For or against the densification of the built environment in Switzerland?
An overview of the advantages and disadvantages for Swiss landowners

Densification is a deeply rooted principle in Swiss spatial planning, as evidenced by the goals of “promote inward settlement development, while ensuring an appropriate quality of housing” and “create compact settlements” enshrined in the Federal Law on Spatial Planning (Art. 1 para. 2 letters a bis and b LAT, RS 700). It consists of using the reserves in the building zone or mobilising the currently unused or underused possibilities. This practice has advantages for public authorities. Densification helps to meet part of the demand for housing in Switzerland and to combat the shortage of housing in the major cities and conurbations. Communities can benefit from an increase in tax revenues thanks to new residents, but also limit urban sprawl and thus fight against the waste of natural and environmental resources such as soil, nature, agricultural land, or the landscape. By restricting urban sprawl, existing infrastructure and facilities are used more efficiently, resulting in considerable savings for public finances.

While it is undeniable that the densification of the built environment brings many benefits for the public interest, what about private interests? What are this strategy’s main advantages and disadvantages for property owners in Switzerland?

An opportunity for landowners to increase their value by expanding the possibilities of use

Densification takes the form of a change in the possibilities for using properties, in particular by changing their land use zone or the degree of use of the latter. It involves, for example, a change in the use of a medium-density zone to a high-density land use zone, an increase in the usage coefficient of building land, or a change in the height limits for specific zones. It is thus possible to do more with the same area by maximising the potential, with the corollary of improving the property’s yield. The construction of a second house or annex following a commune’s increase in the IBUS of the zone is a concrete example of allowing its owner to earn additional rental income. The resale value of properties affected by densification increases significantly for owners wishing to sell, especially in regions of high demand and for land with the best locations, due to the increase in the number of possible uses.

An overall improvement in services and quality of life

Densification, particularly within a global and reasoned reflection framework, is generally accompanied by an improvement and proximity of local services (shops, schools, centres of interest, etc.) and a strengthening of public transport (frequency and service). These amenities are often critical criteria of choice for buyers and tenants. They represent significant improvements to a neighbourhood, resulting in a better quality of life for residents, and can contribute to increasing the resale value of properties, respectively, the yields of rental properties.

Therefore, the densification of the built environment is a source of added value for property owners, especially those who wish to make full use of the new potential available to them and build. However, it is essential to consider the possible disadvantages that may affect these owners when conducting an inward settlement development.

Pressure on existing facilities and infrastructure

Densification can lead to overloading of existing infrastructure and facilities (roads, sewers, water, and electricity networks) and public services (public transport, schools, sports facilities, parks, and gardens). These increasing pressures require continuous adaptations and improvements to facilities and services, putting a strain on public finances. This additional expenditure may even, in the long term, offset the savings from densification outlined above. It can also lead to additional costs for property owners, especially if they have to contribute to the financing of facilities and their renewal.

Possible deterioration in the quality of life

Densification can have a negative impact on the quality of life of residents and property owners in densified areas. It can cause an increase in nuisance and pollution, such as noise or air pollution, for example due to increased road traffic, particularly lacking an effective policy of modal shift to sustainable transport. There are also repercussions on the health of inhabitants. This gradual erosion of the quality of life is often problematic for real estate owners, especially those seeking to maintain a quiet and peaceful environment, or simply to preserve their intimacy and privacy. Natural amenities, such as a view of the lake or the mountains, sunshine or the absence of vis-à-vis, are undeniable assets for certain properties and contribute fully to the quality of life of their residents. When densification results in higher buildings (overbuilding, buildings with large volumes) or closer together, their possible loss leads to a decline in their resale value but is above all accompanied by immense disappointment and disillusionment for the owners occupying these properties.

The gradual transformation of villa districts into building zones is an emblematic case in point. An owner of a beautiful building in a villa zone in the Valais has a large, sunny, well-kept garden and particularly enjoys using this green space to relax and spend time with his family. However, following the decision of the commune to densify his neighbourhood, his neighbour, to the south of his house, decided to demolish his house and construct a new building of several floors. The owner, who had never imagined this before, found himself with a new, large building opposite his house and a new neighbour. Thus, some owners would simply like to maintain the current state of the land, and avoid any densification or urban mutation.

A possible decrease in amenities in the absence of urban planning considerations

Densification of the built environment can also lead to problems of overcrowding, lack of space and deterioration of urban quality. When the built environment is too compact, it can be difficult to preserve or create green spaces, thus providing sufficient recreational space for leisure and outdoor activities. This can be problematic for property owners who value space and nature, but also for the value of their property due to the gradual degradation of the area and the loss of its amenities. Urban densification without a global urban and architectural reflection, in particular on the development of areas free of buildings, often leads to a low-quality built environment and a gradual disappearance of free areas with important intrinsic and functional values (playgrounds, parks and gardens, green areas). This deterioration has a definite impact on the property prices of a neighbourhood.

A more complex real estate market and prices

In a simplified analysis of the supply and demand principle, it is possible that inward development could lead to an increase in the number of new properties available on the market, which could result in a reduction in the value of properties, especially older ones (difficulties in selling), or an increase in the vacancy rate of rental properties and their profitability (difficulties in renting). However, these effects are generally complex and counteracted by increased demand and limited supply of housing in densely urbanised areas, as well as sometimes by strong real estate speculation. Inward development would not always be sufficient to meet the high demands in some areas, nor to reduce or maintain rents or property prices. However, it is necessary to bear in mind that this is a simplistic view of the territory and that the mechanisms of real estate price formation are complex and depend on many factors beyond the scope of this article. However, it is clear that densification contributes to this complexity and has a strong influence on the value of the properties concerned, which may be seen as an advantage or disadvantage by some owners. It also increases competition between new and old properties.

An increase in the complexity of construction projects

It is common for densification projects to encounter strong opposition from neighbours or local communities, especially when social acceptance of such projects is low. These procedures result in prolonged blockages and unforeseen additional costs. When building in densely populated areas, landowners will therefore have to be prepared to face many obstacles and stronger opposition from third parties. It is therefore essential to allow for more resources and time to carry out densification projects.

It should also be noted that the costs of building land in central areas may be higher due to rising land prices.

A value-added levy for specific development measures

Increasing the usability of a property or changing its land use zone is a spatial planning measure which increases the value of a property. Depending on the canton, the benefits resulting from such measures are compensated for by levying a tax of at least 20% (value-added levy) when the property in question is built or sold.

The end of the single-family houses?

Although densification is accompanied by an increase in the potential use of a property, it also leads to major changes in certain neighbourhoods and thus to the gradual disappearance or transformation of certain types of housing, particularly single-family houses. The densification of the territory tends gradually to replace the land use zones dedicated to villas by denser zones (medium density zone), where the constructions are generally represented by semi-detached houses or buildings of 2 to 3 storeys. The land area per house is also expected to decrease as a result of “soft” densification, compacting the available gaps in these areas and limiting building options.

Thus, current owners of land in the villa zone could be forced, in the decades to come, to build another type of housing than the one they initially wanted, putting an end to the myth of the individual house.

An obligation to build in the medium term?

Finally, the public authorities are expected to mobilise the land in the building zone reserves within the planning horizon, i.e. within 15 years of their zoning in an Land Use Zone. The hoarding of building land by its owners, i.e. keeping it in reserve for various reasons, is a recurring problem for public authorities. In theory, an extension of the building zone is only possible if the reserves are consistently used. Hoarding is an obstacle to land development and densification. The public authorities could therefore take measures, or even sanctions, to get the owners to build on their land within the said timeframe. The principle of densification, and thus the mobilisation of reserves, represents a threat to landowners who would like to hoard their properties, for example for their descendants. They may thus be confronted with the possibility of having to build on their land in the medium term, which may be perceived as a very strong constraint for some of them, even a restriction of their freedom.

Thus, only truly informed owners can defend their interests wisely

In conclusion, the densification of the built environment can have both advantages and disadvantages for the community and property owners in Switzerland. While it can increase the value of their property by offering new prospects for use, it can also lead to nuisances for residents, withdrawals, constraints, or threats for certain landowners, particularly those who do not wish to build within the current timeframe of the Land Use Plans.

It is, therefore, essential to understand the issues involved in the densification of the built environment and to be adequately informed about the various laws and regulations in force. Landowners must remain constantly informed of regulatory changes (determination of planning zones, revision or partial modification of Land Use Plans or building and land use zoning regulations, etc.), and projects under development near their properties to make informed decisions and minimise risks and unpleasant surprises.

As the owner of one or more properties located in the French-speaking part of the Valais, you can easily stay informed of these developments to best defend your interests by subscribing to one of our subscriptions. Take advantage of this opportunity to ensure better protection of your interests and real estate.