Following the massive US tariff announcements, various institutions have lowered their forecasts for Switzerland's gross domestic product (GDP). Bank Julius Baer also expects a 20 basis point lower GDP growth rate, now at 1.0 percent (2025) and 1.2 percent (2026). If tariffs on pharmaceutical products are introduced, further revisions can be expected. On the other hand, a better outcome of the ongoing US trade negotiations could mitigate the competitive disadvantage of the Swiss export economy compared to other countries. The economic uncertainties have also increased the possibility of reintroducing negative interest rates by the Swiss National Bank (SNB). At the long end of the yield curve, the yields of 10-year federal bonds have already reacted and decreased by around 10 basis points to 0.3 percent since mid-2025.

What does this changed economic and interest environment mean for Swiss real estate investors? Fundamentally, the low-interest-rate environment and uncertain economic situation support demand for Swiss investment properties. In particular, apartment buildings are considered a rock due to their defensive characteristics, offering stable rental income and low vacancy rates, making them a safe haven as pure Swiss franc investments. In contrast, demand for commercial and industrial spaces is likely to decline, as has been observed in past crises. After the abolition of the minimum euro exchange rate and the introduction of negative interest rates by the SNB in 2015, there was a reduction of around 25,000 full-time jobs in the industry sector. It is likely that despite extended short-time work compensation, there will be job cuts in the industry during the current crisis (Q2 2025: -4,600 jobs in the Swiss industry/construction sector vs. previous year). This reduction is also likely to lead to weaker housing demand in the affected regions. However, for financial and service centres (such as Zurich) and tourist regions, the demand pressure for apartments is likely to remain high.

Due to the mentioned challenges, particularly for industrial properties, investors are likely to maintain their preference for residential properties and prime office and retail objects in central locations, which benefit from the growth of the service industries and related housing demand. This preference is also reflected in the realised price and valuation development in the first half of 2025. According to IAZI, the transaction price index for investment properties with residential and mixed use increased by 1.5 percent over the last 12 months (as of Q2 2025). Wüest Partner also reports a 2.6 percent higher transaction price for apartment buildings over the last 12 months in the Swiss average (as of Q1 2025). Regionally, the strongest price growth was seen in Central Switzerland (+3.6 percent) and the weakest growth in the Geneva region (+1.7 percent). This regionally different development can also be seen in the asking rents. The Homegate Index shows above-average rent growth over the last 12 months for the cantons of Schwyz (+8.4 percent) and Zug (+5.8 percent), in contrast to the cantons of Geneva (-0.6 percent) and Vaud (+1.7 percent). Based on rising transaction prices, property appraisers have reduced their discount rates in the semi-annual valuations as of June 30, 2025, resulting in revaluations on the residential property portfolios of real estate companies of up to 3 percent. Commercial properties were also written up, although at a lower rate of around 1 percent compared to residential properties.

Multi-family houses: transaction price development (Q1 2016 = 100)

For the second half of 2025, price and valuation increases for multi-family houses (MFH) are likely to be less than in the first semester of 2025. On the one hand, the already observed slowdown in the growth of asking and existing rents is expected to continue. While the Homegate Index as of June 30, 2024, showed a year-over-year increase of over 5 percent, as of June 30, 2025, the growth in asking rents was only around 2 percent. In the existing stock, a second reference interest rate cut of 25 basis points to 1.25 percent is expected, which is likely to lead to a declining dynamic. On the other hand, we currently do not expect the introduction of negative interest rates by the Swiss National Bank (SNB). Additionally, possible regulatory interventions such as the national rent price initiative or the Zurich housing protection initiative need to be monitored. Ongoing restrictions on lending also limit the willingness to pay of investors who work with bank debt. However, the willingness to pay of so-called ‘equity buyers’ or those with access to the CHF bond market is not affected by this and continues to drive investor demand in the current low-interest environment, as recent purchases of MFH portfolios demonstrate.