According to the new edition of the ‘Switzerland Annual Property Index’ by Wüest Partner and MSCI, the total return on Swiss investment properties improved to 4.3 percent in 2024 (= 3.2 percent net cash flow yield + 1.1 percent capital growth). This means that the interest rate-related decline in the total return to 1.4 per cent in 2023, which was largely driven by the negative capital growth of -1.8 per cent at the time, has already been partially made up for. At 4.3 per cent, the performance remains below the long-term average of 5.8 per cent since 2002.

Switzerland Annual Property Index: Total Return 2020-2024 by type of use

The performance comparison by type of use shows different results for the various sectors. The top performer was the hotel sector with a total return of 7.0 per cent in 2024, and an increase in value of 2.2 per cent. Industrial properties took second place with 5.0 per cent, followed by apartment buildings (4.9 per cent). While industrial properties fell slightly in value (-0.2 per cent), residential properties increased in value by 1.8 per cent. Office and retail properties were at the bottom of the table with total returns of 3.5 per cent and 3.8 per cent respectively, with the respective capital growth being slightly positive.

A comparison of total returns over the last five years illustrates that the hotel sector suffered particularly in 2020, the year of the pandemic, and was the only sector to suffer a negative performance overall. In recent years, hotels have benefited from a significant recovery in the number of overnight stays and significant sales - including ‘Le Richemond’ Geneva, ‘Park Hyatt’ Zurich, ‘Waldhaus Flims’ and ‘The Alpina Gstaad’ - have recently been reported to foreign investors. In contrast, the residential and industrial sectors stand out in a long-term comparison, achieving solid total returns in all market conditions. While residential properties primarily benefit from increases in value, in the case of industrial properties it is above all the stable cash flows that enable above-average returns.

The outlook for Swiss investment properties is generally positive for the current year 2025. In times of geopolitical tensions and economic uncertainty, real assets are increasingly in demand. As a pure Swiss franc investment, Swiss property investments in particular can benefit from the safe-haven status and the low interest rate environment in Switzerland in the current market phase. On the other hand, an economic slowdown due to the global trade dispute and regulatory changes at federal level (e.g. Lex Koller) and at cantonal level (e.g. Zurich housing protection initiative) could weigh somewhat on the positive outlook.