demand for yield properties gains momentum. the swiss real estate market continues to be driven by scarcity, with no trend reversal in sight, according to consulting firm iazi. institutional investors are also expected to intensify their focus on yield-generating properties once again. the brief slowdown in yield property prices and the temporary hesitation of institutional investors observed about a year ago have subsided with the market now regaining momentum. according to donato scognamiglio, chairman of the board at the zurich-based iazi (information and training center for real estate), this resurgence is fueled by several factors. chief among them is switzerland’s continued high net migration, which fuels demand and exacerbates the housing shortage. additionally, switzerland’s economy remains robust compared to other countries, with low inflation and unemployment rates. donato scognamiglio (image: linkedin). «the significant increase in stock market valuations has given institutional investors breathing room to invest in properties again. as the value of other assets has risen, the real estate allocation within overall portfolios has decreased,» noted scognamiglio, who is also a member of the cantonal parliament, at a media conference in zurich on tuesday. valuations likely to climb. «return expectations for real estate are rising again. low interest rates are reducing mortgage costs, while operating costs are barely increasing due to low inflation. moreover, rental income from new leases continues to grow significantly,» said scognamiglio. he anticipates that the swiss national bank (snb) will further lower interest rates, potentially returning to negative rates. a reduction in the reference rate, possibly as early as december, is also on the horizon. however, this would only slightly lower rents for existing leases, leaving new lease agreements unaffected. «all of this suggests that the sector will significantly revalue yield properties in the coming year.». new construction falling short of demand. a slowdown in homeownership prices is also unlikely. «if switzerland continues to attract companies with its appealing location policies, more workers will relocate here. these employees will fill the gaps left by the retiring baby boomer generation. but all these new arrivals will need housing that meets high living standards and is ideally close to their workplaces,» scognamiglio said. he highlighted several barriers preventing sufficient development of new housing to meet demand. while there is theoretically sufficient land available, high land prices, regulations, and laws are stalling potential projects, including urban densification efforts. «the slogan ‘higher, denser, faster’ will only become realistic if we stop allowing contradictory regulations, objections, or ideological battles to render major construction projects impractical,» he argued. scognamiglio expects little impact from the upcoming national referendums at the end of november concerning subleasing and owner-occupancy. however, local measures—such as municipal pre-emptive rights, rent regulations, or stricter renovation requirements—could have more substantial consequences. the potential abolition of imputed rental value taxation remains uncertain, as opposing effects could neutralize each other. strained conditions in mountain regions. iazi’s analysis also examines switzerland’s tourism-oriented mountain regions, where housing shortages are in some cases more severe than in major cities like zurich, basel, or geneva. the second home initiative has significantly reduced supply, pushing prices in these areas much higher than those for primary residences. prices for second homes rose by 14 percent in 2023 alone and have surged by 48 percent since 2015. for locals and seasonal workers, the situation is becoming particularly dire, as the gap between rental price increases and nominal wage growth continues to widen.
The Swiss real estate market continues to be driven by scarcity, with no trend reversal in sight, according to consulting firm IAZI. Institutional investors are also expected to intensify their focus on yield-generating properties once again.
The brief slowdown in yield property prices and the temporary hesitation of institutional investors observed about a year ago have subsided with the market now regaining momentum.
According to Donato Scognamiglio, Chairman of the Board at the Zurich-based IAZI (Information and Training Center for Real Estate), this resurgence is fueled by several factors. Chief among them is Switzerland’s continued high net migration, which fuels demand and exacerbates the housing shortage. Additionally, Switzerland’s economy remains robust compared to other countries, with low inflation and unemployment rates.
Donato Scognamiglio (Image: Linkedin)
«The significant increase in stock market valuations has given institutional investors breathing room to invest in properties again. As the value of other assets has risen, the real estate allocation within overall portfolios has decreased,» noted Scognamiglio, who is also a member of the cantonal parliament, at a media conference in Zurich on Tuesday.
Valuations Likely to Climb
«Return expectations for real estate are rising again. Low interest rates are reducing mortgage costs, while operating costs are barely increasing due to low inflation. Moreover, rental income from new leases continues to grow significantly,» said Scognamiglio.
He anticipates that the Swiss National Bank (SNB) will further lower interest rates, potentially returning to negative rates. A reduction in the reference rate, possibly as early as December, is also on the horizon. However, this would only slightly lower rents for existing leases, leaving new lease agreements unaffected.
«All of this suggests that the sector will significantly revalue yield properties in the coming year.»
New Construction Falling Short of Demand
A slowdown in homeownership prices is also unlikely. «If Switzerland continues to attract companies with its appealing location policies, more workers will relocate here. These employees will fill the gaps left by the retiring baby boomer generation. But all these new arrivals will need housing that meets high living standards and is ideally close to their workplaces,» Scognamiglio said.
He highlighted several barriers preventing sufficient development of new housing to meet demand. While there is theoretically sufficient land available, high land prices, regulations, and laws are stalling potential projects, including urban densification efforts.
«The slogan ‘higher, denser, faster’ will only become realistic if we stop allowing contradictory regulations, objections, or ideological battles to render major construction projects impractical,» he argued.
Scognamiglio expects little impact from the upcoming national referendums at the end of November concerning subleasing and owner-occupancy. However, local measures—such as municipal pre-emptive rights, rent regulations, or stricter renovation requirements—could have more substantial consequences.
The potential abolition of imputed rental value taxation remains uncertain, as opposing effects could neutralize each other.
Strained Conditions in Mountain Regions
IAZI’s analysis also examines Switzerland’s tourism-oriented mountain regions, where housing shortages are in some cases more severe than in major cities like Zurich, Basel, or Geneva.
The Second Home Initiative has significantly reduced supply, pushing prices in these areas much higher than those for primary residences. Prices for second homes rose by 14 percent in 2023 alone and have surged by 48 percent since 2015.
For locals and seasonal workers, the situation is becoming particularly dire, as the gap between rental price increases and nominal wage growth continues to widen.
demand for yield properties gains momentum. the swiss real estate market continues to be driven by scarcity, with no trend reversal in sight, according to consulting firm iazi. institutional investors are also expected to intensify their focus on yield-generating properties once again. the brief slowdown in yield property prices and the temporary hesitation of institutional investors observed about a year ago have subsided with the market now regaining momentum. according to donato scognamiglio, chairman of the board at the zurich-based iazi (information and training center for real estate), this resurgence is fueled by several factors. chief among them is switzerland’s continued high net migration, which fuels demand and exacerbates the housing shortage. additionally, switzerland’s economy remains robust compared to other countries, with low inflation and unemployment rates. donato scognamiglio (image: linkedin). «the significant increase in stock market valuations has given institutional investors breathing room to invest in properties again. as the value of other assets has risen, the real estate allocation within overall portfolios has decreased,» noted scognamiglio, who is also a member of the cantonal parliament, at a media conference in zurich on tuesday. valuations likely to climb. «return expectations for real estate are rising again. low interest rates are reducing mortgage costs, while operating costs are barely increasing due to low inflation. moreover, rental income from new leases continues to grow significantly,» said scognamiglio. he anticipates that the swiss national bank (snb) will further lower interest rates, potentially returning to negative rates. a reduction in the reference rate, possibly as early as december, is also on the horizon. however, this would only slightly lower rents for existing leases, leaving new lease agreements unaffected. «all of this suggests that the sector will significantly revalue yield properties in the coming year.». new construction falling short of demand. a slowdown in homeownership prices is also unlikely. «if switzerland continues to attract companies with its appealing location policies, more workers will relocate here. these employees will fill the gaps left by the retiring baby boomer generation. but all these new arrivals will need housing that meets high living standards and is ideally close to their workplaces,» scognamiglio said. he highlighted several barriers preventing sufficient development of new housing to meet demand. while there is theoretically sufficient land available, high land prices, regulations, and laws are stalling potential projects, including urban densification efforts. «the slogan ‘higher, denser, faster’ will only become realistic if we stop allowing contradictory regulations, objections, or ideological battles to render major construction projects impractical,» he argued. scognamiglio expects little impact from the upcoming national referendums at the end of november concerning subleasing and owner-occupancy. however, local measures—such as municipal pre-emptive rights, rent regulations, or stricter renovation requirements—could have more substantial consequences. the potential abolition of imputed rental value taxation remains uncertain, as opposing effects could neutralize each other. strained conditions in mountain regions. iazi’s analysis also examines switzerland’s tourism-oriented mountain regions, where housing shortages are in some cases more severe than in major cities like zurich, basel, or geneva. the second home initiative has significantly reduced supply, pushing prices in these areas much higher than those for primary residences. prices for second homes rose by 14 percent in 2023 alone and have surged by 48 percent since 2015. for locals and seasonal workers, the situation is becoming particularly dire, as the gap between rental price increases and nominal wage growth continues to widen.
