COVID-19 Impacts on Switzerland Real Estate

Robert Hauri • 1/14/2021

The count of COVID-19 cases could not be brought under control so the Federal Government decided to take further measures. The number of customers per square metre in shops has been reduced, there is a two-household rule for private gatherings and restaurant visits, and there are now various restrictions for ski resorts. Furthermore, the Federal Government continues to strongly recommend working from home.


The net yields for Swiss residential properties remain stable throughout the COVID-19 pandemic. The vacancy rate in the top cities such as Zurich and Geneva remain very low with stable median rent prices of CHF/sq m 330 in Zurich and CHF/sq m 370 in Geneva. The interest rates are expected to remain low until at least the end of 2021, which makes residential properties in sought after locations still a favourable investment for pension funds, other institutional investors as well as wealthy private investors.  


The office market in Zurich, Geneva and Basel remained stable during the year of 2020. Prices declined slightly in the middle of 2020 but surged again towards the end of the year. The vacancy rate in Geneva stayed the same (5%), office space in Basel slightly increased from 1.8% to 2.2% and in Zurich the vacancy rate dropped from 1.4% to 1.1%. The median rents per square metre are CHF 360 in Zurich, CHF 240 in Basel and CHF 470 in Geneva. In peripheral locations and locations with weaker infrastructure the impact of COVID-19 is noticeable. The economic outlook as well as the increasing demand for a modern working environment make these locations less desirable. Potential tenants in peripheral locations are highly price sensitive, which drives prices down. 


The rent prices for retail space in the high street of Zurich increased to CHF/sq m 440 from CHF/sq m 400 at the beginning of the year. Retail properties in the cities of Basel, Lausanne, Berne as well as Geneva also experienced a slight increase in its rental prices. Non-food retail space located within walking distance of the high street as well as on the outskirts experienced a decrease in demand with consequent price decline. 

In summary, demand for real estate with stable cash flows in good locations remains high amongst Swiss investors. Net yields for residential, CBD offices as well as high street retail properties are almost unchanged. The yields for office and retail in secondary locations experienced a noticeable increase. 


29 October

The number of new COVID-19 cases has risen almost exponentially over the last weeks, and as of today, the federal government in Switzerland has decided on several additional measures that will drastically impact everyday life.

Gatherings in public spaces and private events are now limited to 15 and 10 people, respectively, and masks must be worn practically everywhere.

Sports and cultural activities are restricted to an extent that will make most of them impossible. Nightclubs must close and there is a curfew from 23.00 to 6.00, universities must switch to distance learning, and working from home is strongly recommended. 

Appetite for real estate investment remains high, also driven by Swiss pension funds and insurance companies whose cash surplus increased during the first lockdown.

We have seen a lot of traction on transactions relating to property types including:

  • residential;
  • mixed-use; and
  • commercial/industrial including developments.

Investors are still looking at core offices, but there are currently only smaller properties on the market. We expect most ongoing deals to be closed before end of the year - now accustomed to the pandemic situation, most investors have experience on how to deal with it.

Office space demand from occupiers is fluctuating, with some corporates still securing large spaces going forward, while others are now focusing on more flexibility. 


19 August

The outbreak of the COVID-19 pandemic led to the most serious slump in economic activity in Switzerland for over four decades. Even though there are signs of the business situation easing, there is still a measurable decline in demand.

The development of the Swiss economy will remain dependent on that of the pandemic. In updated scenarios, a leading Swiss Economic Institute forecasts that output will shrink by 4.9% this year, based on the assumption that a likely increase of new infections in the winter months can be contained.

Nevertheless, the Swiss economy is coming through the crisis relatively well compared with the rest of Europe, with a 2021 GDP growth rate of 4.1% expected after all. Residential real estate and certain core products crystallise as a safe haven for investors, and the importance of new asset classes like data centers is elevated. 


5 August

Switzerland has had very few new COVID-19 cases since the middle of May, so that in June most restrictions have been lifted. Due to slightly rebounding case numbers in July, it is since then mandatory to wear a mask on public transport and self-quarantine for ten days upon entering Switzerland from high-risk territories. Business continues as usual. 

Corporate occupiers are bringing people back into their offices (with and without social distancing) and there is a debate as to whether they would be looking into reducing the existing footprint. Though we have some examples of companies putting excess space on the market, this seems to be rather linked to a difficult economic situation and decline in business turnover as opposed to implementation of alternative workplace strategies. 

Office and retail letting activities are picking up again as tenants with expiring leases are searching for attractive opportunities. Even with demand being slightly less than normal, because of low supply, the major centres of German-speaking Switzerland exhibit paradox increase of market rent in certain submarkets (e.g. Zurich CBD). However, differences in office vacancy rates and market rents are expected to widen between city and fringe locations. 

The funding situation of Swiss institutional investors has not changed, and they are still looking to invest in core and core+ real estate with a home bias. Large transactions initiated pre-COVID are now continued, with the sale of the 53,000 sq m Glatt Centre in Zurich and other notable transactions having been announced lately. 


23 April

Last Thursday the Federal Council announced a plan for ‘the way back’ to the ‘new normal’: 

  • 27 April: some shops can open again, such as: hairdressers, DIY/garden centres, florists
  • 11 May: all retail shops can reopen, schools as well 
  • 8 June: universities to reopen, as well as museums and zoos 

Borders are still more or less closed, people are still being told to stay home and work from home. No specific date for restaurants, bars, coffee shops and sports facilities to reopen has been announced. This said about 75% of Swiss companies are still working normally. 

The commercial real estate market starts to react to the slowing down of the economy. Landlords with restaurants and shops in their portfolios face a lot of pressure to reduce rents or even waive rent. We see that the retail real estate-sector and the hospitality and leisure-industry are for the time being almost ‘dead’. In the office market, we see transactions go further as if nothing had changed and others are put on hold or are even stopped. In the investment market we see transaction-processes not being started, some are put on hold, some deals still will close. 


16 April

Since last week, the lockdown in Switzerland has been extended to 26 April. Schools, universities, shops (grocery stores, gas stations still open) and restaurants remain closed.

9 April

In Switzerland the lockdown was announced on 13 March. Schools, universities, shops (grocery stores, gas stations remain open) and restaurants are closed at least until the 19 April. People have been told to stay at home. Offices, construction sites and factories are still working - although everyone is asked to work from home wherever possible.  

The authorities have developed several packages to try to help those affected by measures taken by the Federal Council (Bundesrat). Such as: 

  • loans
  • short time work for all sectors 

The commercial real estate market has started to react to the slowing down of the economy. Landlords with restaurants and shops in their portfolios face pressure to reduce rents or even waive rent - at least until the end of the lockdown.  

Even though some landlords already face difficulties in securing rents for commercial space the real estate industry has not reacted so far.  

There is no clear vision for the future, but it seems the retail-sector, is for the time being almost ‘dead’, particularly as all shops are closed right now.  

There is also uncertainty in the office market. Some transactions are proceeding as normal whereas others have been put on hold or are even stopped entirely.  

In the investment market we see transaction processes not being initiated, some being put on hold, some are closed. Pricing still looks quite high and unchanged. 


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