Credit: GRI ClubUnlocking Switzerland - Real Estate’s Golden Ticket?
Discover why Swiss real estate continues to create challenges for foreign investors despite remarkable market stability
February 7, 2025Real Estate
Written by Jorge Aguinaga
Switzerland is often perceived as one of the most stable and secure real estate markets in the world. But for foreign investors trying to enter the market, the reality is far more complex, with strict regulations, institutional dominance, and limited liquidity.
During GRI Club’s recent Unlocking Switzerland meeting in Zurich, top executives and industry leaders gathered to explore the challenges and opportunities in the Swiss real estate market.
Over the past year, benchmark property values have risen by 18%, with a 2.53% gain from dividends and yields. Institutional investors, particularly Swiss pension funds and major banks like UBS and Credit Suisse, have secured their dominance, ensuring that most transactions stay within domestic circles.
This has, however, led to an extreme lack of liquidity in the country. According to an OECD Economic Survey, property in Switzerland is overvalued by up to 40%, raising concerns about potential price corrections if financial conditions tighten further. Properties rarely change hands, and when they do, they are often prenegotiated within a closed network of Swiss players.
In some cantons, foreign ownership of residential property is capped at 20%, and even Swiss-based investment funds often have limits on how much foreign capital they can raise or manage. This makes it difficult for non-Swiss players to enter the market without partnering with a local entity.
In practice, this means that foreign investors can only step in when Swiss institutions actively choose not to buy, which is rare. Swiss Prime Site, PSP, and pension funds dominate the market, leaving little room for outside investment.
Further barriers to foreign business expansion reported by the OECD, such as slow approval processes and strict market regulations, only serve to exacerbate the difficult situation facing external investors in Switzerland.
Switzerland’s property market is one of the most protected in the world, and without deep local connections or a Swiss partner, foreign investors will find it nearly impossible to break in. However, for those with the patience and strategy to navigate the system, Swiss real estate remains a rare and highly coveted asset class.
Look out for future events in this region on the full GRI Club calendar.
Switzerland is often perceived as one of the most stable and secure real estate markets in the world. But for foreign investors trying to enter the market, the reality is far more complex, with strict regulations, institutional dominance, and limited liquidity.
During GRI Club’s recent Unlocking Switzerland meeting in Zurich, top executives and industry leaders gathered to explore the challenges and opportunities in the Swiss real estate market.
Swiss Property’s Exclusive Market
Unlike the market volatility seen in many other European countries, Switzerland’s property sector remains remarkably steady.Over the past year, benchmark property values have risen by 18%, with a 2.53% gain from dividends and yields. Institutional investors, particularly Swiss pension funds and major banks like UBS and Credit Suisse, have secured their dominance, ensuring that most transactions stay within domestic circles.
This has, however, led to an extreme lack of liquidity in the country. According to an OECD Economic Survey, property in Switzerland is overvalued by up to 40%, raising concerns about potential price corrections if financial conditions tighten further. Properties rarely change hands, and when they do, they are often prenegotiated within a closed network of Swiss players.
Lex Koller Regulation
One of the biggest challenges for international investors is the Lex Koller regulation, which severely restricts foreign ownership of Swiss real estate.In some cantons, foreign ownership of residential property is capped at 20%, and even Swiss-based investment funds often have limits on how much foreign capital they can raise or manage. This makes it difficult for non-Swiss players to enter the market without partnering with a local entity.
In practice, this means that foreign investors can only step in when Swiss institutions actively choose not to buy, which is rare. Swiss Prime Site, PSP, and pension funds dominate the market, leaving little room for outside investment.
Further barriers to foreign business expansion reported by the OECD, such as slow approval processes and strict market regulations, only serve to exacerbate the difficult situation facing external investors in Switzerland.
Conversations at the meeting revealed that Swiss investors are largely favouring long-term holdings and selective international expansion, primarily within Europe. (Image: Xbrchx | Adobe Stock)
Stability Over Returns
For those who do manage to invest, Swiss real estate offers long-term capital preservation rather than high returns. Some current yields stand at:- 2.5% for residential properties in Zurich
- 3-3.5% for commercial real estate
Switzerland’s property market is one of the most protected in the world, and without deep local connections or a Swiss partner, foreign investors will find it nearly impossible to break in. However, for those with the patience and strategy to navigate the system, Swiss real estate remains a rare and highly coveted asset class.
Look out for future events in this region on the full GRI Club calendar.
