First of all, investment property – be it residential or office and commercial space – is and will remain in demand in Switzerland as a place to work and live.

BY PATRICK D. OSWALD

Focus Living

Regional differences are certainly discernible here and, due to brisk construction activity, are associated with local, slightly increased vacancy risks. Grundsätzlich gilt in der Schweiz, dass es rein erschliessungsmässig keine wirklich schlechten Wohnstandorte gibt. We are in an extremely comfortable situation here – with a view to near and far abroad – and only rarely are really exciting investment properties more than 15 minutes away from a good public transport connection. Transaction prices for multi-family houses are on a growth course again throughout Switzerland. An increase in value of over 4 % over the past twelve months shows the willingness of investors to continue paying higher amounts for sought-after investment properties.

Clearly – this dynamic is driven by low interest rates and scarce building land reserves. In particular, it can be observed that many residential buildings from the 1950s and 1960s are particularly attractive for replacement investments by private and institutional investors. On the one hand, because a development and gradual realisation is quasi self-financing through the old properties – and/or the land price has developed in only one direction over the pure development period. Here, the risk of miscalculation is almost completely eliminated. It is not for nothing that gross yields have ranged from almost 7% to less than 4% over the past ten years. In prime locations, we observe gross yields of 2 %, which corresponds to a price of 50 annual rents. The risk of a price collapse in the event of a significant rise in interest rates is latent – but should remain bearable in the top locations mentioned by predominantly institutional investors.

Office focus: industrial and commercial space

Compared to housing, the pandemic has led to a stronger drop in demand or at least new risks, which are increasingly included in the long-term “due diligence”. We observe that in all areas the pressure from investors from abroad is competing fiercely with Swiss investors and funds. It is interesting to observe which criteria are increasingly coming into focus. These are in particular the horizontal and vertical flexibility of a property for future conversions or relocations, of the business activities developing in it.

Traditional business models are changing, location-independent office work is becoming a trend, and robust economic development and new entrepreneurship require new space needs and increasing office and production space. Gross yields range in a clearly narrower range between 7% and 4% and are primarily dependent on location and accessibility. However, this is probably also related to the fact that the investment market in the office and commercial space sector is less transparent and requires more expertise and professional competence in terms of potential, development and risk affinity. Oswald & Sorge Partner AG sees itself as a competence centre for real estate transactions as well as a companion for the development of investment properties.

With our know-how and our resources, we accompany private and business clients successfully and in line with their needs in every real estate transaction. Our customers benefit from our expertise, quality and enormous efficiency. We are pursuing our vision of a demand-oriented service in the increasingly digitalised processes. We do this consistently and always with a focus on the customer. Customer satisfaction is our top priority.