In Montreux, on the banks of Lake Geneva, a landmark belle epoque hotel that once attracted the cream of European and Russian society stands like a forlorn memento of good times past, abandoned for the past 20 years. Its windows have been shattered, old postcards of the hotel lie scattered across the floor, antique furniture is covered with dust and newspapers from 1945 lie untouched in the attic rooms, as if its occupants had suddenly fled.

Soon, however, The National will be restored to its former glory, transformed into luxurious apartments. There will be 17 high-ceilinged properties over six floors in the original hotel and 77 contemporary units with views across the water to the Dents du Midi mountains in three new adjacent buildings.

Among the first buyers are Suzanne Davis and her husband Ian, UK property developers, who celebrated their 25th wedding anniversary in Montreux. “We decided this was the year to do something special and I’ve always wanted to live by the water, so it was a sudden impulse,” says Mrs Davis, 45. “We’ll come out here about six times a year and use it as a base for exploring the mountains, Milan and the rest of Europe. We feel comfortable here. It’s safe, the transport is great, our two teenage children can come here on their own and we feel confident everything will work properly.”

Her story, and The National’s make­over, are emblematic of small but significant changes happening all along the Swiss Riviera. Stretching east from Geneva to Villeneuve around Lake Geneva, the area has long been a popular property market for the Swiss and foreigners already living or running a business in the country. It’s “a place where many people have their primary residence because it’s easy to fly, drive or travel by train everywhere [around Europe] or to their second homes, where they spend late spring and long Indian summers, until the first sniff of snow,” says Tessa Chaffey of Pure International, which is marketing The National.

Now, however, thanks to European Union treaties making it easier for Europeans to establish residency and slight relaxations in some canton and village property ownership rules for non-residents, the market is opening up.

Montreux, in Vaud canton and considered the jewel in the Riviera’s crown, is allowing outsiders in for the first time, although only at The National and buyers who sell immediately will still pay 30 per cent capital gains tax. In Le Bouveret, which sits on Lake Geneva in the Valais canton, non-Swiss holiday home buyers are also permitted but they must hold the properties for 10 years or trade into another home in the country.

Elsewhere around the lake, officials are increasingly allowing new construction targeted at the rising numbers of non-Swiss Europeans moving to or doing business in the country.

“There is a tremendous amount of new development now, as most European buyers looking for apartments want brand new properties,” says Philipe Furer of Furer, a family-run estate agency that has been operating in the area since 1895. “Much of the demand comes from managers at big companies, such as Nestlé, Tetrapak or Philip Morris, who come here for training, are struck by the beauty of the area and want to return and own a place. In many cases they are able to buy because they have a residence permit or they want to retire here, or they have a company that operates from Zürich or Geneva. In some cases you have to use the property yourself for up to three months a year and you can rent it out during the other months.“

Larry Levene, the British director of Alpine Homes, who now lives in Switzerland, confirms the trend. “The Swiss Riviera is becoming more recognised as a resort destination for international buyers and we are seeing a significant increase in the numbers of British and Irish investors.”

Montreaux, a genteel town filled with elegant shops, five-star hotels, Michelin- starred restaurants and vineyard­covered slopes, has long attracted the rich and famous. Tchaikovsky, Byron, Tolstoy and Nabokov were all seduced by its elegance and it is now home to celebrities – notably Formula 1 drivers – who wanted to settle in a tax haven, as well as Saudi and Russian families eager to send their offspring to one of the area’s prestigious finishing schools.

“We are seeing huge interest from well-travelled British, American and Russian buyers who have a historical affinity with the region,” says Sean Collins, a director at Pure International.

Prices at the National, which will be finished by October 2009, range from CHF652,000 (£275,000) for a one-bedroom apartment to CHF5.4m for a six-bedroom duplex. Elsewhere, those with residency can find a tiny studio for CHF60,000 (the cheapest property on Furer’s books) but two-bedroom apartments near the lake start at CHF352,000 and rare, “prestige” lakeside mansions or castles with a private mooring go for CHF23m and more.

“The waiting list is getting longer and longer for lakeside homes as demand is ever increasing and the supply is diminishing,” Furer says.

There are many more options outside Montreux, however. In Vevey, new-build, four-bedroom apartments are available for just over CHF1m, while Villeneuve has the Les Mariners waterfront development, with units starting at CHF1.5m. Le Bouveret, a 10- to 20-minute drive from Montreux, also has several new projects. Pure International is marketing Marina Port Valais, a community of one- to five-bedroom apartments with private moorings (on a lake that usually has a 15-year waiting list) priced from CHF417,000, while Alpine Apartment Agency lists new three-bedroom villas with lawns from CHF476,000 and larger four-bedroom apartments with picture windows from CHF596,000.

“It took us eight years to get permission for this development,” says Theirry Duboisson, the marina developer. “It’s a development for boat lovers but it has also been a great investment as people who bought at CHF5,300 per sq metre two years ago can now resell at CHF7,900 per sq metre.” There are 20 phase one units left and a new group of apartments, without moorings, will be available for sale in June.

Zigi Davenport of Alpine Apartment Agency agrees that the potential for capital appreciation is one reason so many foreign buyers are now interested in the Swiss Riviera. “People like the security of Switzerland. It’s a safe investment with prices rising by about 5 per cent a year [and] there is not a great deal of high-quality off-plan development, so things tend to sell quickly,” she says.

But, for most people, lifestyle is the primary consideration. “From December to May, you have a huge choice of slopes 15 minutes from Montreux and in summer everyone swims in the lake as the water reaches 28°C and there are beaches all along,” says Chaffey, 27, who herself rents an apartment in Lausanne.

“Le Bouveret is popular with slightly older clients who perhaps have children and grandchildren who want to ski, as it’s only 30 minutes from the slopes in the Porte du Soleil,” Davenport adds.

Mary Barclay, 64, moved to Switzerland from south-east England 18 years ago when her engineer husband Andrew changed job. Four years ago the couple bought a four-bedroom apartment off-plan in Lutry, between Montreux and Lausanne, for about CHF1.35m. “From my window, I look across the village and see the entire expanse of the lake from Villeneuve to Geneva,” she says. “We love it here. It’s a very cosmopolitan place. Our neighbours in our building alone are French, Portuguese, American and Greek. We eat out in Montreux, shop in Vevey, which has a lively expat social scene as it is where Nestlé is based, and I drive over the border for lunch in France.”

Some, such as Furer, have begun to worry about the influx of newcomers and the pace of building around the lake. “There is almost too much development. It is a real problem, as the Swiss can no longer afford to buy here,” he says.

But others are relaxed about the changes. “The Swiss are very sensible about how they allot their land,” Barclay says. “I don’t think it will get spoilt.”

Levene agrees. “As with most things Swiss, we won’t see anything radical occurring overnight.”

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