Market prices for apartment buildings and office properties down in 2023
Published: Friday, Feb 2nd 2024, 10:40
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The performance of investment properties was mixed in the final quarter of 2023. While market prices for apartment buildings rose compared to the previous quarter, prices for office properties fell slightly. However, prices for both types of property fell significantly over the year as a whole.
For mixed-use investment properties, the annual average total return in 2023 was negative for the first time since 2017, as announced by Zurich-based consultancy and research company Fahrländer Partner Raumentwicklung (FPRE) on Friday. It amounted to minus 6.6 percent. This is a consequence of the change in real estate prices, which averaged minus 9.6 percent for the year - compared to a plus of 5.0 percent in the previous year. The fall in prices was due in particular to the rise in interest rates.
Of the two sub-segments, prices for multi-family homes rose by 1.6%, while prices for office properties fell by 0.7%. Compared to the same quarter of the previous year, however, prices for apartment buildings fell by a significant 7.0%, while office properties were 4.5% cheaper.
Apartment buildings were valued lower year-on-year in all regions of Switzerland, with the sharpest decline in the Zurich, Lake Geneva and Basel regions. Office property prices also fell particularly sharply in the Lake Geneva region and in eastern and southern Switzerland. There was hardly any change in Zurich.
For 2024, Stefan Fahrländer expects a stable to slightly positive price trend for investment properties. The continuing shortage of apartments will lead to falling vacancy rates and thus to rising new rents. However, the adjustments to the reference interest rate are also likely to have an effect on existing rents. The expectation of falling interest rates could have a positive impact on the willingness to pay on the transaction markets.
©Keystone/SDA
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