Brandon Donnelly — Daily insights for city builders. Published since 2013 by Toronto-based real estate developer Brandon Donnelly. — Page 152

Andermatt is a small mountain village in the Swiss Alps. It's a few hours from Zurich, it's known for its skiing and snowboarding, and it's surely really beautiful. But right now it has two other important things going for it: one, it does not restrict property purchases by foreign nationals and, two, it does not limit the construction of second homes to 20% of the village's housing stock, which is a rule in other places. This is expected to come into force in Andermatt in 2040.

Because of these features, Andermatt is being viewed as a barometer for foreign demand and, over the last six weeks in particular, local developers and agencies are reporting "hockey stick growth" in terms of sales volume and inquiries ( according to FT ). As of April 10, new development projects in the village reported selling SFr14.2mn worth of apartments, which is nearly 2x the amount of transactions for all of 2024. And nearly a third of these deals were signed by "nervous Americans" following April 2.

Here's one buyer testimonial:

One Andermatt buyer, a New York-based tech entrepreneur in his early fifties who asked to remain anonymous, said Trump was one of the “main factors” in his decision to buy. He and his partner purchased a two-bedroom unit for SFr2.2mn in November. Switzerland, he said, was stable and secure at a time when the US was less so under Trump. “It is not only financial uncertainty — it is not liking what [the US] is turning into and what it has become,” he said.

It is not uncommon for people to say, "if X happens, then I'm going to leave and move to Y." That doesn't always, or even oftentimes, materialize. But wealthy people have the means to make it happen, if they want, and we're seeing signs of it all across Europe. In some cases, putting down a deposit on a new Swiss apartment might just be an option, should things get worse. And in other cases it may be a firm commitment to relocate.

But either way, it's a strong indicator and a demonstration of people voting with their feet.

I am deeply skeptical of our federal government getting into the real estate development business, and I think a lot of the industry shares this sentiment. However, there are aspects of Carney's housing platform that do make sense. Here's a recent article by Frances Bula in Storeys citing industry reactions:

Do not create a federal housing developer, empower the private sector to do its thing

Multi-Unit Residential Building (MURB) program (which previously existed from 1974 to 1981 and spurred a lot of new rental housing)

Capital gain deferral on funds immediately re-invested back into housing (something akin to the 1031 exchange in the US)

Remove the federal ban on foreign investors

Dramatically reduce / eliminate municipal development charges (though, there's the important question of how exactly this gets done)

Expand the no HST on new housing (Carney's current plan is to only eliminate it for new homebuyers and for new homes under $1 million)

Tax credits for investors in affordable housing (This is not currently proposed, but I like it too. The US has something called Low-Income Housing Tax Credits, which HUD calls their most important resource for creating new affordable housing.)

Create policies that will outlast the current government, and don't make them convoluted

There are, of course, many other things that need to be done to improve the delivery of new housing in this country, including a lot at the micro level. On this blog , we regularly talk about everything from single-stair buildings to streamlining environmental permissions.

If you have anything else you'd like to add, please leave a comment below. Let's keep the pressure on.

Cover photo by Charan S on Unsplash

I was reminded of this duality the other day while listening to a Scott Galloway podcast where he talked about his love for expensive hotels, and how he travels to hotels, not to places . This is a bit abnormal. Traditionally, people stay at a hotel because there are things they want to see and/or do in the place where the hotel happens to be located. Meaning they choose the place first, and then figure out where they're going to stay after.

But there is also a statistically significant percentage of travellers who work in the opposite direction. Scott seems to be one of them. Now, his examples were all at the highest end of the spectrum, and that makes intuitive sense. If your M.O. is to travel to hotels, and you're kind of agnostic to place, then presumably the hotels are going to be super nice. But I don't think this market segment only exists at the very top. I don't stay at the same kind of hotels as Scott, but I still love hotels.

One example that I have talked about before is Tuba Club in the south of Marseille . Bianca and I stayed here a few summers ago. We read somewhere that it was about to open, we loved the vibe, and so we organized our travel itinerary just so we could stay there. We ended up loving Marseille (so much so that we went back), but Tuba came first. It was the catalyst.

A local example I can give is the Drake Devonshire in Prince Edward County, Ontario. When it opened in 2014, "The County" was not on my radar. Maybe I had been there as a kid? I don't know. But as soon as it opened, I wanted to go, as did many others judging by the lack of room availability. The design by John Tong was a hospitality offering that just wasn't available in the rest of southern Ontario at the time.

This is a powerful position to be in for a hotel. Because it means that through some magical combination of design, brand, service, and experience, you have a product that people specifically want. They're not just stopping by and need a place to stay, they're actively seeking you out. This is not to say that location doesn't matter; it does. But it is to say that a highly-coveted offering that people love is always better to have than not.

And if you get it right, there's the opportunity that people will even choose you over place.

Update: A previous version of this post incorrectly stated that John Tong had passed away. John unfortunately had a severe stroke , but he did not pass away. Sorry, my mistake, John!

Cover photo by Toni Osmundson on Unsplash