RICS study: Commercial real estate is overpriced
87 percent of RICS Switzerland members are convinced that Swiss commercial real estate is overpriced. This is the conclusion of the Switzerland Commercial Property Monitor Q1 2016 of the Royal Institution of Chartered Surveyors (RICS), for which the 500 individual RICS members in Switzerland were surveyed. In the fourth quarter of 2015, 71 percent of experts still considered commercial property to be too expensive.
According to the Switzerland Commercial Property Monitor Q1 2016, investment demand - following a slight recovery in the fourth quarter of 2015 - declined again in the first quarter of 2016. Six out of ten of the experts surveyed believe that the market is currently in the early to middle phase of a downturn.
Both the Occupier Sentiment Index (OSI) and the Investment Sentiment Index (ISI), which measure the dynamics of the Swiss rental and investor markets, show a significant negative trend between Q4 2015 and Q1 2016, according to a media release from RICS. The OSI decreased by 28 percent (from -41 to -32) between Q4 2015 and Q1 2016, while the ISI decreased by as much as 33 percent (from -16 to -12).
Due to falling demand for rental space in all segments and the growing supply of rental space - especially in the office sector - rents are expected to fall sharply and landlords will offer attractive special terms.
The decline in investment was mainly due to lower demand from both local and international buyers, he said.
RICS experts continue to expect both asset values and rents in prime locations to fall less sharply than in secondary markets. First-class industrial and office properties will suffer the least.
The professional association RICS has been represented in Switzerland since 2003. Currently, RICS Switzerland has over 500 members, 18 companies bear the certificate Regulated by RICS. (ah)
