Ticino real estate market: Strong demand for real estate in Ticino

Intense construction activity brings stable real estate prices to Ticino

Sun, nature, and the Italian way of life: Owning a home in Ticino is an attractive prospect for many. In our interview, Alberto Donada, Head of the Ticino Mortgage Center, explains how the Ticino real estate market is progressing and what you should know before buying a house.

Mr. Donada, Ticino is Switzerland's sun belt. In your opinion, what else makes the canton an attractive residential region?

Alberto Donada:* The mild climate and the diverse landscape are very compelling reasons to live in Ticino, of course. That's not all, though. The canton is also ideally situated between Zurich and Milan and has strong and deep-rooted business and industrial sectors, such as chemicals and the fashion industry, in addition to outstanding universities.

How is demand for residential property faring in the canton?

Generally speaking, the low mortgage interest rates are still propping up demand. It does vary from region to region, however. New buyers now face major financial hurdles in highly developed urban centers – particularly in and around Lugano. This is curbing demand and pushing many potential buyers into more affordable regions, for instance Sopraceneri and Leventina in the north of the canton, where prices are lower.

So, is there enough construction to keep up with demand?

Yes, there are still construction activities for residential properties. There is no shortage in the market, and the vacancy rates are remaining stable. That's not the case in the rental segment, which is still seeing a great deal of construction even though the vacancy rates are already relatively high, especially in southern Ticino.

Due to the scarcity of building plots in the canton of Ticino, buyers are increasingly forced to consider peripheral locations

Alberto Donada, Head of Credit Suisse's Ticino Mortgage Center

Construction activity is thus still high. On the other hand, the canton of Ticino is currently under a zoning freeze, which means vacant building land is becoming less and less common. What does this mean for construction projects in the canton of Ticino?

First, the shortage of building plots is contributing to a heavy concentration of construction projects in the canton, particularly in the urban centers. Second, future homeowners are increasingly forced to consider peripheral locations since they offer even more opportunities for construction.

The COVID-19 pandemic is the pervasive topic of 2020. What impact did it have on the Ticino real estate market?

At first, the uncertainty caused by the pandemic and the lockdown quickly produced a sharp downturn in demand for rental housing and in transactions in the residential property market. These impacts were only short lived, though, and prices themselves remained relatively stable at the time. We are already seeing a gradual recovery now, particularly in residential property, even though it has yet to climb back to pre-crisis levels. We also project that, over the medium term, the increasing popularity of home office solutions will boost demand for larger living spaces that offer space for a separate office. Such space is more commonly found in the periphery.

Nevertheless, workplace proximity is still a key factor in deciding where to live. The 2020 Credit Suisse real estate study shows Swiss people are putting up with longer and longer commutes for their own homes. Is that also true in Ticino?

We are also observing this phenomenon here. The distances between homes and places of work are increasing. The canton's public transportation will also change from the ground up with the Ceneri Base Tunnel opening in December 2020. The shorter travel times between major cities in Ticino – and specifically between Sopraceneri and Sottoceneri – also make living outside the urban centers more attractive.

Purchase prices for residential property are not projected to rise sharply

Alberto Donada, Head of Credit Suisse's Ticino Mortgage Center

So, how will the Ticino real estate market develop in the near future?

As long as mortgage interest rates are low, demand for residential property will also continue to remain high. This is not likely to produce a sharp rise in prices, however, since supply is also high in the residential property market. On the contrary, we are seeing more of a declining trend in the acquisitions costs for residential property in the mid-price segment.

One last question: What should buyers consider if they want to find affordable residential property in Ticino?

First, it is always important to know exactly what your personal needs are. Good transport links are often important for gainfully employed people, for instance, while retirees place more emphasis on local recreation areas and nearby shopping facilities. A consultation with specialized advisors can help with this since they are most familiar with the region and real estate market developments.

Are you interested in buying residential property in Ticino?

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