Opportunities and peculiarities in the Geneva mortgage market
Published by Michael Rose, 31.08.2021
For some market participants, the mortgage market of the greater Geneva-Lausanne region, and in particular the one of Geneva, appears to be detached from the mortgage market of the rest of Switzerland. On the other hand and in practice, we observe great mutual openness and opportunities for mutually profitable business as soon as language barriers and cultural differences are overcome.
The mortgage market in the greater Geneva-Lausanne region differs from the rest of Switzerland in many ways. Special features are in particular:
- Deviations in the land registry system from the rest of Switzerland and other differences to most other Cantons (in particular higher transaction costs, private notaries, no cantonal building insurance in the canton of Geneva, etc.)
- Relatively closed funding market due to:
a) lack of a strong local ecosystem of mortgage-focused retail banks (regional banks and Raiffeisen banks have a very low market share in Geneva),
b) local cantonal banks do extensive business outside the mortgage market and
c) the strong private banks often do not offer mortgage business
- Very untypical properties for the rest of Western Switzerland (e.g. very large office buildings, residential properties in the super-luxury segment)
- Very tenant-friendly laws with the disadvantage that owners of rental properties have no incentive to renovate them
- Higher credit margins than in German-speaking Switzerland on comparable transactions.
For these reasons, some national financiers, especially in Geneva, are reluctant or unwilling to provide financing. However, the market is comparable with the rest of Switzerland in various respects.
Objectively, the Geneva market offers very attractive projects and properties
Especially, loan defaults have been low over the past 20 years and volume growth is only slightly higher than in the other parts of Switzerland (average mortgage volume growth 2010-2020 = 3.6% per year in Switzerland as a whole vs. 4.4% in Geneva and 3.9% per year in Vaud).