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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