|  Ramzi Chamat

Evolution of the real estate market and housing habits in Switzerland in 2023.

In 'Evolution of the Real Estate Market and Housing Habits in Switzerland in 2023', we explore the complex and significant changes shaping the Swiss real estate sector this year. From the increase in rents and the perception of a housing shortage to the impact of economic policies and interest rates, this article provides an in-depth analysis of current trends and challenges, crucial for investors, tenants, and policy makers.




In 2023, the Swiss real estate market has undergone major transformations, reflecting an era of challenges and opportunities. This period is characterized by substantial adjustments in rents, fluctuations in the performance of real estate investments, and significant impacts of interest rate policies. These complex dynamics are shaping a new landscape for tenants, investors, and market players.



I. Swiss Rental Market under Tension


The dynamics of the Swiss rental market in 2023 are characterized by increasing tension, mainly due to the significant increase in rents for new tenants. This situation has several interesting facets to explore.


1. Increase in Rent for New Tenants


One of the most notable factors is the substantial increase in rents for new tenants, often more than a third higher than for existing tenants. This increase results from the restrictive provisions of Swiss tenancy law. These regulations, designed to protect tenants, can paradoxically lead to significant disparities in rents between newcomers to the market and those who already occupy housing.


2. Effect of Rising Incomes


The increase in incomes in Switzerland has also played a role in this dynamic. With more purchasing power, people are willing to pay more for quality housing, thus fueling increased demand in the market. However, this increase in income does not benefit everyone equally, deepening the gap between different categories of the population in terms of access to housing.


3. Increased Demand for Living Spaces


The combination of rising rents and incomes has led to unprecedented demand for quality living spaces. This increased demand is manifested by more intense competition for available housing, with hundreds of applicants for some apartments, especially in urban areas and city centers.


4. Perception of a Housing Shortage


The increase in rents and strong competition for housing exacerbates the perception of a housing shortage in Switzerland. This perception is further reinforced because the supply of new housing does not keep pace with demand, partly due to the slowdown in new construction.


5. Long-Term Consequences


In the long term, this tension in the rental market could have significant consequences on the social and economic structure in Switzerland. It could lead to migration to cheaper areas, affect workforce mobility, and potentially influence housing and urban development policies.


In conclusion, the Swiss rental market in 2023 is marked by complex challenges, resulting from the interaction between tenancy law regulations, income trends, and the dynamics of housing supply and demand. These factors contribute to creating a tense market environment, requiring attention and possibly strategic intervention to ensure equitable access to housing for all segments of the population.



II. Reluctance to Leave Reasonably Priced Housing


The situation in the Swiss real estate market in 2023 is marked by a notable reluctance of tenants to leave reasonably priced housing, even in the face of changes in family or personal circumstances. This trend raises several important points:


1. Attachment to Affordable Housing


In a context where new tenants are faced with significantly higher rents, current tenants cling to their affordably priced housing. This situation is particularly common among tenants who have secured rental contracts on favorable terms before recent rent increases.


2. Family and Personal Changes


Even when family circumstances change, such as the departure of children from the home or a need to reduce space, many choose to stay in their current housing. This phenomenon can be attributed to the fear of not finding comparable housing at a similar price, given the inflation of rents in the market.


3. Impact on the Perceived Housing Shortage


Reluctance to move contributes to the perception of a housing shortage, particularly in more affordable market segments. This can lead to a stagnation of the rental market, where few reasonably priced housing units become available, exacerbating competition for these spaces.


4. Call for Stricter Regulation


In the face of this dynamic, voices are raised to demand stricter regulation of the rental market. These regulations could include measures to encourage tenant mobility or to limit excessive rent increases.


5. Economic and Social Considerations


This reluctance to move raises important economic and social questions. It affects workforce mobility and can lead to inefficient use of housing space. Moreover, it can have implications for housing policies, particularly regarding accessibility and affordability.


In summary, the reluctance to leave reasonably priced housing in Switzerland in 2023 is a symptom of a tense real estate market. It reflects the concerns of tenants facing an evolving market and highlights the need for innovative solutions to ensure a balanced and accessible rental market.



III. Impact of Immigration and Construction on the Real Estate Market


The Swiss real estate market in 2023 is significantly influenced by two main factors: strong immigration and a slowdown in new construction. These elements interact to maintain the attractiveness of investments in residential real estate.


1. Influence of Immigration on Housing Demand


Switzerland, with its robust economy and high quality of life, continues to attract a significant number of immigrants. This sustained immigration increases the demand for residential housing, particularly in large cities and economic centers where job opportunities are more numerous.


2. Slowdown in New Construction


Concurrently, the construction sector faces a slowdown, partly due to challenges such as regulation, high construction costs, and longer permit acquisition times. This slowdown limits the supply of new housing on the market, creating an imbalance between supply and demand.


3. Attractiveness of Investments in Residential Real Estate


The combination of increasing demand due to immigration and limited supply of new construction reinforces the attractiveness of residential real estate as an investment. Investors perceive residential real estate in Switzerland as a stable and potentially lucrative investment, given the constant demand and attractive rental yields.


4. Long-Term Consequences


This dynamic can lead to a continuous increase in real estate prices, making access to housing more difficult for certain segments of the population. In the long term, this could have repercussions on social cohesion and require political interventions to ensure a balanced housing market.


5. Challenges and Opportunities for Market Players


For real estate developers, the challenge lies in the ability to effectively respond to increasing demand despite regulatory and logistical obstacles. For authorities, the challenge is to find a balance between stimulating the construction of new housing and preserving the quality of life in densely populated urban areas.


In conclusion, the combined impact of strong immigration and the slowdown in new construction creates a unique situation in the Swiss real estate market in 2023. This situation presents both challenges and opportunities for investors, developers, and policymakers, highlighting the need for prudent management and strategic planning to meet the housing needs of the population.



IV: Performance of Real Estate Investments


In 2023, the sector of listed real estate investments in Switzerland experienced a difficult period, marked by performances that fell short of expectations. This situation is due to several key factors and has significant implications for investors and the market in general.


1. Disappointing Performances in 2022


Listed real estate investments, such as real estate funds and publicly traded real estate companies, recorded disappointing performances in 2022. This situation is partly attributable to the sideways movement of Swiss equity markets and Swiss franc bonds, influenced by an uncertain global economic context and fluctuating monetary policies.


2. Pressure on Listed Real Estate Securities


The underperformance of listed real estate investments has created additional pressure on these securities. Investors, faced with lower-than-expected returns, may have re-evaluated their exposure to this market segment. This pressure resulted in increased sales of these securities, contributing to a decrease in their market value.


3. Limitation of New Buying Opportunities


The decrease in the value of listed real estate securities has made these investments less attractive to new buyers, thus limiting buying opportunities in this sector. Potential investors may have sought more stable or profitable alternatives, given the uncertainties surrounding the listed real estate market.


4. Impact on Investment Strategies


This period of disappointing performance has forced investors to reconsider their investment strategies in real estate. Some may have shifted their interest to direct real estate investments or other asset classes. Fund managers and institutional investors also had to adjust their asset allocation to balance risk and return.


5. Future Outlook


As the market recovers from the disappointing performances of 2022, investors remain attentive to economic and monetary trends that could influence the recovery of the listed real estate investment sector. Responsiveness to changes in monetary policy, housing market developments, and overall economic health will be crucial for navigating this segment in 2023 and beyond.


In summary, the performance of listed real estate investments in Switzerland in 2022 was a key indicator of the challenges faced by the sector. Investors and fund managers must continue to monitor the market closely to adapt to a constantly evolving environment.



V: Influence of Interest Rates on the Real Estate Market


The monetary policy of the Swiss National Bank (SNB) plays a crucial role in the dynamics of the real estate market in 2023, particularly through its management of interest rates. The expected evolution of these rates could have a significant impact on the market.


1. End of the Rate Hike Cycle


The SNB plans to end its current cycle of interest rate hikes. This decision marks a turning point in monetary policy, which previously saw an increase in rates to control inflation and stabilize the economy. The end of this cycle could mean a stabilization or decrease in long-term interest rates, which would have direct repercussions on the real estate market.


2. Effect on Mortgage Rates


Interest rates directly influence mortgage rates. A decrease in interest rates could lead to a reduction in borrowing costs for real estate buyers. Lower mortgage rates would make property purchases more accessible, potentially stimulating demand in the real estate market.


3. Impact on Real Estate Investments


For investors, lower interest rates can increase the attractiveness of real estate investments. Reduced financing costs can improve the returns on real estate investments, making them more attractive compared to other asset classes. This could encourage an influx of investments in the real estate sector, both in residential and commercial properties.


4. Consequences on Property Values


The decrease in interest rates can also lead to an increase in property values, as increased demand and more affordable financing can drive prices higher. However, this could also raise concerns about housing affordability and the potential overvaluation of real estate.


5. Long-Term Prospects


As the SNB adjusts its interest rate policy, market participants will need to prepare for changing conditions. Careful planning and ongoing monitoring of economic trends will be essential for successfully navigating this market. The long-term effects of these changes will depend on how consumers, investors, and lenders adapt to this new rate environment.


In summary, the decisions of the Swiss National Bank regarding interest rates are a determining factor for the real estate market in 2023. The end of the rate hike cycle could pave the way for more favorable financing conditions, positively influencing the Swiss real estate market, but also requiring increased vigilance regarding the risks of market overheating.



VI. Investment Opportunities in Swiss Real Estate Funds


In 2023, Swiss real estate funds stand out as a particularly attractive investment option, especially those displaying a 17% premium (agio). This characteristic gives them a distinctive advantage in the market, offering unique opportunities for investors.


1. Attraction of the 17% Premium


A 17% premium indicates that these funds are listed at a value higher than their net asset value (NAV). This can be interpreted as a sign of investor confidence in the quality and potential return of these funds. This high premium may also reflect strong expectations for future growth, based on past performances and the stability of the Swiss real estate market.


2. Comparison with Other Types of Investments


Compared to other asset classes or direct real estate investments, these real estate funds may offer better liquidity and risk diversification. Their professional management and the diversification of real estate assets within the fund can reduce the risk for individual investors, unlike direct investment in real estate.


3. History of Swiss Real Estate Funds


Historically, Swiss real estate funds have often offered stable and reliable returns. This historical trend reinforces their attractiveness as a long-term investment. Their ability to maintain consistent returns, even in volatile market conditions, makes them particularly attractive to investors looking to stabilize their portfolio.


4. Impact on the Direct Real Estate Market


Although real estate funds do not provide the same ownership experience as direct real estate, they offer exposure to the real estate market without the complexities of direct real estate management. This can be particularly advantageous for investors who do not wish to be directly involved in property management.


5. Considerations for Investors


However, investors must be aware of the risks, particularly in terms of fluctuations in the premium and the conditions of the global real estate market. A thorough analysis of the fund, its structure, management, and property portfolio is essential before any investment.


In conclusion, Swiss real estate funds with a 17% premium represent a tempting investment opportunity in 2023. They offer a mix of advantages in terms of potential returns, professional management, and diversification, while allowing investors to benefit from the solidity of the Swiss real estate market.





The year 2023 has been a period of significant transformations and challenges for the Swiss real estate market, touching various aspects, from rental market dynamics to real estate investment.


The notable tension in the rental market, exacerbated by the increase in rents for new tenants and the reluctance of existing tenants to move, has highlighted the need for regulation and strategic planning to maintain a balance in the market. This situation has been complicated by the impact of strong immigration and the slowdown in construction, reinforcing the pressure on the housing market while maintaining the attractiveness of real estate investments.


Simultaneously, the performance of listed real estate investments has seen highs and lows, reflecting economic uncertainty and financial market volatility. The interest rate policy of the Swiss National Bank has played a crucial role, with direct implications for borrowing costs and the attractiveness of real estate investments.


Finally, Swiss real estate funds, with their significant premium, have presented attractive investment opportunities, offering an interesting alternative to direct real estate and other asset classes, despite inherent risks.


Overall, the Swiss real estate market in 2023 has demonstrated the complexity and interconnection of economic, regulatory, and market factors. Investors, tenants, and policymakers must continue to navigate cautiously in this changing landscape, making informed decisions based on a deep understanding of current trends and future prospects.

On the way to a housing shortage in Switzerland.

On the way to a housing shortage in Switzerland.

Shortage of nearly 50,000 housing units throughout Switzerland within the next three years.

Shortage of nearly 50,000 housing units throughout Switzerland within the next three years.