Market Commentary October 2024

After a quiet September with no noteworthy news, the year is moving into its final phase. However, several important decisions could directly or indirectly impact the real estate market. The upcoming U.S. elections are influencing global stock markets, and expectations for another rate cut by central banks have largely been priced into international stock prices. A significant factor for Swiss real estate funds could be the potential reduction of the reference interest rate for rent determination, which may occur in December or next spring. In the short term, various political decisions will likely shape developments until year-end, especially the national and cantonal referendums in November. Parliament recently revised rental laws concerning subletting and evictions for personal use  - a decision positively received by the real estate sector from a property owner’s perspective. In Zurich, the popular initiative "Affordable Housing for Zurich" calls for more capital to enable the city and its housing foundations to acquire additional properties and land. Given Switzerland’s rapidly declining vacancy rates, a revision of private interest objection regulations would also be desirable. Recent results from some real estate funds show an alignment of discount rates used, which increases the importance of each fund manager’s value-creation measures for sustainable performance. Investor demand has risen since late summer, leading to new capital increases each month.

The Market Commentary newsletter - subscribe here!