Study: Foreign investments in the Swiss real estate market
According to a recent study by CBRE Switzerland, foreign investors account for 11% of the annual transaction activity on the Swiss real estate market. The survey was prompted by the recent push to tighten the Lex Koller.
A recent study by CBRE Switzerland sheds some light on the still rather opaque Swiss real estate transaction market. According to this study, the capital spent by foreign professional investors in Switzerland on purchases of commercial properties will account for around 11% of the annual average total investment volume of approximately CHF 6.8 billion from 2011 to 2020 and corresponds to around CHF 750 million per year.
According to the CBRE study, in the Swiss real estate market, which is characterized by a relatively high price level and a strong currency, significantly more sales than purchases have been made by foreigners in recent years, resulting in an annual net disinvestment effect of around CHF 290 million for Switzerland.
Even in the recent past (2017-2019), purchases were lower than disinvestments, and in this period they are likely to have accounted for only around 5% of the total investment volume. However, this does not apply to the exceptional year 2020, as the transaction volume here experienced a special effect due to individual larger transactions, according to the CBRE researchers.
Foreign investors take more risk
Around half of the prices paid by Swiss and foreign investors for operating premises in the last decade are attributable to office uses, followed by retail space with around a quarter of the transaction volume. Foreign investment differs from Swiss investment primarily in that significantly more foreign capital is flowing into hotel properties.
Foreign market players also often invest in properties with a higher risk/return profile, which traditional Swiss institutional investors such as pension funds, investment foundations, insurance companies or real estate funds tend to avoid or which are not permitted for some players for regulatory reasons.
For certain special segments in which foreign investors occupy higher market shares, whether for investment purposes or also for their own use, cross-border money flows have a stabilizing effect. They provide these markets with additional liquidity that is not available to the same extent locally, especially in economically difficult times. Even in the traditional sectors such as office and retail, foreign investors are often attracted to properties that do not fit the investment profile of the majority of Swiss investors, who are risk-averse and focused on the residential sector.
A large proportion of foreign buyers in the last decade have come from the United Kingdom, Germany and France. Furthermore, particularly in the retail segment, investors from Israel have a long-standing investment tradition. According to the CBRE study, Asian capital currently plays a subordinate role - with the exception of the hotel sector. (bw)
