Booming Geneva grapples with housing crisis

Finding space for new buildings is becoming increasingly more difficult in Geneva Keystone Archive

Geneva's economy may be flourishing, but the influx of international companies has led to an acute shortage of housing. The cantonal government is trying to tackle the problem, but its efforts have been criticised.

No one is in any doubt that new homes need to be built, and quickly. But opinion is divided as to what kind of homes these should be, and where they should be built. The housing crisis will undoubtedly be the most divisive issue during cantonal elections this October.

“Geneva is a small territory, and every square metre of land is under pressure from all sides,” says the cantonal housing minister, Laurent Moutinot.

“We have to balance the needs of housing, infrastructure and the environment. The canton’s development has to be sustainable,” he told swissinfo. “It’s important to have a city that is developing, but there must be limits. We don’t want it to become Mexico City.”

The population of the canton has grown by almost seven per cent in the past ten years. Some 6,000 new inhabitants settled in Geneva in the year to March 2001, and 5,000 came in the previous 12 months.

Many have relocated with international firms that have decided to take advantage of Geneva’s favourable tax regime and good quality of life. Procter and Gamble, for example, decided to locate its European headquarters in the city, bringing with it 1,000 employees and their families.

Their arrival and that of other firms has had a direct impact on the middle and upper sections of the housing market and a knock-on effect lower down the scale.

The authorities have taken into the account the problems this has caused, and are now actively encouraging smaller high-tech start-ups, with fewer staff but more “added value” to establish themselves in the city.

Officials say 2,500 new houses and flats are needed every year to meet demand, yet only 1,800 new homes are being built. The current property vacancy rate is a mere 0.8 per cent. The real estate business says that, for equilibrium in the market, a rate of between 1.5 and two per cent is required.

That is why Moutinot has decided to act. His plan is to build 32,000 new homes in the canton by 2015. He rejects suggestions that he and his colleagues in the cantonal government should have seen the crisis coming.

“Eighteen months ago, the banks told me they were not ready to invest in housing. Of course, now they pretend that they knew all along. But their reaction was slower than ours,” he says.

“It was right to attract new enterprises, because we needed jobs. But it was difficult at the time for investors to build without knowing they could fill the new homes,” the minister adds.

The most controversial aspect of Moutinot’s Plan is that he has decided to declassify 600,000 square metres of land in areas occupied by large private homes in order to build 3,000 homes.

Not surprisingly, the inhabitants of these so-called “villa zones” are up in arms, but Moutinot is unrepentant. He says the 12 projects he has commissioned amount to just 1.5 per cent of the surface of these areas, and that developing the villa zones is the best way of providing housing without harming the environment.

“In federal and cantonal law, we are obliged to use zones earmarked for building first, in order to preserve the countryside, agricultural land and forests as much as possible,” he says.

But the real estate industry and parties of the centre-right say the policy could be counterproductive: “We need to keep these villa zones as they are,” says Mark Muller, secretary general of the Geneva Chamber of the Property Business.

“There is a real demand for that kind of accommodation, especially from people who come to Geneva with multinationals. They don’t want to live in a small flat. If we want to keep attracting these companies, we have to have to provide the people who work for them with the right kind of accommodation,” he told swissinfo.

He says Geneva’s relatively large rural zone, which constitutes around 50 per cent of the canton’s surface area, could be the solution to the housing crisis: “Within five or eight years, the limitations of the Moutinot Plan will become apparent, and I’m sure the rural zone will come under scrutiny. We will have to build there – and probably massively.”

Muller believes that one of the factors holding back the construction of new houses in Geneva is a cantonal regulation that requires two-thirds of all new homes to be cheap and affordable – what is known as social housing.

“If it wasn’t for this dogma, property developers would build more houses in Geneva,” Muller says.

“Investors are not interested in social housing because the state imposes limits on the value. They don’t want the authorities controlling the amount of profit they make, so they invest elsewhere,” he says.

But Moutinot says he has an obligation to all the inhabitants of the city: “About two-thirds of the population earns less than SFr75,000 a year. I have to ensure they can find a home. It’s unacceptable to build only for rich people. We have to look after everyone’s interests,” he explained.

Geneva is not just a city and a canton. It can also be regarded as a region, stretching well into canton Vaud and neighbouring France. These areas, too, have been affected by the Geneva boom.

The population of Nyon, for example, is 20 per cent bigger than ten years ago, and that of the commuter towns of France – Annemasse, Gex, Ferney-Voltaire – are around 12 per cent higher.

Apart from a brief period in the 1990s, Geneva’s population has grown steadily since the Second World War. Given the presence in the city of the United Nations and numerous other international organisations, that is likely to continue.

“It’s a situation that we’ll never solve,” says Laurent Moutinot. “But we must do our best to make it better.”

by Roy Probert