Planned Tax Hikes Kill High-End Swiss Real Estate Market

Way to shoot your economy in the foot

Real estate broker Alexander Koch de Gooreynd relayed a difficult message to a client last June: the 39.5 million Swiss-franc ($43 million) asking price for his eight-bedroom lakefront villa in Geneva was too high.

The 8,600 square-foot (800 square-meter) home with yacht mooring, wine cellar and kennels in Collonge-Bellerive, where Saudi Arabia's King Fahd built a summer palace in the 1970s, had been on the market for nine months. The seller took his advice and the house sold for 31.5 million francs in December.

"The heady days are over," said Koch de Gooreynd, head of London-based Knight Frank LLP's Swiss residential team, adding that the house might have fetched the higher price two years ago. "Vendors are becoming much more realistic."

Geneva luxury-home prices, among the highest in the country, are tumbling as buyers are spooked by proposals to end tax breaks for foreign millionaires and the number of multinationals moving to the city slows. Houses in Geneva worth at least 6 million francs have declined by as much as 25 percent in the past 12 months, said Sebastien Rohner, a Geneva-based broker at Barnes International Luxury Real Estate.