Whether you are investing in a luxury chalet in the French or Swiss Alps, a practical pied-a-terre in London, an expansive estate to escape to the countryside or a dream villa to soak up the sun in the south of France, a pulse on the markets is always welcome.

In speaking with real estate experts from Knight Frank, this is what we heard:

UK: Bottomed out and new build on the rise?

This might be close to the bottom for prime London, but political uncertainty is keeping sellers ‘at home’. Many transactions are taking place off-market and sellers are either driven by the three Ds (debt, divorce and death) or looking to downsize and pass wealth to the next generation. There is evidence of demand building (figure 1). The number of new prospective buyers registering in Prime Central London (PCL) and Prime Outer London (POL) increased 6.3% in the year to February 2019 and the number of offers made in PCL and POL rose 7.5%. However, LonRes data shows actual transactions down 14% in the same period. When the Brexit veil lifts, pent-up demand is likely to oil the wheels of a recovery in prices.

Figure 1: Demand is building

Five-year UK house prices forecast 2019-2023 Sources: Knight Frank, Residential Market Update, 2019

Who’s buying?

For US dollar buyers, prime London values are down about 25% since the 2014 highs, showing signs of relative value. Consequently, there has been increased demand from US buyers, particularly in the super-prime (>£30 million) market where they have driving 31% of purchases versus 17% of purchases from Chinese buyers.

In the £10 million to £20 million bracket, the market is driven mostly by domestic demand (41%), followed by Russian and Middle Eastern buyers covering 35% together.

In the £20 million to £30 million bracket, again there is demand from US buyers (22% transactions) and also Europeans (22% of transactions), the latter particularly seeking traditional houses.

London has something for everyone

Whether buyers are looking for newly built, large lateral spaces attached to a five-star hotel, or traditional Victorian or Georgian homes with access to excellent schools, London can provide. 

There is a trend of modern ‘One Hyde Park’ type offerings coming to the market. One that I have the pleasure to watch grow out of the ground from my office is the Peninsula. It will offer luxury residential living with all the trappings of a five-star hotel. It is expected to be fully sold off plan. It is worth remembering though that the resale of these properties will depend on the alternatives available. Demand is still there for One Hyde Park, which launched this trend in London in 2011, especially the parkside apartments. However, the newest of these offerings will likely be the place buyers want to be.

Family homes in neighbourhood areas with good schools have performed well over the past year, with Notting Hill and Holland Park seeing much greater purchase activity.

The point on life’s wheel and cultural habits of buyers drives the type of residence they are looking for. European families are seeking the more traditional stock with proximity to schools and gardens, while international buyers, who are familiar with the services of US condo-hotels, are seeking out the same level of service.

Once uncertainty fades, prices expected to rebound

What might continue the halt in house price rises in prime UK housing? Well, there is the obvious political uncertainty with Brexit, which has a knock-on threat of a UK general election and then less obvious threats of changes to property and wealth taxes dependent on the government prevailing, and interest rate rises. Knight Frank see all these as medium risks and Rory stated the “fear seems to be bigger than the risk”. 

To counter the headwinds, the UK remains very stable, the education system is highly reputed and there is a continued ease of operating a business under English law with English speakers that are likely to maintain a level of demand. That said, there is consensus that until the uncertainty clears, the market will at best move sideways.

France: Character, tradition and architectural pedigree

Overall the French market is in recovery mode. Prime Paris prices have risen 18% over the last two years as domestic buyer confidence strengthens. 

Domestic buyers dominating but international interest picking up

40% of purchases in France at the moment are being driven by French buyers who are either already resident in France, or returning on the back of repatriation motivated by Brexit and renewed confidence in the French economy. Buyers from northern Europe, the Middle East, US and Asia are also in the market and the British continue to be very present, representing 25% of prime property transactions in 2018. Record purchases have been driven by Americans, Ukrainians and Norwegians in luxury locations. 

Mark Harvey suggests not going too far ‘hors-piste’ from prime areas to reduce the risk of capital depreciation. He reminds us that stock, particularly in the south of France, is highly illiquid, so any forced sale will likely attract a deep discount. The property cycle usually has a 10-year time horizon and ensuring the right structure is in place at the outset for exiting the property in the future is strongly advised. 

The hunt for architectural pedigree

Demand in Paris continues, coming largely from international buyers (90%) and tends to be for Hausmann buildings set on wide leafy boulevards with architectural pedigree. With little bomb damage from World War II, there is not the same scope for developers that exists in London, where infill sites and tradition are still popular.

Turning to the Alps, development restrictions are lifting and there is a shift for the larger historical chalets to be divided up. They are achieving €15,000 to €30,000 per square metre.

For every buyer, there needs to be a seller and the main trend Knight Frank has seen is the older generation of UK owners in France taking the opportunity to realise a capital gain and downsize. The relative strength of the euro to the pound is a further reason to make the sale. 

Overall strength in the French market

Europe in general remains attractive in terms of relative value. In the short to medium term, the political and economic backdrop may pose a threat. Debt levels may return to hold back markets. Generally, however, the outlook for the French market is positive as prices still show relative value, financing is at historical lows and pockets of inconsistency are providing potential opportunity. Looking at Paris, the 16th and 17th arrondissement prices (€12,000 per square metre) have not recovered as quickly as those in the 6th and 7th (€20,000 per square metre).

Figure 2: Lending rates remain at historical lows

Eurozone base rate vs. USD, GBP and CHF Sources: Bloomberg as of April 2019

Switzerland: Ever the safe-haven

Knight Frank has been as busy as ever in the Swiss market. Values have remained relatively stable, except for the super-prime properties around Lake Geneva, which have been softer recently.

Security and education a common theme for buyers

The demographic of the buyer is varied, but there is a conforming answer to ‘why buy?’ in Switzerland: It remains a safe haven. Crime rates are low, the political system is stable and the education system is voted the best in the world by the World Economic Forum.

Due to the Weber and Koller laws, there are two distinct markets in the country – those where non-residents can buy, such as certain ski resorts, and those where only residents can buy. As newcomers to Switzerland navigate the ‘where to buy’ question, they quickly end up in the French-speaking area given the availability of good schools, tax planning considerations and connectivity to ski resorts and international travel connections.

A trend in hôtel-residence, though tradition still desired

Buyers in Switzerland favour fully renovated historical buildings. Yet demand also exists for modern, energy-efficient architecture, particularly in residential markets such as Geneva where the development of the Trois-Chêne area and new luxury apartments in Cologny are proving attractive. The Swiss Riviera, which stretches from Montreux to Vevey, is popular with families relocating for lifestyle reasons as it offers excellent schools and views across Lake Geneva, all within a 75-minute train journey of the city. 

With the Weber law restricting the secondary residence quota in each municipality to 20% of the total housing stock, a new trend is emerging of ‘hotel residences’ in ski resorts. These residences provide the homeowner with a fully serviced holiday home, sometimes with shared spa and concierge services, such as the Seven Heavens in Zermatt, though on a smaller scale than those seen in London and with specific occupation requirements.

Meanwhile, there is a micro-trend of the larger family estates around Lake Geneva being sold as early succession planning, given the estates are costly to maintain and the sales proceeds are easier to divide than the estate itself.

Safe and steady outlook

Absent of a shock hit to the Swiss franc, or a significant change to the Swiss political system, Swiss property looks to remain a steady and safe investment. As in France, financing rates are historically low, providing a potentially opportune time for buyers interested in the Swiss market.

Figure 3: The safe haven currency

Swiss Franc vs EUR, USD and GBP Sources: Bloomberg as of April 2019

There are many issues to consider when buying and selling property along with macroeconomic conditions to factor into when and what to buy. Ensure you are well advised when making those important property decisions. 

Please contact your J.P. Morgan Advisor should you wish to discuss the outlook for property in these markets, or our Mortgage Team who can help arrange financing across each of the jurisdictions referenced.

Related Resources:
Video summaries of luxury property market trends in the UK, France and Switzerland 

From geopolitical shifts to luxury spending trends, view Knight Frank’s 2019 The Wealth Report.

Learn more about our J.P. Morgan Private Bank Mortgage Features


All market and economic data as of March 2019 and sourced from Bloomberg and FactSet unless otherwise stated.

We believe the information contained in this material to be reliable but do not warrant its accuracy or completeness. Opinions, estimates, and investment strategies and views expressed in this document constitute our judgment based on current market conditions and are subject to change without notice.


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