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Investment pressure stabilizes real estate market

Media Release: Stable real estate market

The price expectations of players in the Swiss real estate investment market have dropped slightly since last year and a damper has been put on price expectations for all location qualities. Nevertheless, nearly half of the respondents to the survey by KPMG Switzerland expect prices to remain stable over the next 12 months.


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Andreas Hammer

Director, Head of Marketing & Communications

KPMG Switzerland


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For the seventh year in a row, KPMG Switzerland surveyed real estate investors and appraisal companies about the Swiss investment property market to compile data for its Swiss Real Estate Sentiment Index (sresi). The Sentiment Index stands at 0.8 index points (pts.) across all participant groups, 14.4 pts. down from the previous year. The index has been falling since 2016 and is currently at the stability threshold.

KPMG Swiss Real Estate Sentiment Matrix

KPMG Swiss Real Estate Sentiment Matrix

Economic outlook persistently optimistic

As expected, the Swiss economy has improved, and that improvement is reflected in the assessment for the next 12 months: At 16.5 pts., survey respondents forecast renewed improvement in the country’s economic situation, although less pronounced than last year.

The Price Expectation Index for investment property experienced another year-on-year decline, from 10.3 pts. to -3.1 pts. This marks another foray into slightly negative territory, the Index’s first since 2014. Nevertheless, nearly half of those surveyed still expect prices to remain stable overall. Major institutional investors, in particular, anticipate increasing prices. More than a quarter of the people surveyed (27%) foresee a negative price trend.

Demand for central locations remains high

Although the index for principal centers has fallen by 3.8 pts., at 61.7 pts. it clearly shows that prices in central locations are still expected to rise. Declines have also been observed in the index for secondary centers which has dropped by 6.6 pts. to -12.3 pts. With an index score of -100.8 pts. on a 200-point scale, current sentiment shows that prices are expected to decline significantly for peripheral locations. Overall, we detected a slight year-on-year decrease for all location qualities.

Investments continue to focus on principal centers. These price expectations are also reflected in the breakdown by economic center: Like last year, respondents of the survey indicated that they expect prices to continue to rise in six of the eight economic centers, with the exceptions being Lugano and St. Gallen. The index for Lugano has fallen further and, at -50.3 pts. (change of -22.3 pts.), has now hit its lowest level since this survey was first conducted. Coming in at -45.8 pts. (-12.8 pts.), the downward trend in St. Gallen is still holding on.

Price expectations down on the whole

The Price Expectation Index for residential property fell again in 2018 and, at 18.7 pts., is now at its lowest level since 2012. While 38% of those surveyed anticipate rising prices for residential properties and 40% expect prices to remain stable, 22% forecast a decline.

The Price Expectation Index for retail property, on the other hand, has been in negative territory ever since the sresi survey was first conducted. At -115.5 pts., the index has remained practically unchanged compared to last year’s low level (down by 3.8 pts.). While the Price Expectation Index for office property might have reached its all-time high for this survey at -51.2 pts., it nevertheless remains moderately negative.

Interest rates, regulations and value adjustments as risks

After last year’s record low, the general risk assessment rose slightly in 2018. Professional investors were most critical in their ratings of the current risk situation and appraised the risks posed by changes to interest rates, more stringent regulations and declining real estate values as moderately high. Last year, insurance companies, appraisal companies and real estate companies were more sensitive to risk. This shift in attitude is probably partially attributable to the fact that professional investors are more highly leveraged. What they have in common, however, is that declining property values pose a moderate risk.

Half of the survey’s participants expect market risk to increase over the next 12 months. Year-on-year there was a three-percentage-point drop in respondents’ assessment of the market risk situation. 41% anticipate that the risk situation will remain stable, while 9% forecast declining risk.

With the Supply Index at -104.4 pts., adequate investment opportunities for residential properties remain scarce (2017: -133.5 pts.). The Supply Index of 3.3 pts. for office properties was back in positive territory, albeit slightly, in 2018 following last year’s negative score (-7.8 pts.). Well over 70% agreed that the demand for office space will decline by 10% over the next ten years and that demand for logistics space in urban centers will be on the rise. At 22.6 pts., the supply of retail properties is felt to be just barely adequate.

Mobility and sharing economy driving structural transformation

More than 90% of the survey’s respondents consider demographic development and mobility-related changes as drivers behind demand for more residential offers for single- and two-person households. Future developments in the area of mobility should primarily benefit central locations. Only 30% expect mobility trends to cause the value of real estate in peripheral locations to rise and 42% actually expect these prices to decline.

Autonomous driving is not considered a game changer with respect to real estate markets: 38% of those surveyed do not expect the availability of building land in core cities to change in response to developments in autonomous driving. Responses from just a little under a third indicated that they see potential for another 10% of developable area in core cities.

Yet another trend involves the sharing economy. Two thirds of respondents (67%) feel that this model will also catch on in the residential segment.

A land register organized based on blockchain technology: 27% of those surveyed predict that this will become a reality by 2028. 44% anticipate a change eventually but expect it to take longer while another 20% are relatively unimpressed by the technology and do not expect land registers to be switched to blockchain at all.


The KPMG Swiss Real Estate Sentiment Index (sresi) serves as a leading indicator for anticipated developments in the Swiss real estate investment market. The main index is generated based on assessments of economic developments and price trends in the real estate investment market. The sub-indices reflect the assessments of market players in terms of individual market and use segments. This data was first collected in 2012, and the survey is repeated every year to generate an index which permits a comparison of market assessments over time. Investors and appraisal companies from the Swiss real estate investment market participate in the survey. Additional information on one topical area of focus that is currently of interest to the industry is also collected. This year’s survey featured an examination of future trends on the Swiss real estate market.

© 2020 KPMG Holding AG is a member of the KPMG network of independent firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss legal entity. All rights reserved.

KPMG International Cooperative (“KPMG International”) is a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm.

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