Finding land for building: New spatial planning legislation has made it harder to buy a plot

"We don't think there will be a general shortage of land for building" 

The revised spatial planning law is designed to improve the utilization of land zoned for building. This will make it more difficult to find building land. Real estate expert Fabian Waltert explains in the interview what impact the new planning laws will have, and where those who want to buy a plot will have to dig particularly deep into their pockets.

New spatial planning legislation has made it more difficult to find land for building

The authorities want to put an end to urban sprawl in Switzerland. A revised spatial planning law entered into force in 2014. This requires the cantons to take steps to improve utilization of their existing building zones. Overly large building zones will have to be reduced in size or shifted to areas of high demand. This will have consequences for those who are looking to buy a plot.

Under the new spatial planning law, the cantons were mandated to revise their land use plans by May 2019. Their planned building zones may only be designed to meet projected demand for the next 15 years. The cantons were not permitted to zone any new land for building until the land use plans had been approved. With a few exceptions, the cantonal land use plans have now been approved by the Federal Council.

Fabian Waltert, a real estate expert at Credit Suisse, has examined the land use plans in the cantons. He knows what priorities the cantons have set in their plans, and how these are likely to impact on the building zones.

What do you think: Can further sprawl be stopped?

Fabian Waltert*: The spatial planning legislation is a powerful tool. And the moratorium on new building zones has at least temporarily reduced the consumption of building land. But the consumption of agricultural land remains high. In the long term, urban sprawl is driven by a rising population, economic growth, and increasing mobility. We have become accustomed to traveling long distances between home and work. This encourages urban sprawl. To stop sprawl completely, the underlying drivers I have mentioned would need to be tackled – and mobility pricing is one way of achieving this. However, I would regard measures such as capping immigration, or generalized moratoria on building and zoning, as counterproductive.

What impact will the new spatial planning law have on the availability of building land in Switzerland?

The new land use plans are based on the principle of responsible land usage. Existing reserves of building land and higher-density building have priority. This will make it more difficult to rezone new land for building. However, if the existing reserves of building land are insufficient, this remains possible in principle. So, we should not be facing a general shortage of building land. Building on greenfield sites on the edge of towns and villages will, however, be restricted.

We will continue to have rapid growth in construction, particularly in the cities. 

Fabian Waltert, real estate expert at Credit Suisse 

How will the landscape change in the next 20 years?

We will continue to have rapid growth in construction, particularly in the cities. In the urban centers and their suburbs, residential and mixed districts will replace the last industrial brownfield sites over the next 20 years. High-rise buildings will also become increasingly common. In rural areas the change in the landscape will be less striking. Gaps will be filled in; and when old buildings are replaced with new ones, new stories will be added.

Which cantons can no longer rezone land according to the new land use plans?

There is far too much building land in the cantons of Jura and Valais. These cantons will have to dezone building land. This is also the case to a lesser extent in the cantons of Uri, Schaffhausen, Grisons, both Appenzells, and Neuchâtel. Rezoning will only be possible in these cantons in the coming years if land of equal value is dezoned elsewhere in the canton. In the other cantons, rezoning remains possible in principle. However, some of the cantonal land use plans also require dezoning in certain municipalities.

Spatial planning legislation cantonal land use plans

Several cantons have restrictions on rezoning 

1Due to the absence of an approved land use plan, or the lack of a revaluation compensation mechanism compliant with federal law
Last update: August 30, 2019
Source: Federal Office for Spatial Development, Credit Suisse, Geostat

To ask the same question in another way: In which regions and cantons is there a shortage of building land?

The rule of thumb is that the closer an area is to large population centers, the greater the shortage of building land. Reserves of surplus land are particularly low in the Zurich region as well as neighboring regions of central Switzerland and Aargau. Meanwhile, parts of western Switzerland such as Vaud and Fribourg are experiencing rapid population growth. Increasing the density of development will be essential in both regions.

What might higher-density development look like?

Higher-density may mean going upwards, and we are certainly witnessing a boom in high-rise buildings at the moment. High-rises are not the only solution, however. Higher-density building can also mean six- or seven-story apartment blocks built around a communal courtyard, for example. On the other hand, there are still a number of brownfield sites that can be built on in cities, for example in Basel. In rural areas, building density is often increased by filling in gaps or adding additional stories to existing buildings. The latter can also be an option for apartment owners. I regard adding new stories as a good way to secure financing for buildings in need of renovation.

While a large majority regard urban sprawl as a problem, when it comes to their own situation people are still attached to the idea of a large single-family dwelling with an undisturbed view of the countryside. 

Fabian Waltert, real estate expert at Credit Suisse 

You mention high-rise buildings as a way of increasing building densities. But in practice they often attract widespread opposition. How can we make people less skeptical of such projects?

If a high-rise building is part of a high-quality development, people tend to be much more supportive. For example, well thought-out and designed external areas as well as a good population mix are important for setting the tone in a neighborhood. I personally think that there is also more support if residents in a neighborhood are kept informed from the early stages of a project and are included in the planning process, for example in public workshops. A number of cooperative housing associations, and increasingly some private and institutional investors too, have set a good example here.

Are homeowners really willing to live in higher-density surroundings rather than building a house on a greenfield site?

Unfortunately the NIMBY principle is at work here: While a large majority regard sprawl as a problem, when it comes to their personal situation, people are still attached to the idea of a large single-family dwelling with an undisturbed view of the countryside. Price signals are an effective tool for guiding supply and demand. The supply of land is limited and the price is therefore high. The number of single-family homes being planned has already fallen sharply. Homeowners are instead increasingly choosing condominium ownership. They already account for around two-thirds of new residential properties.

Building permits for single family dwellings

The number of single-family dwellings being built has declined steadily 

Building permits for single-family dwellings and share of total residential building permits, rolling 12-month total

Source: Baublatt, Credit Suisse

In general terms, what is the current cost of building land in Switzerland?

The differences are huge, even within a single municipality. The most important drivers are access to urban centers and the location within the municipality, for example with regard to the quality of the views and exposure to noise pollution. At the lower end, there are still plots available in the canton of Jura, the Upper Valais, or Glarus for 100 Swiss francs per square meter. In top locations, for example by Lake Zurich, land prices can easily reach 3,000 Swiss francs or more per square meter.

Are you setting a good example of higher-density living, or do you live in a house in the countryside?

My family and I live in a rental apartment in a large complex in the greater Zurich region. A single-family house obviously does have its attractions. But I appreciate the advantages of a neighborhood with multi-family dwellings, such as friends to play with and lots of communal space for the children, neighbors to chat to close by, and a central location with good public transport links.

Are you looking to buy a plot of land and have questions about financing? 

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