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The economic crisis induced by the coronavirus pandemic is causing concern on the property market. The feared downward spiral however is anything but inevitable.

To get a feel of where the Swiss property market is heading for ought to take a look at the prices of the many real estate funds. The funds are traded on the SIX stock exchange and issuers must pay out their investors upon request – which means selling assets.

The coronavirus has unsettled investors across all asset classes. The prices of property funds have come under pressure and several Swiss funds are traded at a discount to their intrinsic value. This is particularly the case of funds invested in commercial property.

Fear Is Poison

On Monday, Swiss insurer Helvetia announced the delay of the subscription period for the Helvetia Swiss Property Fund – mentioning specifically the challenging environment.

The question therefore is whether the property market is now due for a correction, a downward spiral that would inevitably affect the Swiss domestic banking industry, which has a huge exposure to real estate.

The UBS experts say that the industry could absorb a correction of as much as 20 percent. Donato Scognamiglio, founder and CEO of Zurich-based property advisory firm Iazi, also urges for a sober approach . «In the current environment fear is like a poison,» he said, «a poison for everything – including the property market.»

Back and Forth?