High rents are increasingly forcing the Swiss into urban areas
Published: Tuesday, Jun 4th 2024, 12:10
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Demand for apartments in Switzerland remains at a high level due to continued strong immigration from the EU. According to a UBS study, newcomers are mainly attracted to the cities of Zurich, Bern, Basel, Lausanne and Geneva. This in turn is driving up rents in these cities, where supply has been scarce for years.
According to a real estate study published by the big bank on Tuesday, 29 percent of newcomers from abroad would have settled in these five major centers between 2020 and 2022. However, only around 12 percent of the total resident population lives in these cities.
At the same time, migration from the centers towards other Swiss municipalities has increased since the start of the coronavirus pandemic. On balance, the major centers recorded an annual internal migration of around 15,000 people between 2020 and 2022. This is the highest figure in the past 40 years. As a result, three to four times as many people net left the cities of Zurich, Bern and Geneva each year than in the previous ten years, writes UBS.
Large rent gap
Reasons for this include the increasing prevalence of working from home, prices for residential property in and near the centers that are barely affordable and the rising rent gap between the major centers and the surrounding areas. According to the study, a move away could lead to greater rent savings.
In 2017, 56 percent of people would have moved to municipalities with lower rents on offer than in their municipality of origin, writes UBS. By 2022, this figure had already risen to 61 percent. As a result, demand for housing has increased in all other types of municipality, most significantly in suburban agglomeration municipalities.
However, more households moved from these areas to municipalities on the outskirts of conurbations, as well as to small and medium-sized centers and rural communities.
Surrounding area becomes more attractive
In 2013, asking rents within a 10-minute drive were on average 11 percent lower than in the city center. By 2023, it was already 16 percent. The rent gap is particularly pronounced in the Zurich area. In municipalities within a 10-minute drive, asking rents are a good 20 percent cheaper than in the city center. From a 20-minute drive, the discount is around a third and from 60 minutes around half.
In other centers, these discounts are lower: for a 20-minute drive, they amount to around 5 percent in Lausanne and 11 percent in Basel.
Due to strong immigration and insufficient residential construction, these migration flows from the core cities are likely to continue in the coming years, the report continues. From an investor's perspective, this will reduce the risks in the agglomeration belts and well-developed rural municipalities, and the surrounding areas will also become more attractive for investors. The focus is on well-developed municipalities beyond the cantonal borders of the centers, for example in cantons such as Basel-Landschaft, Aargau or Thurgau.
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