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    Exit from the crisis?

    What is the outlook for the Swiss real estate market in 2021?

    The coronavirus has brutally impacted every aspect of life, not sparing the economic markets. What about the real estate market? This article offers a state of play as of the second quarter of 2021. Experts now have more distance on the effects of the pandemic to allow them to sketch some perspectives. This is the case, among others, of Credit Suisse, which in March published a “Home Sweet Home” study, the main results of which we present.



    While the pandemic has changed the maps of the real estate market, it has also reinforced already existing trends, such as online shopping and telecommuting. In general, real estate demand is taking place against a backdrop of economic stability and real estate rates that remain at a very low level in Switzerland.

    A growing interest in property

    The pandemic has induced changes in our preferences, as we tend to spend more time at home. We want homes that are more pleasant, more spacious – incorporating a room or office area if possible – and with outdoor spaces (garden, balcony, terrace). At the same time, the attractiveness of home ownership (single-family homes and apartments) has increased and many households have accelerated their purchase plans. An analysis (Realmatch360) of search subscriptions on various online real estate platforms confirms this appetite.


    In addition, a rise in demand for housing on the urban fringe and in rural areas – with more affordable prices – is noted. Interest in second homes (apartments, chalets) has also increased, particularly in the Alpine tourist regions. Indeed, with flexible working, their usefulness is increasing. Finally, luxury real estate is prized, especially by expatriates or foreigners seeking to acquire a prestigious home on Swiss soil.

    Supply, meanwhile, remains scarce: construction of owner-occupied housing in Switzerland has been declining for several years and no reversal of the trend is in sight.


    property market


    Strong price increases are being felt in the housing market:

    • +5.5% in 2020 and +4% in 2021 (compared to 2.3% in 2019) for single-family homes
    • +5% in 2020 and +3% in 2021 (compared to 2.1% in 2019) regarding apartments.

    Note in this regard, that the percentages published in other studies such as those of Acanthe or Wüest Partner differ slightly. A continuation of this dynamic is expected in the current year.


    housing market


    The marketing of owner-occupied housing is faster, as evidenced by the decrease in the insertion time: for apartments, this was down from 110 to 74 days and for villas from 98 to 77 days.

    A difficult dream to achieve in the property market

    At present, only a third of the properties available on the real estate market are affordable for middle-income households. In some regions of Switzerland, the proportion of affordable property is almost zero. This is also the case for new buildings in central locations. In the cantons of Zurich and Zug, in the Lake Geneva region and around Basel and Lucerne, for example, there is hardly any property left that is affordable for middle-income households with 80% foreign financing (equity). th or 3rdth pillar of pension provision under certain conditions, etc.


    real estate market


    Rental real estate market

    The rental segment is benefiting from the surge in prices for owned properties. The surprisingly strong demand for rental housing is mainly due to the fact that net migration to Switzerland has not weakened as a result of the crisis. In fact, it has increased significantly in 2020 compared to 2019. Indeed, many would-be emigrants have chosen not to leave our country, which is considered to be a safe haven in this period of crisis. However, net migration is expected to decline in 2021, leading to a drop in housing demand.

    As with home ownership, demand for rental housing is experiencing a slight decline in major centres without signifying a reversal in the urbanisation trend. Cities remain attractive and economic drivers. Criteria such as housing quality, proximity to schools and training facilities, transport infrastructure, cultural institutions and the living environment (green spaces, peace and quiet, etc.) are examined with great attention by potential tenants.

    Rental housing production has definitely passed its peak and is trending downward (-12% building permit applications in 2020). Although reduced, this construction activity remains significant enough not to generate an effect on the vacancy rate. Instead, the projections are for an average increase in vacancies for rental accommodation of 2.85% in 2021 (compared to 2.75% in 2020), for Switzerland as a whole. The rents offered are down (-1.5%) in both 2020 and 2021.


    housing market


    Yielding rental real estate, however, remains highly prized. Investors appreciate the stable income generated compared to other asset classes. This interest translates into pressure on property prices, which are expected to continue to rise.

    The future of office space

    Commercial real estate has been impacted more by the coronavirus crisis than residential. It can be seen that demand for office space in Switzerland is on the decline: -700’000 m2 (for 2020 and 2021 combined). This does not prevent supply from continuing to rise. As a result, vacancy rates are expected to rise and rents to fall. Only easily accessible sites and city centres are likely to escape this trend. Thus, the gap that has already widened between the centres and the peripheries in terms of office supply, vacancies and rental prices is likely to widen in the coming years.



    What is the impact of telecommuting, an issue that has been widely debated in recent months? Companies have realized that working from home works, but within limits. The gradual return to the office has been observed following successive confinements. Many SMEs believe that substantial savings in terms of office space can be achieved through teleworking. Thus, a reduction in demand can be expected over the next few years.

    Hybrid work arrangements, both home and office, are likely to become more prevalent. The demand for office space is mainly concentrated in central locations with nearby services (shops, restaurants, administration, etc.) and good accessibility. The administrative surfaces put on the market will have to be able to respond to new models: desk sharing (workstations reassigned daily according to needs and availability), coworking, collaborative spaces, etc., while being modular and connected.

    Sales floors: the Covid-19 accelerates structural change

    During the pandemic, restrictions on leisure activities and a slowdown in shopping tourism induced a shift in consumption. The food sector and online shopping are the big winners of the crisis. On the other hand, retailers are suffering and many have already closed down. It is highly likely that stationary trade will not return to its pre-sanitary crisis level, with a significant proportion of internet purchases set to continue.

    The increase in telecommuting will reduce mobility also in the post-Covid world. The scenarios assume a decline in traffic (between 15 and 20% on average), both pedestrians and motorists. Commuting is particularly affected, with fewer spontaneous and occasional purchases. For retail space, this means that the downsizing process will become even more noticeable in the coming quarters.

    Logistics real estate, the segment of the moment


    The increasing order volumes on the Internet require large logistics areas. However, Switzerland suffers from a lack of modern warehouses and distribution/handling centres, as many of the buildings currently used for this purpose are outdated. In addition, development projects are often met with resistance from local residents. Thus, the availability of logistics space remains very low and prices are constantly rising. For investors seeking high yield premiums, this scarcity of supply and the good prospects for long-term demand make logistics real estate an attractive diversification opportunity.



    Read also: The mountains, a “safe haven” for skiers and hikers: what the Covid crisis reveals


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