Swiss Real Estate Market: Direct Real Estate Investments

Residential Market

Switzerland’s housing market remains under significant pressure due to strong demographic trends and supply constraints. In 2023, the country’s population grew by 146 900 people (+1.7%), marking the largest annual increase since the 1960s. This sharp rise was primarily driven by high net migration, which remained elevated in 2024, exceeding 80 000 people by the end of November. The combination of population growth and demographic shifts, such as a rising number of smaller households, has further intensified demand for residential properties.

Despite this demand surge, new housing construction remains subdued, leading to persistently low vacancy rates of under 1.0% nationwide. This supply shortage continues to put upward pressure on rental prices.

A key development expected in March 2025 is the anticipated reduction in the reference mortgage rate. Since many rental agreements in Switzerland are tied to this benchmark, a cut in the rate could legally entitle tenants to a rent reduction of approximately 2.91%. According to Wüest Partner, a 25-basis-point decrease in the reference rate could dampen the growth of advertised rental prices by a similar margin. However, strong demand and tight supply conditions are likely to keep rental prices on an upward trajectory overall.

At the same time, declining interest rates are expected to increase homeownership affordability, potentially incentivising more renters to become homeowners. If developers shift their focus towards ownership housing, this could further constrain the supply of new rental properties, reinforcing the already high demand pressures in the rental market.

Commercial Real Estate

The commercial real estate market in Switzerland presents a mixed picture. While prime office locations in major cities continue to see strong demand, suburban and peripheral office markets—particularly in Basel and Lausanne’s outer districts—are facing rising vacancy rates. The continued adoption of hybrid work models has led to office space consolidations, increasing the availability of older office spaces in less central locations. Despite these challenges, employment growth remains a stabilising factor, with an increase of +26 900 full-time equivalent jobs in the first half of 2024—a slowdown from 2023 but still positive.

In contrast, logistics and retail real estate continue to benefit from structural changes. The ongoing expansion of e-commerce has fuelled demand for modern warehouse and distribution centres, particularly in well-connected urban hubs. Businesses are increasingly prioritising efficient supply chain access to enhance last-mile delivery capabilities, supporting sustained demand for high-quality logistics properties.

From an investment perspective, centrally located, well-connected office and commercial spaces remain the most attractive assets. Investors continue to favour prime urban locations, as businesses seek modern, high-quality spaces with strong transportation and infrastructure links.