According to consulting firm Wüest Partner, prices for residential investment properties surged 5.2 per cent year-on-year in the second quarter, while commercial properties increased by 4.1 per cent.
Indirect real estate investments showed even stronger performance, with listed companies growing by 15.2 per cent and funds by 10.2 per cent since the beginning of the year.
These increases substantially outperformed the Swiss Performance Index (SPI), which rose by 8.3 per cent during the same period.
The remarkable growth has been primarily attributed to the Swiss National Bank’s monetary policy shift, which saw the base interest rate reduced from 1.75 per cent to 0 per cent between March 2024 and June 2025.
The significant reduction in interest rates has made financing more affordable while simultaneously reducing the attractiveness of fixed-interest investments.
Market fundamentals have further supported this growth, with residential vacancy rates remaining extremely low at just 1 per cent and Switzerland continuing to experience population growth of approximately 1 per cent annually.
Despite the interest rate shock in 2022, property has maintained its status as a preferred “safe haven” investment for many Swiss investors, adding a psychological factor to the market’s resilience.
The renewed property boom has intensified the yield squeeze across the market.
Net initial yields across all segments fell to 3.1 per cent based on preliminary data for 2025.
While the property premium for prime properties aligns with long-term averages, mid-range properties are showing slightly lower premiums.
The compressed yields for mid-range properties indicate increased investment pressure in the market.
Experts are cautioning about potential risks that may be obscured by the current boom conditions.
Low market liquidity combined with strong capital inflows could lead to disproportionate price increases that may not be sustainable long-term.
Economic concerns also loom on the horizon, as a declining economy could potentially reduce rental income.
Additionally, political initiatives such as the rental initiative and the “No to 10 million Swiss!” popular initiative could impact future yields by introducing regulatory constraints.
Looking ahead to 2026, Wüest Partner anticipates a stabilisation in price momentum.
The market is expected to be driven more by income potential and property quality rather than capital appreciation.
Residential investment properties are forecast to continue growing moderately at 1.5 per cent to 2 per cent, while commercial properties are likely to remain broadly stable. Key factors for success will include location quality, implementation of ESG strategies, and targeted investments in building maintenance.
