Luxury apartments go unsold in Zurich West
The market for luxury apartments in Zurich is saturated, says one development company that is changing its focus to lower-priced properties because many of its upscale homes are failing to find buyers.
A couple of years ago, Mobimo Management touted its Mobimo Tower as a “milestone” place to live in Zurich West, a former industrial area that has become fashionable through redevelopment.
Built at a cost of 250 million francs, the 81-metre, 24-storey tower was designed by Basel architect Roger Diener to combine a hotel on the lower 15 floors with luxury condos on the top nine.
But more than 18 months after opening, one-third of the apartments remain empty, the Tages Anzeiger newspaper reported.
Christoph Caviezel, an executive for Mobimo Management, admitted at a press conference on Thursday that the apartments are more difficult to sell than originally expected.
Condos such as those in Mobimo Tower with prices of up to 25,000 francs per square metre do not sell easily, Caviezel is quoted as saying.
The company has decided to sell land in Erlenbach, in Zurich’s upscale “Gold Coast” area, where it initially planned to build a luxury apartment complex.
Instead, Mobimo wants to focus on the “middle segment” of the market, for which there is strong demand, thanks to low interest rates and a high number of people seeking home ownership.
The Mobimo Group, with a real estate portfolio of more than 2.3 billion francs as of December 2012, describes itself as one of Switzerland's leading real estate companies.
Begun in Lucerne in 1999, Mobimo Holding was listed on the SIX Swiss Exchange in 2005.
The company is planning projects in the Zurich-Oerlikon area, as well as in Lausanne’s Flon neighbourhood, in Lucerne and in Aarau.
But Mobimo is only building projects if at least 30 percent of apartments are reserved ahead of time.
The Zurich Tenants Association has been critical of development in Zurich West, saying it is too much concentrated on luxury apartments and high-end offices.
A study by the association showed there was no affordable living space in the precinct.
Caviezel acknowledged that developers in Zurich West were looking at their individual projects without a view to the overall makeup of the area, Tages Anzeiger reported.
Concerns about a saturated market for luxury homes in Switzerland’s largest city come as the country’s federal government announced a clampdown on mortgages.
The government, concerned about the run-up in residential property prices, has ordered that banks hold more capital to back their residential mortgages as of September.
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