Many actors are now getting used to the new framework conditions, according to a study published Wednesday. With the foreseeable end of interest rate hikes, many investors’ compliance may come to an end and more capital can be returned to the real estate asset class. However, without demonstrable investments, rent increases or cost reductions, increases in value are unlikely to be justified in the future as they have been in the past.
Despite the increase in interest rates, real interest rates are still negative due to current inflation. That’s why real values such as real estate remain attractive, according to JLL. Long-term, fully indexed rentals and real estate with renewable energy sources are currently among the most sought-after investments.
The market in the various regions shows some significant differences in terms of shortages, construction activities, vacancies and prime rents. In the Zurich region, for example, top rents increased by 6 percent last year to CHF 925 per square metre. At the same time, the usable space was reduced by 13 percent.
In the current year, 71,000 square meters of new office space will be completed below average, and the volume of new construction in 2024 and 2025 will be even lower in the coming years. Therefore, a consistently low vacancy rate and consistently high rents can be expected, according to experts.
In Bern also in 2022 peak rents rose to CHF 450 per square meter, a more significant increase of 15 percent despite a 13 percent increase in available space. Little change can be expected for the market before the end of 2024, after which time various completions could lead to higher vacancies.
Meanwhile, the supply of space in Geneva fell slightly by 2 percent, with top rents holding steady at CHF 850 per square metre. Gaps have increased, especially in the airport area.
In Basel, the vacancy rate in the city center meanwhile doubled, the supply of available office space increased noticeably with constant higher rents. However, the office vacancy rate should gradually decrease as significantly fewer new spaces will be completed in 2024 and 2025.
(SDA)