Tow truck hasn’t arrived yet

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In the first three months of the year, rents increased by 0.3 percent in both old and new apartments compared to the same period of the previous year. This is demonstrated by assessments by the consulting firm Fahrländer Partner Raumentwicklung (FPRE), published on Friday.

Compared to the previous quarter, the picture is mixed. In the first quarter of 2023, market rents for new leases in apartments in old buildings increased by 0.5 percent compared to the previous quarter. On the other hand, newly built flats do not show any change in the same period.

Regional differences

Vacancies in Switzerland have been declining since the peak in 2020, and while the number of rental apartments offered has decreased significantly since then, rents have not risen overall. On the contrary, there are regional differences.

Rental increases were highest in Jura (+1.9 percent), Eastern Switzerland (+1.0), Mittelland (+0.7) and Zurich (+0.6). In contrast, rents for older buildings in the Lake Geneva area were even lower than in the previous quarter (-0.3 percent).

FRPE explains this by saying that there is still high overcapacity in many regions. As a result, landlords have limited scope for rent increases. In addition, the FRPE writes that gloomy economic prospects may have prompted some households to delay relocation.

This reduces demand. Therefore, demand pressure still looks too low to move market rents significantly. However, this situation is likely to change in the coming months. Among other things, on June 1, when the reference rate rises. Then many owners can significantly increase their rent.

Regional differences in the office market as well

A similar picture emerges when it comes to renting new office space. Rental prices increased by 0.5 percent compared to the previous quarter. On the other hand, rental prices are almost constant compared to the same quarter of the previous year (+0.1 percent). While there was a net increase in office rents in the Lake Geneva region (+5.7 percent), declines in office rents in Eastern Switzerland (-4.1), Basel (-2.2) and the Swiss Plateau (-1.1) it happened. rents followed.

For 2023, most experts expect office rents to trend sideways. However, demand is likely to remain high in major centers and particularly in above-average micro-locations. Therefore, market rents are likely to increase slightly. (SDA/smt)

Source :Blick