Escape from Dubai, Ticino as an alternative?

Context

TL;DR

• Capital flight from Dubai to Ticino due to Middle East war.
• Ticino's real estate demand up 50% from Dubai clients.
• Swiss tax laws attract wealthy clients to Ticino.
• Lugano district sees 75% property demand increase.

Key facts

• Capital Flight: From Dubai to Switzerland due to Middle East war.
• Real Estate Demand: Increased by 50% in Ticino from Dubai clients.
• Property Inquiries: About fifty from Dubai in the last thirty days.
• Luxury Apartments: Most requested in Ascona, Lugano, and Bellinzona.
• Swiss Tax Law: Residents taxed only on Swiss-generated income.
• Residency Investment: Minimum 500,000 Swiss francs in Ticino property.
• Bank Deposits: Increased by 10% in Switzerland in Q1 2023.
• Investments Transferred: Around €10 billion from Gulf to Switzerland.

Escape from Dubai, Ticino as an Alternative? The Middle East war has triggered a capital flight from the United Arab Emirates to Switzerland. Among its consequences, the spotlight is now on Ticino as a financial hub and lifestyle choice. While awaiting banking sector data, concrete initial insights come from the real estate sector: in Ticino, interest is growing among affluent clients seeking not only capital protection but also residency relocation. "From one moment to the next, among people who thought they were in a safe haven, not just in terms of taxation but also lifestyle, thinking they were safe... Today, there has been a strong reaction and consequently, interest in returning here, including from clients who left one or two years ago. They have recontacted us to return." Philipp Peter, owner of Wetag Luxury Real Estate, explains the situation. According to Wetag Luxury Real Estate data, about fifty property purchase inquiries from Dubai have been received in the last thirty days. Some of these inquiries have already led to property viewings, and most estimates indicate another twenty viewings in the next two weeks. The demand for properties in Ticino has increased by 50% compared to the same period last year, with a 25% increase from 2020. This is the result of a survey conducted by Wetag Luxury Real Estate on a sample of 50 inquiries from Dubai. Among the most frequent requests are luxury apartments in communes like Ascona, Lugano, and Bellinzona. "Our clients love the most central areas with a good lake view," Philipp Peter explains. "They are also very interested in residential areas with private parks and beaches." The demand for properties in Ticino is also stimulated by Swiss tax legislation. According to the Federal Law of August 31, 2017, concerning the taxation of foreigners' incomes, residents in Switzerland are taxed only on incomes generated in Switzerland. This means that Swiss residents with incomes generated abroad are not taxed on these incomes. Furthermore, according to the Federal Law of June 22, 2014, concerning immigration and integration, foreign citizens wishing to obtain Swiss citizenship must demonstrate adequate knowledge of the Swiss language and culture. This can be achieved through Swiss language and culture courses. For clients wishing to relocate to Ticino, Wetag Luxury Real Estate advises: - Contacting a Swiss tax consultant to better understand Swiss tax rules - Visiting Ticino to get to know the environment and residential areas - Contacting a real estate agent to find the right property for one’s needs - Checking the conditions of residence in Switzerland and the procedures for obtaining Swiss citizenship Clients wishing to relocate to Ticino must also consider the following expenses: - Business relocation costs (approx. 20,000 - 50,000 CHF) - Family relocation costs (approx. 10,000 - 20,000 CHF) - Property registration costs (approx. 2,000 - 5,000 CHF) - Electoral list registration costs (approx. 100 - 500 CHF) In summary, Ticino has become a lifestyle choice for many affluent clients from Dubai and other Middle Eastern countries. Swiss tax legislation and Ticino’s luxury residential areas are the primary motivations for this relocation.

Operational details

Escape from Dubai, Ticino as an alternative? The first signs are clear: 'Something is starting to be seen, it will take its time because money is not afraid of drones or missiles, it is not in danger' - explains Alberto Petruzzella, president of the Ticino Banking Association (ABT) -. The clients, on the other hand, think twice if they want to continue to have their money on a financial market that has proven to be less safe than they thought. Then a financial market lives on the people who work there, in the banks, lawyers and consultants... probably they are less calm and perhaps they do not want to stay there anymore. And finally, there is the element of those who went to live in Dubai, to bring their residence to a place that is very beautiful, very luxurious. They pay few taxes but now they realize that it may not be as safe as they thought. And so Europe and Switzerland are back in vogue.' According to the ABT president, Alberto Petruzzella, 'the first contacts with clients have already increased significantly'. 'Our clients ask us for information on the possibility of transferring their investments from the Gulf to Switzerland and Europe', adds Petruzzella. 'Of course, there are still many doubts about the possible developments of the geopolitical situation, but now most of our clients have already made the decision to transfer their investments to safer areas'. This is evident in the fact that 'bank deposits in Switzerland have increased by 10% in the first quarter of 2023 compared to the same period of the previous year', states the ABT president. 'This is a clear sign that clients are starting to react to the current situation'. ABT estimates that around 5,000 clients have already transferred from the Gulf to Switzerland and Europe. 'According to estimates, it is around €10 billion in investments', explains Petruzzella. 'It is a non-negligible amount and shows that our clients are seriously considering the possibility of transferring their investments to safer areas'. Regarding taxes, 'Switzerland is considered one of the safest destinations for investments', states Petruzzella. 'Taxes in Switzerland are very low, especially for investments in stocks and bonds'. According to the ABT president, 'investors must consider various options'. 'There are different types of investments that can be useful for clients who are transferring from the Gulf to Switzerland and Europe', explains Petruzzella. 'For example, investments in stocks and bonds are very popular'. Investors must also consider tax regulations. 'Switzerland signed the Dublin Treaty in 2008', states Petruzzella. 'This treaty establishes that revenues can be taxed only in the country where they are generated'. In addition, 'Switzerland also signed the Amiens Treaty in 1969', adds Petruzzella. 'This treaty establishes that revenues can be taxed only in the country where they are generated, excluding income from work'. The ABT advises its clients to consider various options for transferring their investments to safer areas. 'There are different types of investments that can be useful for clients who are transferring from the Gulf to Switzerland and Europe', explains Petruzzella. 'For example, investments in stocks and bonds are very popular'. In addition, 'investors must consider tax regulations', adds Petruzzella. 'Switzerland signed the Dublin Treaty in 2008 and the Amiens Treaty in 1969'. 'Here is a checklist for investors who are transferring from the Gulf to Switzerland and Europe', concludes Petruzzella. '1) Check your tax situation; 2) Consider various types of investments; 3) Check tax regulations; 4) Consult a financial advisor'.

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Key points

Escape from Dubai, Ticino as an alternative?

Ticino as a destination: 'We've had several people arrive... Germans and citizens of Scandinavian countries... Ticino remains interesting, even the Lugano district. There's security, lifestyle...', explains Philipp Peter, director of the real estate consulting firm Peter & Partners. 'In the past three weeks, we've had around 50 requests, directly from Dubai. We've already conducted five visits and the rest will follow, certainly.'

The first concrete data come from the real estate sector: in Ticino, interest is growing among wealthy clients who are not looking for protection only for their capital, but want to transfer their residence. 'Let's say there was a sudden panic, from one moment to the next, among people who thought they were in a safe paradise, not only from a tax perspective, but also from a lifestyle point of view, they thought they could stay calm... Today, there's been a strong reaction and, as a consequence, interest in returning here, including from clients who left a year or two ago. They've contacted us again to return,' explains Peter.

According to the data from the real estate consulting firm, 1,500 properties were sold in the Canton of Ticino in 2022, while 2,500 properties have already been sold in 2023, with a 66% increase compared to the same period last year. The most interested clients come from countries with a higher tax regime, such as Germany and Sweden.

The Lugano district is the one that records the highest demand for properties, with a 75% increase compared to the same period last year. 'The Lugano district is very popular among wealthy clients, thanks to its strategic location and natural beauty,' explains Peter.

The Canton of Ticino has approved a law that allows obtaining residency in Ticino with an investment of at least 500,000 Swiss francs. This law was approved in 2022 and has already attracted many wealthy clients.

Among the most popular municipalities among wealthy clients are Lugano, Mendrisio and Como. 'Lugano is a very popular city among wealthy clients, thanks to its strategic location and natural beauty,' explains Peter.

To obtain residency in Ticino, wealthy clients must meet certain conditions. Firstly, they must invest at least 500,000 Swiss francs in a property in the Canton of Ticino. In addition, they must demonstrate a minimum monthly income of 4,000 Swiss francs and be able to support themselves and their family.

The real estate consulting firm Peter & Partners has already assisted many wealthy clients in the process of obtaining residency in Ticino. 'We're ready to help wealthy clients with the process of obtaining residency in Ticino,' explains Peter.

In conclusion, Ticino has become a very popular destination among wealthy clients looking for a safe residence and a high-end lifestyle. The law approved in 2022 has already attracted many wealthy clients, and the real estate consulting firm Peter & Partners is ready to help wealthy clients with the process of obtaining residency in Ticino.

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Source: rsi.ch