Confidence in the real estate investment market – tempered by regulation

Compared with the previous year’s all-time high of +89.0 points, the sub-index “Price development” fell by 28.3 points to +60.7 points. Nevertheless, roughly 62 percent of respondents expect prices to increase slightly or significantly over the next twelve months. The expectations remain positive across all participant groups, most notably among pension funds (+72.7 points), real estate companies (+72.3 points) and real estate funds (+65.5 points).

“Investment pressure remains high in the Swiss real estate market. Further price increases can be expected, particularly in the residential segment, though price momentum is likely to be limited as acquisition yields are already low” says Beat Seger, Real Estate Expert at KPMG Switzerland.

While price expectations for residential real estate remain high at +109.8 points, they are below last year’s all-time high of +131.0 points. Around 90 percent of respondents expect prices to rise. While prices for office (-2.7 points) and commercial properties (-4.1 points) are expected to remain relatively stable, expectations for retail properties (-40.2 points) are negative. Special-purpose properties remain slightly positive at +13.2 points.

A clear picture also emerges across location categories: Price expectations are particularly high for urban centers (+88.5 points), followed by secondary centers and agglomerations (+76.1 points). Peripheral locations remain positive at +8.8 points but are losing price potential.

The strongest price increases are once again expected in Zurich (+104.0 points), Central Switzerland (+87.4 points) and the Lake Geneva region (+84.1 points). 87 percent of respondents expect rising prices in Zurich, while the figure for both Central Switzerland and the Lake Geneva region is 75 percent. At -7.9 points, Lugano is the only economic center with negative price expectations. The Ticino region has also been in negative territory since the inception of the survey.

Expectations for Swiss economic growth remain slightly negative at -5.0 points and are virtually unchanged compared to the previous year (2025: -8.4 points). Only real estate funds (+1.7 points) and insurers (+0.1 points) expect growth to be slightly positive. Real estate companies, pension funds, developers and appraisers anticipate a slight deterioration.

“The real estate investment market remains robust despite subdued economic expectations. The lower overall index therefore does not indicate a shift in sentiment but rather a normalization following the exceptionally strong previous year,” says Beat Seger.

The supply index for residential properties fell from -107.9 to -122.3 points, indicating that the market participants see a pronounced shortage of supply. Around 84 percent expect a moderate to severe shortage of suitable investment opportunities in the residential segment, five percentage points more than in 2025. Office, commercial and special-purpose properties are considered to be in limited supply. Retail properties are the only segment where the supply is considered sufficient at +8.1 points.

Investment preferences remain largely unchanged. On average, respondents would allocate 64 percent of a hypothetical CHF 100 million investment to residential properties. This figure is 73 percent for pension funds and 70 percent among developers. Office properties account for 13 percent of the total investment volume, commercial properties for 12 percent, special-purpose properties for 7 percent and retail properties for 4 percent.

The risk index rose slightly from 1.58 to 1.67 points, reaching its third-highest level in the past ten years. Tighter regulation remains the biggest risk to the Swiss real estate investment market, scoring 2.4 out of 3 points. Potential effects of the European economic environment rank second, at 2.0 points. Interest rate risk has moved into third place for the first time since 2024 at 1.7 points. Declining property values continue to be perceived as the lowest risk.

The survey underlines the strong influence of political decisions on the real estate market. 94 percent of respondents believe that the adoption of the sustainability initiative “No to a Switzerland with 10 million!” would have had a negative or strongly negative impact on Switzerland as a business location. 95 percent of respondents would have expected negative consequences for the commercial real estate segment had the initiative been adopted.

Objections and building permit procedures are considered key obstacles to development projects, new construction, and renovations: 97 percent of respondents believe that they have a significant impact. Political and regulatory conditions are also seen as having a noticeable or strong impact by 94 percent of respondents, while 64 percent cite the construction industry’s capacity as an important influencing factor.

87 percent of respondents believe that the adverse anticipatory effect of a building and zoning ordinance that has not yet been adopted creates considerable planning uncertainty. “Planning certainty is a basic prerequisite for investment. Without a binding regulatory framework, projects are delayed, become more expensive or are not implemented at all” says Beat Seger.

A tightening of the Lex Koller legislation could also have a noticeable impact on the market. 63 percent see a risk that listed real estate companies and real estate funds could be delisted from the stock market. This, among other factors, would affect liquidity in the transaction market, according to 61 percent of respondents. 61 percent expect capital to shift into alternative asset classes or markets. This could significantly impair the country’s supply of residential and commercial space.

For more information and the detailed study with interactive dashboards, please go to: www.kpmg.ch/sresi