofits have been a gas pedal of large transactions, observes Sandro Fanara, partner at John Taylor, Luxury Real Estate. The most fearful, as well as those who wanted to avoid being the exception under the radar, followed suit." At a time when the Covid crisis was causing people to shut themselves away, all the parameters were in place to exacerbate the desire for exceptional spaces in ideal locations. Traders in their thirties or forties have helped to rejuvenate this market," notes Bardiya Louie, CEO of Rockwell Properties. They have also introduced other ways of consuming, adding high-tech communication tools to the off-market."
Swiss and foreign buyers from a wide range of sectors - banking, pharmaceuticals, multinationals, manufacturing, watchmaking and luxury goods - now rub shoulders with traders in the pharaonic transactions posted by the land registry. After the 56.8 million paid by banker Jacob Safra for a property in Cologny, the "hill of billionaires", and the 52 million paid by Thierry Stern, Chairman of Patek Philippe, for a property in Conches, the craze for exceptional properties continued in 2022. The year was marked by eight transactions in excess of CHF 30 million, including two in excess of CHF 50 million. From Michael Wainwright , No. 2 at Trafigura, the Geneva-based oil trading giant, to Gabriel Bahadourian (agri-foods) and Jean-Pierre Guichard (Casino retail group), not forgetting, in 2023, the Aponte family, owners of the giant MSC, and Domaine Beau-Pré in Genthod, bought in November by the Dominicé family, the diversity of buyer profiles is the rule in the ultra-luxury segment. And neither choppy stock market performances nor volatile interest rates, to which the wealthiest - who use bank credit lines as collateral - are immune, are weighing on their willingness to invest in homes.
Doping the dream first
The interplay between a sharp rise in demand and a tight market has caused prices to soar by up to 20% between 2020 and 2021. While noting the stabilization that has set in on this strong market since early 2022, specialists categorically refute any speculative phenomenon driven by commodity traders. "With a 50% tax on resale for two years, tax rules are restrictive. Geneva is not Dubai! Like all wealthy buyers, traders buy to establish themselves in the medium or long term," notes Bardiya Louie. Twenty years ago, buying a property was linked to a long-term life project," observes Maxime Dubus, Director of SPG One - Christie's International Real Estate. Nowadays, traders don't set up shop to resell, but they do consider the purchase as an asset, their speculative spirit being obviously linked to their profession." Corinne Dubois, senior economist at Wüest Partner, echoes this, noting "the rationality of buying on impulse, since acquisitions must also make financial sense".
Hyper luxury, a haven of stability
The attractiveness of Geneva's hyper-luxury sector remains strong in an international context characterized by an increasing number of crises. Thanks to the canton's solid political and economic foundations, combined with a business-friendly tax system, the market should remain as buoyant in 2024 as it was in 2023, both in terms of number of transactions and volume," predict the specialists. "This real estate segment is a haven of stability," sums up Maxime Dubus. Supply remains limited, overvalued properties continue to stagnate on the market, and the scarcity of available plots of land is boosting conversion-renovation operations, while new construction is virtually non-existent.
As for commodity traders, boosted by the military and political turbulence, they are well on the way to seeing their sky-high dividends continue to rise. With a half-year net profit of $5.5 billion, Trafigura is heading for a fourth record year, surpassing last year's performance of $7 billion. 1.7 billion in dividends distributed to its shareholders, all of whom are employees of the Group. Vitol, Mercuria and Gunvor, our main competitors all based in Geneva, should continue to enjoy the same favourable trend.
These prospects are also having an impact on Alpine real estate. "Traders who have already settled in Geneva are continuing to invest in second homes in ski resorts in both the Swiss and French Alps," notes Maxime Dubus.
Credit: Bilan 300 plus riches
Editor: Viviane Scaramiglia - November 2023
