Market environment

Real Estate

Transaction market

Parameters for institutional investors remain demanding. Due to the continuing low-interest environment and the resulting scarcity of investment opportunities, high demand is recognised for yield-producing properties and for land suiting the development and construction of new projects. This is reflected, especially, in high price levels of properties in attractive locations. As the result of lower-yield expectations, the majority of market participants is showing restraint while, occasionally, exaggerations can be observed. Overall, the general situation on the transaction market continues to be characterised by capital inflow and rising real estate prices.

Residential rental market

While throughout Switzerland, supply on the residential rental market is rapidly exceeding demand, there are considerable differences, especially with regard to location and product. Peripheral locations and such not well developed are under pressure, while demand in the urban centres and in semi-urban areas that are well served by private and public transport continues to exceed supply.

Office rental market

Last year, the commercial property market benefited from a strong economy and connected job growth. This contributed toward reducing capacity in the office market. Yet, various developments are being observed in the office market: On the one hand, floor space in the centres of larger cities has become limited owing to very good demand while, on the other hand, outside the central business districts, large capacities continue to be available. These spaces will remain under pressure should the economy begin to slow down. In addition to economic factors, various social and technological developments influence the market for office space. While digitalisation is increasingly supporting demand for additional office workplaces, changing working methods and new office concepts, such as co-working, workplaces for a limited period of time, or mobile working in general, are determining the future demand for space.

Home ownership

Although the requirements made on affordability remain high concerning financing of residential property, the market remains attractive, ensuring stable demand. Supply of residential units in the low- and medium-price segment and in well-developed and city centre locations is limited and, as a result, prices are rising. This is true, all the more, for land suitable for such projects. Under these circumstances, the attractivity of this market segment is growing and, therefore, gaining increasing significance.

Projects & Development division

The market remains characterised by increasing pressure on prices and progressively eroding margins. Therefore, the market environment is correspondingly competitive. For general and total contractors, it is essential to specialise further, extend their range of services, limit their area of activity to a certain region, or capture attractive niches. A market shake-out is expected in the medium term. Under these conditions, the quality issue is becoming even more significant. Other topics that influence the market refer to increasing density by means of replacement buildings and energy-related upgrading of buildings.