Real estate is considered as one of the least risky investments. Many investors prefer this type of investment since it is a tangible project with a proven track record in terms of ROI.
Over the past few years, real estate in Switzerland has become a hot topic of public interest for one reason: the constant and rapid rise in prices. This increase affects all regions of the country, especially the major financial hubs of Geneva and Zürich.
Swiss citizens and experts alike are raising many questions and wondering about their future and that of real estate.
Demand clearly outstripping supply
Rising property prices in Switzerland are mainly due to the imbalance between supply and demand.
Constantly evolving demand is proof that Switzerland has succeeded in ensuring a favorable environment. There are several reasons for this:
- Security and stability: Switzerland is among the world leaders in terms of security. Crime rates are relatively low, and political stability is remarkable.
- Attractiveness of the country: Geneva and Zürich are among the world’s most important financial hubs. Located in Europe and surrounded by several countries, these hubs are considered the Nexus of investors and talent. This public gathers around an environment that offers numerous opportunities and an extensive financial network.
- Quality of life: Cities like Geneva and Zürich offer a variety of activities in one place, from business to entertainment. The climate also contributes to a better quality of life.
The supply of real estate in Switzerland is not keeping pace with demand, and as a result, property values are rising steadily, leaving residents with fewer housing options.
Foreign investment and speculation:
Another key factor in this price rise is the growing demand from foreign investors. Thanks to its political stability, Switzerland is one of the least risky countries in which to invest. Investors, whether high-net-worth individuals or hedge funds, are taking advantage of this to buy properties and speculate on prices, knowing that these are rising all the time.
This speculative pressure has a snowball effect, as many Swiss homeowners, seeing their properties rise in value, decide to hold on to them as investments, reducing the available supply even further.
This real estate supply crisis is encouraging Swiss citizens to move away from urban centers and big cities. Finding decent housing at an affordable price is now a major challenge for the middle classes. This choice to move to the outskirts is a temporary solution, as it brings with it other problems such as road infrastructure saturation caused by the large number of vehicles commuting to and from work. The Swiss public is also keen to encourage the construction of new housing, and this can be achieved through the efforts of cantons and municipalities to ease strict regulations, to ensure more rapid real estate development.
