Experts warn of risks Swiss real estate market experiences strong upswing

The Swiss real estate market recovered significantly in 2025 after a two-year correction phase. According to experts, the upturn is mainly driven by the National Bank's monetary policy turnaround.

Keystone-SDA

13.11.2025, 06:04

SDA

Prices for residential investment properties in Switzerland rose by 5.2 percent year-on-year in the second quarter, while prices for commercial properties increased by 4.1 percent, according to the consultancy firm Wüest Partner on Thursday.

Indirect real estate investments also rose sharply: listed real estate companies by 15.2 percent and funds by 10.2 percent since the beginning of the year, according to the analysis of real estate investments. The increases were thus significantly higher than those of the SPI (+8.3 percent).

"Safe haven"

According to the experts, the upturn is primarily driven by the SNB's monetary policy turnaround: as is well known, it lowered the key interest rate from 1.75% to 0% from March 2024 to June 2025, making financing cheaper and fixed-interest investments less attractive.

At the same time, low vacancy rates - just 1.0 percent in the residential segment - and sustained population growth of around 1 percent per year supported rental income. There was also a psychological factor: despite the interest rate shock in 2022, real estate remained a preferred "safe haven".

With the new run on real estate, however, yield compression has intensified. Across all segments, net initial yields fell to 3.1% in 2025 based on provisional data. According to Wüest Partner, the real estate premium for prime properties is in line with the long-term average, but slightly lower for mid-range properties, which indicates increased investment pressure.

Warning of political risks

At the same time, the experts warn of risks that could be masked by the boom. Low market liquidity and strong capital inflows could cause disproportionate price jumps. In addition, the cooling economy could lead to lower rental income, while political initiatives - such as the rent initiative or the popular initiative "No 10 million Swiss!" - could reduce future yields.

Wüest Partner expects price momentum to level off in 2026. The market is likely to be driven more by income and property quality. Residential investment properties could increase moderately by 1.5 to 2.0 percent, while commercial properties are likely to remain stable overall. Location, ESG strategies and targeted investments in building maintenance are decisive factors.