Market Commentary October 2025

Investor demand for Swiss real estate reached record highs in October. This surge has prompted fund managers to launch new capital increases—over CHF 6 billion are expected for 2025—and subsequently to intensify acquisitions in the market. The gross yield of a residential property in a major Swiss city has returned to around 3%. Pension funds and real estate investment vehicles seeking residential assets are now forced to pay significantly higher prices than just twelve months ago. According to JLL data, market liquidity is now comparable to levels seen before 2022—that is, before the start of the interest rate hiking cycle. Demand is strongest for residential properties in zones B and C as well as development sites with residential potential. The regions of Zurich, Central Switzerland, and Northeastern Switzerland currently rank among the most attractive. Swiss real estate remains appealing in a European context. Although “prime” yields for residential assets in Geneva and Zurich are among the lowest in Europe, the spread over risk-free rates, particularly 10-year government bonds, remains the widest—150 to 200 basis points. Over the past decade, many investors have favored residential portfolios, viewing commercial assets as riskier. Yet, performance data from Swiss indices tell a different story: the REAL Index, which is composed of roughly 80% commercial properties, has delivered the best performance of all Swiss real estate indices over the past ten years. At the same time, volatility remains a key concern for investors. Listed real estate products—both funds and equities—currently exhibit volatility of around 10%, a historically elevated level. 

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