Market Commentary December 2023

Switzerland is preparing for a population of 10 million people, inevitably leading to an increased demand for housing. In this context, the participation of investors with a long-term perspective is crucial. Besides leveraging existing properties, new developments are also necessary. Unfortunately, developers are facing significant challenges. Construction times and approval deadlines have doubled due to numerous bureaucratic hurdles, such as shading, local concerns, noise and heritage protection. This is a clear sign of a policy that does not act in the interest of the population. Many investors anticipate imminent interest rate cuts, which could revive interest in real estate investments. In the final weeks of the past year, publicly traded real estate products underwent reallocations, causing fund prices, especially those of index-related investors, to rise to mid-2022 levels. This development is positive, but premiums of over 30% and distribution yields of 2% in residential real estate funds seem to warrant exploring alternatives – which do exist. With a positive trend, it is expected that some managers will conduct new capital increases to reduce mortgage burdens, leading to further dilution of existing portfolios. The year 2023 was marked by significant volatility due to various uncertainties. However, the outlook is improving for the new year. Managers are now tasked not only with creating value but also providing investors with new perspectives.  Learn more about current real estate investment trends on January 17th and 18th at IMMO24. Everyone is invited to participate in enriching discussions and benefit from educational opportunities.

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