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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