According to the latest edition of the “Switzerland Annual Property Index”, Swiss real estate investments across all sectors generated a total return of 1.4% in 2023 (2022: +4.5%). The net cash flow yield reached 3.2% and the capital growth component fell to -1.7%. This significantly lower but still positive total return compared to the previous year is a major exception in a global comparison. Most countries posted single-digit negative total returns in 2023, and some markets, such as the United Kingdom, posted negative total returns for two years in a row (2022: -7.1%, 2023: -0.7%).

For the first time since the index began in 2002, Switzerland also recorded a negative capital growth of -1.7% last year (2022: +1.3%). This is unprecedented, as Switzerland did not experience any devaluations during the global financial crisis of 2007/08 or the global pandemic. However, given the reduced willingness to pay for investment properties following the turnaround in interest rates, such a performance was also to be expected in Switzerland. In contrast, net cash flow yields rose slightly for the first time since the index’s inception to 3.2% (2022: 3.1%) due to value adjustments and rising rental income.

Switzerland Annual Property Index: Performance of 1.4% in 2023

The various use categories of residential (-0.9%), office (-2.6%), retail (-2.5%), and industrial/warehouse (-0.6%) all experience negative capital appreciation in 2023, with industrial/warehouse experiencing the smallest depreciation. However, this relatively smaller correction for industrial/warehouse is tempered by the more moderate long-term appreciation (2013-2023: +0.3%) in this sector. In contrast, the residential sector remains very resilient, with a marginal value correction of -0.9% and an average appreciation of +3.3% over the last ten years. The residential segment is also currently benefiting from rising asking and existing rents and declining vacancy rates, resulting in rising cash flow yields and better value appreciation compared to commercial uses. Across all types of use, the average total return since 2002 is now 5.8%, which means that Swiss real estate investments have a very good track record.