Real estate prices at record level
Prices for prime real estate in central locations reached new records in 2021, while yields fell in return. This is according to the new market report by CSL Immobilien.
"Anyone who wants to buy a property in a prime location today needs a lot of money and patience," write the researchers at CSL Immobilien in their latest real estate market report. That's because bidding processes continue to drive property prices to new highs, especially for core properties. "As a low-risk asset class, prime real estate is still without alternative," says Yonas Mulugeta, CEO of CSL Immobilien, explaining the situation.
In 2021, price trends had caused net initial yields in most segments of the investment market to fall to new lows. According to the CSL market report, prime residential properties yielded a national average of 1.85%, down from 2.1% a year earlier. Yields for prime office properties actually fell just short of residential at 1.9% (previous year 2.35%). One reason was that investors who had lost out in the residential market had moved into the office market, the report said. Commercial and logistics properties have also enjoyed increasing demand.
On the office market, demand from users is concentrated more strongly on central locations than before the pandemic, the researchers continue. Accordingly, the majority of the office space available in the past six months (2.43 million sqm, previous year 2.26 million sqm) was located on the periphery. Pandemic effects are also evident in the residential market: Demand for condominiums is rising, and prices are also increasing almost across the board. This trend is likely to continue in 2022, forecast the market observers at CSL. In the rental housing segment, larger properties in particular are in demand, while interest in 1- to 2.5-room apartments has declined noticeably in many locations.
Read the detailed market report by CSL Immobilien in the upcoming, 334th issue of the Swiss Real Estate Newsletter.
