SWITZERLAND Trends and Developments Contributed by: Andreas F. Vögeli, Fabiano Menghini, Charles Gschwind and Annina Fey, Niederer Kraft Frey
delays or redesign. The market, therefore, remains active, but decisions are more deliberate, timelines longer, and risk assessments more sophisticated, sig - nalling a transition from growth-driven expansion to stability-oriented investment strategies. Residential Real Estate Trends Continued price growth with regional variation Residential prices have continued to rise, though at a more moderate pace. Price dynamics vary signifi - cantly by region: • Prime urban markets remain the most expensive and supply-constrained. • Suburban areas benefit from spillover demand. • Peripheral regions offer affordability but face slower growth. Owner-occupied housing remains highly desirable, but stricter affordability criteria and high equity require - ments limit access. Rental market dynamics Switzerland’s residential rental market is under sig - nificant strain. Vacancy rates in major cities remain extremely low. Demand consistently exceeds supply, resulting in rising rents and competitive tenant selec - tion. While foreign investors are in effect banned from investing in Swiss residential assets due to restrictions under Federal Act on the Acquisition of Immovable Property in Switzerland by Foreign Non-Residents (Lex Koller), Swiss investors continue to show a strong appetite for this asset class due to its stable income streams and strong demand fundamentals. This has reinforced the role of pension funds and insurance companies as dominant residential buyers and land - lords. Supply constraints and building activity Housing supply constraints stem from multiple struc - tural factors such as:
• local opposition to densification or construction projects. Densification strategies are increasingly necessary to accommodate population growth. However, these projects often face political and community resist - ance. Construction activity slowed during periods of cost volatility but is gradually recovering. Nonetheless, the structural housing shortage in urban areas is expected to persist for the near future. Affordability pressures and social implications Housing affordability has become a central social and political issue. Rising rents and property prices disproportionately affect low- and middle-income households. Policy responses include support for co-operative housing, housing protection measures, restrictions on demolition, and replacement of affordable units. These measures aim to balance market dynamics with social stability, but they also introduce additional regu - Transaction volumes in certain traditional office and retail segments have moderated, reflecting structural changes such as hybrid work models and evolving consumer behaviour. Office market The office sector has undergone significant transfor - mation but remains resilient. While remote work has reduced overall space demand, offices continue to play a critical role in collaboration, innovation, and corporate identity. Demand has shifted toward central locations and buildings with flexible layouts. Older office buildings in secondary locations face increased vacancy risks. Many are being repositioned through renovation, conversion to residential use, or transformation into mixed-use developments. latory complexity for developers. Commercial Real Estate Trends
• limited land availability; • strict zoning regulations; • lengthy permitting processes; • rising construction costs; and
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