Real Estate Outlook – Switzerland, Edition 1H26

The year 2025 was marked by a high degree of economic policy uncertainty, as the US import tariffs placed a noticeable burden on export‑oriented economies such as Switzerland. With the start of 2026, geopolitical risks have come to the forefront. The conflict in the Middle East has driven commodity markets into extreme volatility and has heightened concerns about stagflation. Europe is feeling these effects very acutely, which is dampening the expected economic recovery.

Switzerland, by contrast, remains resilient in international comparison: a lower energy share in the consumer basket, regulated electricity prices and a strong Swiss franc all provide stabilizing effects. At the same time, the franc’s role as a safe‑haven currency increases pressure on the export sector. In the baseline scenario, Swiss GDP growth is expected to reach 1.1% in 2026, while inflation is now expected to come in at 0.5% and thus slightly above previous expectations.

The Swiss real estate market saw exceptionally high activity in 2025: capital market transactions reached a record volume, with residential property funds being particularly high in demand, as reflected in rising premiums. Defensive segments experienced further yield compression – a sign of strong demand for stable, well leased properties in a low interest rate environment. We expect the demand for Swiss real estate to stay high in 2026. It often provides inflation protected, predictable rental income and valuable diversification and therefore stability in uncertain times.

Switzerland’s residential market continues to be supported by structural and demographic trends. Although net immigration in 2025 was slightly below the record levels of previous years, it remains above the long term average. In addition, individualization, an aging population, and ongoing urbanization continue to support demand – particularly in cities and urban agglomerations – where supply is limited. Vacancy rates are falling further, while rents are rising across almost all regions. Given the increase in long term interest rates, the mortgage reference rate is also likely to edge higher again in the second half of the year.

Over the past decade, commercial rental markets worldwide have faced numerous challenges. Structural shifts, such as the increasing prevalence of mobile and remote working, are dampening demand for office space, while the growth of e commerce continues to put pressure on retail space. At the same time, the logistics sector has benefited significantly from these developments. Adding to this is the overall subdued economic momentum that has persisted since the Covid 19 pandemic.

In an international comparison, as well as in a historical context, Switzerland’s commercial real estate markets nonetheless remain resilient. Population growth not only supports the residential market but also has a positive impact on employment and consumption, which in turn provides tailwinds for the commercial real estate sector in Switzerland.

Despite rising long term interest rates in the wake of geopolitical conflicts and high volatility, we still expect positive value growth in 2026, albeit somewhat weaker than in the previous year. Fundamentals in the residential segment remain particularly robust. While residential assets are expected to deliver higher capital growth than commercial properties, the latter remain attractive as well, especially when supported by active asset management. In addition to offering higher running income yields, commercial properties continue to provide compelling acquisition opportunities with materially more attractive yields and risk premia. Given robust fundamentals, moderate valuations, increasing regulation in the residential sector, and inflation linked long term leases, commercial real estate continues to represent an appealing investment opportunity in the current environment alongside the residential segment.