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Archives of market commentaries
Market Commentary May 2025
Annual and semi-annual reports of real estate products now often begin with a familiar statement: “We are pleased to inform you that our results are solid.” However, such a statement is no longer sufficient, particularly when management fails to present a compelling strategic positioning...
Market Commentary May 2025
Annual and semi-annual reports of real estate products now often begin with a familiar statement: “We are pleased to inform you that our results are solid.” However, such a statement is no longer sufficient, particularly when management fails to present a compelling strategic positioning. The outlook for 2025 is positive: valuations are recovering, and financing costs are declining. Despite the lower reference interest rate, only a few tenants are requesting rent reductions, which is reflected in rising rental income. Demand for real estate remains high, and investors continue to anticipate a prolonged negative interest rate environment. As a result, both real estate prices and the share prices of listed funds and equities are recording significant gains. Nevertheless, it is well known that markets do not move in a straight line. The extraordinary strength of the Swiss real estate market is surprising, especially in the context of ongoing geopolitical developments and media spectacles orchestrated by “Uncle Donald.” At the same time, short-term volatility is increasing, and credit risks are coming into sharper focus. Claudio Saputelli of UBS expects that banks will need to revise their lending standards over the medium term, which will likely lead to more restrictive credit issuance, particularly for private investors. Since the beginning of the year, a trend toward deleveraging has become apparent, and with several capital increases announced, the coming summer is expected to be an active one. In the area of sustainability, the picture is mixed: according to the Swiss Federal Statistical Office, around 52% of buildings in Switzerland are still heated using fossil fuels. The highest proportion is found in Neuchâtel (66%), while Basel-Stadt reports the lowest at 27%. Although all Swiss asset managers now claim to have sustainability strategies, what matters is their credible and measurable implementation. Increasingly, products are aligning with established standards such as SSREI or GRESB. Sustainable portfolio optimization requires time, diligence, and a strong commitment to long-term value creation. In this context, the focus on "risk-adjusted returns" is becoming ever more important. Finally, even the Swiss market is not immune to the effects of geopolitical communication strategies, Uncle Donald remains active.
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Market Commentary April 2025
The past month was also marked by market disruptions triggered by U.S. tariff antics, affecting real estate stocks. While Swiss real estate equities experienced only a short-term but sharp setback in the REAL Index, real estate funds suffered for a longer period...
Market Commentary April 2025
The past month was also marked by market disruptions triggered by U.S. tariff antics, affecting real estate stocks. While Swiss real estate equities experienced only a short-term but sharp setback in the REAL Index, real estate funds suffered for a longer period. General uncertainty remains noticeable. On one hand, falling interest rates continue to support the sector, and dividends distributed in many cases are mostly reinvested. On the other hand, economic risks are dampening expectations in the commercial property sector. However, the Swiss franc as a safe haven is currently compensating well for these concerns. International investors continue to favor stable stocks such as Swiss Prime Site and PSP Swiss Property. But excesses carry risks with a dividend yield of 2.8% and a premium (agio) of up to 35%, conditions can shift quickly. Capital measures added pressure to the funds segment: a CHF 350 million capital increase by SIMA, along with other similar-sized issuances being announced. Demand for residential real estate remains high, additionally supported by low interest rates. In uncertain times, many asset managers are more likely to increase than reduce their allocations in indirect real estate investments. Fund and company results remain solid and have a stabilizing effect. However, the stock market is expected to remain jittery, with continued volatility. Precisely in such an environment, interesting opportunities and arbitrage situations regularly arise opportunities. Consolidation in the financial sector continues: insurance companies Helvetia and Baloise have announced a merger, and CHAM and INA have successfully combined into Cham Swiss Properties. In contrast, Switzerland’s largest real estate provider, UBS, made a last-minute decision not to merge UBS Direct Residential after all — a decision that leaves a bitter aftertaste. With a premium of 55%, caution is advised with this title, even though broader market indicators remain positive for the coming weeks...
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Market Commentary March 2025
Swiss real estate funds have closed an exceptionally volatile quarter. While the average performance of +1.9% may appear encouraging at first glance, it remains fragile given the challenging market environment...
Market Commentary March 2025
Swiss real estate funds have closed an exceptionally volatile quarter. While the average performance of +1.9% may appear encouraging at first glance, it remains fragile given the challenging market environment. Although past and potentially further interest rate cuts by the Swiss National Bank (SNB), along with high market liquidity, supports a positive environment for real estate investments for the coming months, listed real estate funds currently struggle to convince investors in a sustainable manner. This is reflected in a wide performance range of individual funds this quarter, spanning from -8% to +8%. Meanwhile, economic stimulus packages and increased defence spending have led to a noticeable rise in long-term interest rates across Europe. The yield spread between real estate funds and risk-free investments has now narrowed to less than 200 basis points, leaving uncertainty as to whether this is a temporary reaction or the beginning of a structural shift. What is clear, however, is that strong demand has driven prices of many funds to excessive levels, decoupling current developments from realistic long-term value potential. This perception is gradually being recognized in the market. The upward trend in the SWIIT Index, which tracks all listed Swiss real estate funds, has either stalled or significantly cooled in recent weeks. Following the challenging years of 2022 and 2023, many investors are reassessing their strategies. One often overlooked yet fundamentally strong segment is real estate equities with a residential share exceeding 50%. Despite frequent criticism over their low free float, these stocks offer stability. Data from recent years clearly show that active management has continuously generated value, whereas passive approaches have led to capital erosion.
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Market Commentary February 2025
Traditionally, February is a time of caution, as investors await the release of the first annual results of real estate stocks. However, political and economic issues are currently dominating the headlines...
Market Commentary February 2025
Traditionally, February is a time of caution, as investors await the release of the first annual results of real estate stocks. However, political and economic issues are currently dominating the headlines. In the U.S., the economy remains stable, but President Trump’s desire to lower interest rates while keeping inflation under control is proving challenging. One possible strategy to achieve this would be a reduction in oil prices, which could help ease inflation. At the same time, he is working to accelerate a resolution of the Ukraine conflict and secure access to raw materials— a strategic goal that major powers have always pursued to strengthen their global influence. Meanwhile, Europe is experiencing a phase of instability. The confirmation of a political shift to the right in Germany through recent elections came as no surprise. Political developments directly impact inflation, migration, and resource management— all critical factors for the real estate sector and investors. In Switzerland, investors are anticipating a possible return of negative interest rates. Unlike ten years ago, when this was considered unlikely, the Swiss National Bank is now openly discussing various possible scenarios. As a result, the gross yield on real estate purchases in cities has returned to the levels seen in 2020/2021, when the COVID crisis drove investors to acquire residential properties at inflated prices. In the real estate stock sector, Swiss Prime Site caused a surprise by announcing a capital increase with very short notice— just one hour before the market closed, an extremely unusual practice. The first annual results show that portfolio revaluations slightly exceeded expectations. The merger ratios between Ina Invest AG and Cham Group AG were published as expected, and the newly formed company, Cham Swiss Properties AG, shows potential— the internal management structure of Cham Group AG was adopted as a best practice.
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Market Commentary January 2025
The new year began as the old one ended: euphorically. IMMO25 recorded a record number of visitors, confirming the strong interest in Swiss real estate investments...
Market Commentary January 2025
The new year began as the old one ended: euphorically. IMMO25 recorded a record number of visitors, confirming the strong interest in Swiss real estate investments. Many investors are hoping for further interest rate cuts by the SNB. As a result, real estate indices quickly rose by more than 3%. At the same time, asset managers aggressively announced several capital increases. However, investors are becoming more cautious with premiums exceeding 50%. The year 2022 is still fresh in everyone's memory, marked by a significant loss of confidence that led to a 15% market correction. Despite a strong start to the year, the SWIIT Index closed January down 1.4%. The high capital demand could exceed investor appetite, similar to 2018. Additionally, the annual results of funds closed in September were disappointing: while rental defaults continue to decline, growth potential is shrinking. This makes innovation among asset managers crucial. Moreover, indirect real estate investments continue to suffer from redemptions. The annual results of real estate stocks are particularly important for identifying the most active companies and promising sectors. A first market shake-up is expected at the end of February with the merger of Ina Invest and Cham Group, whose valuations are expected to be positive according to recent reports.
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Market Commentary June 2025
Tension in the financial markets is palpable. What was considered unthinkable at the end of 2014 now suddenly seems very real: the return of negative interest rates. The SNB, banks, and investors largely agree—the likelihood of slipping back into negative territory by the end of 2025 is high...
Market Commentary June 2025
Tension in the financial markets is palpable. What was considered unthinkable at the end of 2014 now suddenly seems very real: the return of negative interest rates. The SNB, banks, and investors largely agree—the likelihood of slipping back into negative territory by the end of 2025 is high. What’s driving this shift? A dangerous combination of disappointing economic data, deflationary trends, and the relentless appreciation of the Swiss franc. The SNB attempted to signal a turnaround with a rate cut back to zero—but the desired effect failed to materialize. Global market forces are overpowering national monetary policy. The previous calm was misleading. For the Swiss construction sector, however, a silver lining is emerging after three difficult years, growth is expected to return from the second half of 2025 onward. Strong demand from institutional investors is catching the attention of asset managers—many are looking to capitalize on the momentum and raise fresh capital. But the cycle is repeating itself: overpriced properties are being acquired, while other players focus on deleveraging. At the same time, regulatory pressure is mounting—especially in the Zurich region. New legal measures, such as stricter permit requirements for demolitions and renovations, rent ceilings, and municipal pre-emption rights, are being prepared. What does this mean for investors? Greater uncertainty, increased complexity, and an even more fragmented market. Regional disparities are expected to intensify further in the coming months. Should the SNB actually reintroduce negative interest rates, market liquidity is likely to decline once again. The transaction market could dry up, with many owners postponing sales decisions—while the attractiveness of mortgages would rise. In such a challenging environment, the internal value-creation potential of a portfolio becomes more important than ever. What’s needed are full transparency, precise steering capability, and rigorous active management. At the same time, the near-monopolistic dominance of a few large players is creating growing imbalances. The Swiss real estate market remains attractive—but the risks are real and often lie where one least expects them.
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Market Commentary July 2025
Contrary to expectations, Switzerland reported moderate inflation figures for June. Many analysts believe that the Swiss National Bank lowered its interest rates too quickly. Others argue that the weakness of the US dollar should actually be importing deflation...
Market Commentary July 2025
Contrary to expectations, Switzerland reported moderate inflation figures for June. Many analysts believe that the Swiss National Bank lowered its interest rates too quickly. Others argue that the weakness of the US dollar should actually be importing deflation. This rare disagreement among analysts has gained further momentum following the U.S. initiative announced during the night of August 1. The coming months will reveal which side was right. In the canton of Zurich, intense debate surrounds the popular initiative for more affordable housing in the Canton of Zurich, which proposes giving municipalities pre-emptive rights to purchase land. However, the initiative faces opposition. A counterproposal is on the table instead, aiming to double funding for housing promotion. The ongoing demand among investors for stable long-term investments continues to benefit the real estate sector. Several capital increases were successfully completed in July. Yet, the dilemma for real estate managers remains: those unable to create value within their existing portfolios are forced to purchase new properties at elevated prices. The issue of debt persists. Refinancing maturing mortgages is becoming increasingly challenging, as attractive offers from banks are becoming scarce. In the medium term, managers will need to pay closer attention to liabilities and refinancing risk. This summer’s hot topic is the merger of several UBS real estate funds. While market consolidation is generally viewed positively, UBS’s dominance raises concerns: UBS manages 35% of the SREAL Index and Swiss Prime Site another 9%. The concentration is even more pronounced within SWIIT index investors, where UBS manages 48% of the funds. Investors are keeping a close eye—and pushing back where necessary. For the market to rebalance, other players—particularly insurance companies—would need to gain market share. Given the weakness of the transaction market, further mergers or acquisitions may occur in the next 18 months. For now, the Swiss real estate market remains attractive—but the challenges are mounting.
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Market Commentary August 2025
After the summer break, numerous real estate funds and listed property companies published their half-year results. Overall, these were characterized by positive revaluations. However, NAVs did not rise across all products. On an operational level, the picture is mixed...
Market Commentary August 2025
After the summer break, numerous real estate funds and listed property companies published their half-year results. Overall, these were characterized by positive revaluations. However, NAVs did not rise across all products. On an operational level, the picture is mixed: higher revenues do not automatically mean managers have performed convincingly. At present, many products are growing primarily through capital increases—deploying fresh funds into what remains an expensive market. This is where managerial skill becomes evident: anyone can buy, but achieving sustainable value creation requires expertise, experience, and courage—especially when it comes to realizing that value at the right moment. Real estate remains highly sought after by investors. In an environment where bonds continue to offer limited attractive returns, the property market is a preferred asset class. Moreover, the sector proved its resilience during the crisis years of 2022–2023. While many managers failed to act countercyclically during that period and thereby missed opportunities, the market nevertheless demonstrated its long-term strength. Housing demand remains strong, driven by ongoing migration, while vacancy rates are at record lows. At the same time, political risks are rising: in Zurich, several popular votes are scheduled over the next 24 months (the Housing Protection Initiative, Rent Control Initiative, Pre-Emption Rights Initiative, and the Green Housing Initiative). These could impact the residential market, though commercial properties are less directly affected. There, however, macroeconomic uncertainties weigh heavily—particularly refinancing. Banks are increasingly demanding higher margins on mortgages. This is partly due to lower risk appetite among many institutions, but also reflects the strong position of UBS, which is charging significantly higher spreads. Conclusion: Despite individual challenges, Swiss real estate remains a stable and attractive long-term investment. Demand is strong, and low interest rates support continuity and stability. The key is smart diversification and managers who, through active management, courage, and foresight, create genuine added value. Those who follow this approach will continue to benefit from the sector’s attractive potential.
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