In Brief

  • 2018 is expected to be a strong year for Switzerland: Swiss GDP is forecasted to grow by 2.7%, its highest level since 2010, and inflation should reach a 10-year peak at 1.0%.
  • After having reached a ceiling mid Feb-2018, the 10-year Swiss bond lost almost 40 bps and is now back into negative territory at -0.23%.
  • Divergent trends on office assets: increasing pressure in Geneva (197k sqm or 5.8% vacancy rate) and a softening in Zurich (353k sqm / 4.5%).
  • Price deflation is continuing on both multifamily assets and private units, with respective decrease of -1.7% and -1.4% at end of Q3-2018.
  • Tough year for indirect real estate recording a significant drop on the SXI Real Estate Fund index (-5.3% over 2018) with almost all stocks down, and an average agio at 15.6% in Dec-2018, its lowest level since June-2013.

Macroeconomic situation

On interest rates, while the US curve is flattening with maturities ranging between 2.5% and 3.0%, Swiss rates remains low. After having reached a peak mid Feb-2018, the 10-year Swiss bond lost almost 40 bps and now stands at -0.23%.

Bonds curves

Commercial

The trends for available office stock are divergent between Geneva and Zurich: vacancy in Geneva is still increasing and now reaches 5.80%, while the stock of available office spaces has significantly decreased in Zurich over 2018 and stands at 4.50%.

Office vacancy rate (%)

Residential

For the 9th consecutive year, vacancy increased in Switzerland and now totals 72’294 empty dwellings or 1.62% of total stock (vs. 1.45% in 2017). Both in Zurich in Geneva, the rate of unoccupied units is below national average, but still on the upward slope, respectively at 0.99% and 0.53%.

Residential vacancy rate (%)

Swiss RE Environment Report

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