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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