Zurich is escaping the end of the real estate super cycle
With the exception of the Zurich region, the end of the era of constant price increases is in sight on the Swiss real estate market. According to a real estate barometer, the reversal is particularly abrupt in one area.
In view of the gloomy economic prospects, professional and institutional investors fear that the era of rising prices on the Swiss real estate market is coming to an end. A clear signal of this is provided by the Swiss Real Estate Sentiment Index determined by KPMG, which as a leading indicator reflects the expectations of investors, developers and appraisers on the Swiss real estate investment market.
The latest values of the sentiment barometer published on Wednesday show that the index has fallen from a historic high of 63.7 points to an all-time low of -32.5 points within a year (see chart below). At the same time, the sub-index for the economic situation fell significantly from 63.8 to -51.4 points.
Rapid price collapse
fur hit blessersPartner and real estate expert at KPMG, this slump makes it clear that the somewhat surprising optimism of 2021 due to the Ukraine war, the turnaround in interest rates and inflation has evaporated.
(Source: KPMG)
For the first time since the index was established, market participants’ expectations for the price development of real estate investments are clearly negative at -27.7 points, as the data shows. The fall in prices will set in quickly, as more than 40 percent expect prices to fall in the next twelve months.
Residential real estate is resilient
According to the survey, retail space is hardest hit, as are commercial and office properties. Market participants are only assuming that prices will rise slightly in the case of residential real estate. There, the supply of suitable investment opportunities remains very scarce.
In a regional comparison, according to investors and appraisers, the trend towards price increases is only unbroken in the greater Zurich region. Prices in central Switzerland and on Lake Geneva are likely to remain stable. On the other hand, Eastern Switzerland and above all Ticino are facing a collapse in prices.
Only the agglomeration can hope for a positive price development. In contrast, the end of the road seems to have been reached for central locations and medium-sized centres. In peripheral locations in particular, the fall in prices compared to the previous year is likely to accelerate.
Which types of stocks will generate the highest returns in the near future?
-
value stocks
-
growth stocks
-
Small and mid caps
-
dividend stocks
-
No shares at all