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Housing trends
Micro-apartments: the smart housing trend – compact and profitable. Ideal for urban lifestyles, they offer investors high rental income but also come with risks such as higher management costs and vacancies.
The real estate market has always offered stable investment opportunities. In addition to traditional investment properties, small, compact units are increasingly coming into focus: micro-apartments. In times of rising rents, growing urbanization and dwindling housing, they are becoming a desirable form of investment.
According to a study by the UBS Chief Investment Office, the demand for smaller apartments in Switzerland will increase by 30 percent by 2050 – especially in cities. The reasons for this are population growth (10.5 million by 2050) and declining living space per capita (from 50 m2 in 2005 to 47 m2 in 2023). Micro-apartments are therefore in tune with the spirit of the times – for both tenants and investors.
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Micro-apartments are not a short-lived trend but the result of several long-term shifts in living and lifestyle behaviors. At the same time as cities are becoming denser, the average household size is decreasing. This also changes the need for living space: compact, centrally located units that can be seamlessly integrated into everyday urban life are in demand.
The desire for autonomy and mobility is becoming a guiding principle for both younger and older population groups. At the same time, demographic change requires new housing solutions that are accessible, efficient and affordable. Micro-apartments meet exactly these requirements – and offer both users and investors a solution to the shortage of urban living space.
Strong demand in urban markets shows that it is not about “more living space”, but rather about smarter use of high-quality space.
The trend towards smaller living spaces is primarily due to the sharp increase in rental prices. These have risen twice as much as household incomes between 2000 and 2020. Over the coming years, rents are expected to rise much faster than incomes, due in particular to the housing shortage.
By the end of 2030, tenants will have to live in spaces an average of 10 to 20 percent smaller than today – either out of economic necessity or on their own initiative. This is exactly where micro-apartments fit the bill: they offer compact and high-quality living arrangements with above-average returns per square meter.
The Swiss housing market presents a clear picture: while larger apartments are increasingly struggling with vacancies, demand for small units remains stable or is even growing. Compact apartments are consistently easy to rent out long-term in cities such as Zurich, Geneva and Basel.
An analysis by UBS shows that small and micro-apartments benefit from high demand per square meter, especially in well-connected locations. At the same time, smaller housing units on the Swiss market are proving to be comparatively resistant to general economic fluctuations – especially when compared to larger, more expensive properties. Their target groups are also diverse (students, professionals, commuters), which further reduces the risk of individual defaults.
Micro-living is more than just an architectural design concept – it represents a lifestyle focused on mobility, efficiency and mindful consumption. The target groups often live in cities on a temporary basis, work remotely or on a project basis and value a central location with minimal effort.
This lifestyle offers clear advantages for landlords: a high willingness to pay, short contract terms and stable demand. At the same time, operating costs per unit remain manageable – for example, through modular furnishings, simplified maintenance and the absence of large-scale infrastructure.
Investing in micro-apartments not only serves a market trend but also fulfills a clearly defined urban need for flexible and efficient living space.
The yield prospects of micro-apartments are highly dependent on the location. In cities such as Zurich and Geneva, rents of over CHF 70 per square meter are possible – and even more for properties with the right amenities.
In medium-sized cities like Lausanne, Lucerne or St. Gallen, prices are somewhat lower but demand remains stable. Rents are significantly lower in rural areas, but rental income and resale value are also lower there.
Studies by UBS show that the most economically attractive regions are located along urban axes and around university locations. The decisive factors are the combination of location, transport links, target group and supply – not every city is equally suitable for investment.
Additionally, UBS analysis estimates that:
The vacancy risk is significantly higher in the latter regions, as fewer new jobs are created here. The cantons of Zug, Schwyz and Aargau in particular are considered promising locations for investments in the construction and rental of small or micro-apartments.
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Micro-apartments are more than a trend – they are a response to the structural changes in the housing market. Rising rents, declining living space per capita and new lifestyles make them an attractive solution for tenants and an exciting investment option for investors. With the right location and professional management, they offer high rental income, low default risks and solid value growth. Especially in urban markets with high demand, they complement classic investment properties or are attractive as a standalone investment. Those who understand regional dynamics can take advantage of return opportunities and minimize risks – an investment in the future of housing.
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