Press release

6 Apr 2020 Zurich, CH

Swiss real estate market feels effects of pandemic

Zurich, 6 April 2020. The corona pandemic has not gone unnoticed by the Swiss real estate market: 62 percent of those surveyed expect the Swiss real estate business for 2020 to see a drop in transactions as a result of the crisis.

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  • COVID-19 und die Auswirkungen auf die Schweizer Immobilienwirtschaft

  • Drop in transaction volume expected
  • Housing and logistics are stable — office spaces stable to down slightly, retail and hotels have seen significant losses
  • Investments in new construction and future financing on the test bench

The corona pandemic has not gone unnoticed by the Swiss real estate market: 62 percent of those surveyed expect the Swiss real estate business for 2020 to see a drop in transactions as a result of the crisis. At the beginning of the year, only 14 percent stated this. One third of respondents—a substantial share—expected the level to remain the same. These are the results of a survey conducted by EY Switzerland in the period from March 27 to March 31, 2020. The approximately 90 participants were from all areas of the real estate sector. The results were evaluated in relation to the results of the trend barometer for the real estate investment market for 2020 at the beginning of the year.

“Even though the long-term consequences can still not be predicted, the Swiss real estate market is facing tremendous challenges from the COVID 19 crisis. However there is no need for pessimism,” said Claudio Rudolf, author of the study as well as partner and head of Transaction Real Estate at EY in Switzerland.

Housing and logistics stable by comparison

In the opinion of those surveyed, housing and logistics facilities are showing a comparably high level of stability. As the result of increased deliveries, logistics facilities are actually benefiting, at least maintaining their price level. Before the crisis about half of the respondents had predicted increasing prices, but today only about half are of that opinion. The same holds true for the housing market. Two thirds of survey respondents expect a stable price level (previously: 38 percent). However, one fourth of those surveyed are concerned about dropping prices.

Survey participants estimate the future of the office and retail real estate market to be significantly more critical. After the positive assessment regarding the trend toward increasing sale prices for office real estate—at the beginning of the year, 43 percent still anticipated this trend—no one expects this now. In fact, quite the opposite is expected. 76 percent of survey respondents assume that prices will drop for this usage category (previously: 8 percent). Hotel properties are facing the greatest challenge. Travel restrictions, cancelled trade shows, and temporary hotel closures are causing 94 percent of survey respondents to expect prices to fall here (previously: 27 percent).

“The effects of the corona pandemic are already noticeable today when we look at the missing sales, for example in the retail trade,” said Daniel Zaugg, partner and head of the Real Estate Sector at EY in Switzerland and co-author of the study. “What will be critical is the length of time the crisis has a hold on the economy and society, and what long-term effects the pandemic has.”

Low interest rates remain — current financing not at risk

Because of the effects of the pandemic, the central banks have little opportunity to raise interest rates. As a result, 89 percent of the survey respondents expect the low interest rate environment to continue. 62 percent assume that bank lending will become more restrictive in the future. Current financing, however, is unlikely to be in jeopardy, in the opinion of 56 percent of respondents. A significant majority (95 percent) of the respondents still expect rent prices to fall. Investments in portfolio holdings will not increase, in the opinion of 61 percent of participants. The situation for new construction is expected to be somewhat worse. Here about 77 percent are forecasting a drop.

To alleviate the critical situation, the respondents would prefer fiscal measures that go beyond what has already been done. 63 percent prefer an easing in the taxation, collection, and enforcement procedures. Increasing the opportunities for write-offs was named by one third of survey respondents. Simplifying the use of losses for tax purposes (e.g., removing the deadline) as well as a temporary waiver on collecting VAT are also options with which one fourth of the respondents agree.


Information about the survey

For the survey from EY Switzerland, investors were asked how active they were in the Swiss real estate market in recent years. From March 27 to March 31, 2020, about 90 Swiss market investors representing a cross-section of the Swiss real estate market participated in the survey.


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