Immospektive August 2025

Sebastian Zollinger

Director, Head Real Estate Advisory, PwC Switzerland

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With the second interest rate cut within six months, the SNB lowered the policy rate to 0.0% in June 2025. The reasons for this include declining inflation, geopolitical risks and the threat of trade conflicts with the USA. A return to negative interest rates appears increasingly likely. The rental property market remains tense. Rents for new tenancies rose again, particularly in urban centres such as Zurich, Basel and Geneva. This is due to the shortage of supply combined with sustained demand and continuing low levels of construction activity. In the office space market, the decline in rents for new tenancies is continuing, particularly in peripheral regions. Central and ESG-compliant spaces, on the other hand, are proving more resistant. Market segmentation continues to increase. The situation for residential property is divided. Prices for owner-occupied housing are continuing to rise, while those for single-family units are stabilising or falling slightly. Although interest rates remain low, access to financing remains challenging, partly due to stricter lending guidelines. Nevertheless, many market participants expect prices for residential property to continue to rise.

The information on market developments, on which Immospektive is based, can be found in FPRE’s real estate meta-analysis. References to FPRE graphics in our text are marked [1] etc.

Focus on monetary policy: is the trade war in the USA a trigger for negative interest rates?

During its monetary policy assessment on 19 June 2025, the Swiss National Bank (SNB) lowered the SNB policy rate by 0.25 percentage points to 0.0%. This is the second interest rate cut within six months and marks the reintroduction of a nominal neutral interest rate. The SNB is thus reacting to recession risks abroad and a further decline in inflation. In May, it even fell to -0.1% compared to 0.3% in February, with the decline attributable to negative price trends in tourism and oil products.¹ The SNB’s conditional inflation forecast was adjusted slightly downwards. Average inflation of 0.2% is expected in 2025, followed by 0.5% in 2026 and 0.7% in 2027 [9]. Geopolitical uncertainties with regard to US trade policy remain high.² In particular, the USA’s imposition of 39% punitive tariff on Swiss exports recently caused considerable nervousness in the industry and on the financial markets.³ A return to negative interest rates seems increasingly likely in the event of a further escalation of the trade war with the USA and a persistently weak US dollar, among other things. In its interest rate forecast for the next SNB interest rate meeting in September, Raiffeisen cited the possibility of a further interest rate cut as a result of US customs policy.⁴The Swiss real estate market should continue to respond positively to the persistently low interest rate environment and benefit from rising transaction momentum.

Economic growth in Switzerland was unexpectedly strong in the first quarter of 2025, but was significantly influenced by advance exports to the USA. Adjusted for these one-off effects, growth momentum is more moderate and in line with the global economic picture. After this strong start to the year, growth is likely to slow down again in the further course of 2025. For the year 2025 as a whole, the SNB expects GDP growth of between 1.0% and 1.5%, driven in particular by robust domestic demand, which will be further supported by increased real wages and the easing of monetary policy. By contrast, the outlook for the global economy has clouded over. Increasing trade tensions, particularly with the USA, are leading to greater uncertainty, which is likely to further weaken global growth in the coming quarters according to the SNB’s baseline scenario. Inflation is expected to rise in the USA, while pressure on prices in Europe will probably ease further. For 2026, the SNB again expects growth in the range of 1.0% to 1.5%. In this environment, the Swiss labour market is likely to deteriorate slightly, with unemployment continuing to rise moderately.⁵ The average forecast for real Swiss GDP growth remains at 1.2% for 2025 and 1.2% for 2026. This means that there are no changes for 2025 compared to the previous quarter’s forecast, while expectations for 2026 have been revised downwards by 0.2 percentage points [6].

_{¹SNB, Geldpolitische Lagebeurteilung vom 19. Juni 2025

² SNB, Geldpolitische Lagebeurteilung vom 19. Juni 2025

³ Reuters, Swiss stunned by US tariff hike, seek negotiated solution vom 1. August 2025

⁴ Raiffeisen, Newsletter Zinsprognose August 2025

⁵ SNB, Geldpolitische Lagebeurteilung vom 19. Juni 2025}

Rental housing market: rents for new tenancies continue to rise, driven by short supply

The rental housing market in Switzerland continued the upward trend that was recorded in the previous quarter (+1.8%). Rents for new tenancies rose on average by +1.7% compared to the previous quarter, which corresponds to an annual increase of +2.6%. This development highlights the persistent excess demand, especially in urban centres. The increase is particularly evident in Zurich, where rents for new tenancies rose by +4.4% quarter-on-quarter [23]. After a brief period of stabilisation at the end of 2024, the effects of the extremely scarce supply of housing in Switzerland are once again becoming apparent. A ceiling for rents in new leases appears, on the other hand, to have been reached for apartments in the upper price segment. Accordingly, renting out these properties is becoming increasingly difficult, as potential tenants are reacting with price sensitivity and are no longer willing to pay rents at this level. Construction activity in particular remains low [14]. An analysis by the federal government on the influence of objections on construction activity illustrates their delaying effect on residential construction, which is further driving up rents due to the shortage of supply.⁶

In the second quarter of 2025, rents for new tenancies for rental apartments continued to rise in many cantons, continuing the upward trend observed in the previous quarter. A look at the cantonal change in rents for new tenancies for new and existing apartments in a quarterly comparison once again shows a clear differentiation between the urban centres of Zurich (existing buildings: +3.0% and new builds: +2.4%) and Geneva (existing buildings: +2.2% and new builds: +1.8%), which show solid rental growth, and the peripheral areas such as the Jura (existing buildings: -1.0% and new builds: -1.3%), where rents for new tenancies are declining. In Basel-Stadt, rents for new tenancies rose significantly again in the second quarter of 2025 (existing buildings: +3.9%, new builds: +3.2%). This suggests that landlords are making full use of the legal possibilities for rent adjustments, particularly in a market environment with high demand and limited supply. The strong momentum of previous years is thus continuing (annual comparison of existing buildings: +8.4%, new builds: +6.5%).⁷ As the latest report from the Basel-Stadt Statistical Office shows, the Housing Protection Act has not yet had a dampening effect on rental price development.⁸ Rather, the significant decline in construction activity and the marked fall in investment activity indicate an increasing shortage of supply.This development is a direct consequence of the regulatory intervention in the supply of the housing market and is likely to lead to further upward pressure on rents for new tenancies in Basel-Stadt in the medium to long term.

In a year-on-year comparison, the low-tax cantons of Zug, Obwalden and Lucerne recorded rental growth in the high single-digit to double-digit range (Zug existing buildings: +10.5%, Obwalden existing buildings: +6.5%, Lucerne existing buildings: +6.6%), which was the most significant increase for new tenancies.

Rental housing market – development Q2 2025

new buildings
old buildings

^{Source: FPRE, Marktmieten- und Baulandindizes von Renditeimmobilien Schweiz, 2. Quartal 2025}

Construction activity remained subdued in the second quarter of 2025. The Swiss Construction Index (SBV) currently stands at 99 points, which equates to an annual change of -0.1%. This means that construction activity has risen slightly compared to the previous quarter (Q1 2025: -0.3%), but remains at a low level overall. Residential construction in particular continues to show weak momentum with a year-on-year decline of 0.3%, which is underpinned by the BAK’s medium-term forecasts of only moderate growth rates in construction activity until 2027 [14, 15]. On the demand side, the resident population continues to rise and reached a new high of nine million people by the end of 2024 [12]. Immigration remains a key driver with particularly strong population growth in urban areas [13].

Against the backdrop of this structural demand, combined with a persistently weak expansion in supply, there are still no signs of excess demand easing. This is likely to maintain the upward pressure on residential rents for new tenancies for the rest of the year.

_{⁶ NZZ, Einsprachen hindern die Schweiz am Bauen vom 2. Juli 2025

⁷ FPRE, Marktmieten- und Baulandindizes von Renditeimmobilien Schweiz, 2. Quartal 2025

⁸ Kanton Basel-Stadt, Wohnraumschutz: Erster Blick auf mögliche Auswirkungen vom 10. Juli 2025}

Office space market: office rents continue to fall – barely any upturn in sight

The downward trend in office rents in Switzerland will continue in the second quarter of 2025. At a national level, rents for new tenancies fell by -2.0% compared to the previous quarter and were therefore -3.8% lower over the course of the year [35]. The weak rental growth can be attributed, among other things, to the continuing high level of uncertainty surrounding economic policy, which has been further exacerbated by the USA’s tariff policy.⁹ The latest trade policy decisions by the USA have contributed to a noticeable increase in economic policy uncertainty, which may dampen the attractiveness of Switzerland as a business location and delay investment decisions. The labour market also continues to show dampening trends. The weak employment trend is a placing a strain on demand for space, particularly in cyclical sectors and peripheral locations. At the same time, the increase in real wages could support consumption, which could provide slight relief for office locations centred around the service sector. However, no structural impetus is expected in the short term.¹⁰

Against this backdrop, the downward trend in office rents, particularly in peripheral locations, can be interpreted as a reaction to existing structural vacancies and an increase in economic policy uncertainty. In contrast, demand for centrally located, high-quality office space remains stable, which should lead to a continuation of the increasing segmentation of the market.

The price decline on the Swiss office space market continued in the second quarter of 2025. Rents for new tenancies fell significantly on average across the cantons, with Fribourg (-5.1%), Zug (-5.1%) and Geneva (-3.5%) in particular recording the sharpest declines compared to the previous quarter. A look at the annual trend shows that the declines are even more pronounced in some places. In Fribourg (-15.3%), Ticino (-13.7%) and Zug (-13.5%), rents were more than 13% down on the previous year. The declines in Schwyz (-11.1%) and Solothurn (-11.1%) also amounted to more than 11%, while significant corrections were also observed in Basel-Stadt (-9.1%) and Aargau (-7.0%). In comparison, individual cantons showed positive signs in the second quarter of 2025. The two cantons of Thurgau (+2.7%) and Neuchâtel (+1.5%) recorded rising rents for new tenancies. This suggests that demand remains intact in certain regions despite the generally gloomy environment.¹²

Office space market – development Q2 2025

^{Source: FPRE, Marktmieten- und Baulandindizes von Renditeimmobilien Schweiz, 2. Quartal 2025}

In the current market environment, there is an increasing preference for ESG-compliant office space, particularly in central locations. For example, institutional investors are observing significantly higher demand and lower price discounts for sustainable, certified properties. ESG criteria therefore not only have a reputation-enhancing effect, but can also help to stabilise values in a declining rental environment.¹³

The data emphasise a progressive market segmentation. While economically exposed regions remain under pressure, other locations are showing a certain amount of resilience to the overall economic slowdown.

_{⁹ KOF, Konjunkturbericht Schweizer Wirtschaft im Spannungsfeld: Handelskonflikt versus Fiskalimpuls, Frühjahr 2025

¹⁰ KOF, Konjunkturbericht Schweizer Wirtschaft im Spannungsfeld: Handelskonflikt versus Fiskalimpuls, Frühjahr 2025

¹² FPRE, Marktmieten- und Baulandindizes von Renditeimmobilien Schweiz, 2. Quartal 2025

¹³ Swiss Sustainable Finance, Swiss Sustainable Investment Market Study 2025}

Return performance: multi-family units impress again, office properties under pressure, central properties hold their own

In the second quarter of 2025, the total return for multi-family units remained at a high level, averaging 11.5%. This continues the upward trend from the previous quarter (10.6%). Higher total returns were achieved in almost all regions compared to the previous year.¹⁴ This increase is primarily due to a persistently strong return on investment, while the cash flow return remained stable at an average of 3.3% [51]. The situation for office properties differs by region. At 4.8%, the average total return on office properties in the second quarter of 2025 was noticeably lower than in the previous quarter (6.3%). As in the previous quarter, some cantons again recorded a significantly negative total return.¹⁵ The average cash flow return fell slightly to 3.4% (Q1 2025: 3.5%), while the return on investment declined significantly to 1.3% compared to the previous quarter (2.8%). This development emphasises the tense market situation for office properties [52].

A look at the cantonal development of total returns on multi-family units reveals an overall uniform picture in the second quarter of 2025. Double-digit returns were again achieved in most cantons, with many regions posting further gains compared to 2024. As in the previous year, the canton of Uri came out on top with a total return of 14.6%, which represents a slight increase on the previous year’s figure (14.2%). The lowest returns of 8.5% were achieved in Grisons.¹⁶ The average minimum discount rate (net, real) for multi-family units was 1.86% as at mid-August, according to estimates by Switzerland’s leading valuation houses and thus remained constant compared to the previous quarter [32].

By contrast, the overall trend in returns for office properties remains highly differentiated by region. While some cantons such as Valais (20.4%), St. Gallen (17.6%), Thurgau (15.7%) and Schaffhausen (14.1%) reported very high returns, other regions once again posted clearly negative returns. The cantons of Ticino (-6.8%), Schwyz (-5.3%), Zug (-5.2%) and Fribourg (-4.9%), for example, recorded negative overall returns, which is due in particular to significant losses in value in some cases. The cash flow return remained stable to slightly lower in many regions.¹⁷

^{Source: FPRE, Marktindizes für Renditeimmobilien, 2. Quartal 2025}

The data for the second quarter of 2025 underline the continued attractiveness of multi-family units as a stable asset class in a market environment that remains positive. In contrast, the market for office properties is becoming increasingly divided between economically strong regions with high demand for space and those suffering from structural vacancies and falling market values. A differentiated location analysis is therefore more essential than ever for investors.

_{¹⁴ FPRE, Marktindizes für Renditeimmobilien, 2. Quartal 2025
¹⁵ FPRE, Marktindizes für Renditeimmobilien, 2. Quartal 2025
¹⁶ FPRE, Marktindizes für Renditeimmobilien, 2. Quartal 2025
¹⁷ FPRE, Marktindizes für Renditeimmobilien, 2. Quartal 2025}

Residential property: price growth continues, but shows initial signs of stabilisation

Prices on the market for residential property continues to rise in the second quarter of 2025, albeit at a somewhat slower pace. Overall, prices rose by +0.4% compared to the previous quarter, while a year-on-year increase of +4.6% was recorded.¹⁸ Growth was particularly pronounced in transaction prices for owner-occupied housing, which rose by +1.7% quarter-on-quarter and recorded a significant increase of 6.1% over the year as a whole [62]. Prices for single-family units, on the other hand, developed more cautiously. They fell slightly by -0.6% compared to the previous quarter, but still recorded a year-on-year increase of +3.6% [56]. On the financing side, there are increasing challenges that can counteract further price increases. SARON fell below the 0% mark again for the first time at the beginning of August 2025 (after 0.2% in May). However, mortgage rates have not become noticeably less expensive despite falling policy rates. Many banks have increased their premiums and are only passing on interest rate advantages to their customers to a certain extent. At the same time, lending has become more restrictive, which is primarily due to stricter regulatory requirements such as Basel III and a lower risk appetite among financial institutions.²⁰

Striking differences remained between the cantons. The price trend for owner-occupied housing was particularly strong in Basel-Stadt (+3.7%), Aargau (+3.2%) and Schaffhausen (+3.0%). In urban cantons such as Zurich (+2.6%) and Zug (+2.7%), prices also rose noticeably once again. Only in the canton of Geneva was there a noticeable price decline of -1.6%, which indicates a temporary market correction. The highest year-on-year growth rates were recorded in Zug (+11.4%), Schwyz (+9.9%) and Basel-Stadt (+9.4%). This development underlines the continuing high demand for urban, low-tax or centrally located property. The development of single-family units must be viewed in a differentiated manner. Prices rose in individual cantons such as Geneva (+2.6%), Basel-Stadt (+3.2%) and Appenzell Innerrhoden (+2.3%), and in some cases sharply. However, in other cantons like Obwalden (-1.6%), Ticino (-1.0%) and Thurgau (-0.9%), prices fell slightly. Over the year as a whole, prices for single-family units rose, particularly in the cantons of Nidwalden (+10.1%), Appenzell Innerrhoden (+9.6%) and Schwyz (+8.7%). The only exceptions were Zug (-0.4%) and Jura (-0.8%), which recorded a decline in annual prices.²¹

This development points to increasing regional differences in market dynamics. Owner-occupied housing continues to benefit from the high demand for compact, efficiently usable living space in central locations. In the single-family unit segment, however, there are signs of stabilisation.

Price development – owner-occupied housing Q2 2025

condominiums
single-family houses

^{Source: FPRE, Transaktionspreis- und Baulandindizes für Wohneigentum Schweiz, 2. Quartal 2025}

The volume of mortgages in Switzerland increased further in May 2025, reaching a new high of CHF 1,222.7 billion. Compared to the previous year, this corresponds to annual growth of +2.8%, which represents a slight acceleration in relation to the previous months [22]. The current interest rate forecasts from SECO, KOF, UBS and Raiffeisen indicate that SARON is likely to remain at a low level of between 0.0% and 0.2% until at least the end of 2026. A slight increase to between 0.3% and 0.5% is also expected for yields on ten-year government bonds in the same period [18]. The majority of market participants continue to expect prices to rise. In the second quarter of 2025, the price expectation index for single-family units reached one of its highest values since 2021, driven by a clear predominance of positive assessments [59]. A similar picture emerged for owner-occupied housing, for which the price expectation index has also risen significantly [65].

The data show that market participants continue to expect rising prices for residential property despite the recent price consolidation and increasing financing hurdles, even though momentum has slowed slightly in individual regions.

_{¹⁸ FPRE, Transaktionspreis- und Baulandindizes für Wohneigentum Schweiz, 2. Quartal 2025
¹⁹ SNB, Current interest rates and exchange rates, August 2025
²⁰ NZZ, Teurere Hypotheken trotz sinkenden Zinsen vom 10. Juni 2025
²¹ FPRE, Transaktionspreis- und Baulandindizes für Wohneigentum Schweiz, 2. Quartal 2025}

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