In thirty years, real estate prices have tripled in Switzerland. This remarkable growth raises essential questions for investors today.
Should you still buy a residential property or an income-producing building? Is direct investment still relevant in the long term? Do real estate funds offer a more flexible alternative? And how can inheritance planning be integrated into a real estate wealth management strategy?
These issues were at the heart of a conference organised by , as part of the LO Women cycle. Launched ten years ago for the bank’s female clients and our women’s networks, this initiative has already brought together more than 1,500 participants at dedicated events, in Geneva but also in Lausanne, Zurich, Paris, Brussels, London, Madrid and São Paulo.
Gathered in the auditorium of our 1Roof headquarters in Bellevue, our guests benefited from the insights of Fabio Simonici, a specialist in real estate fund management. He provided a clear analysis of the fundamentals of the Swiss real estate market and the various ways to invest in it today.
We summarize the key lessons here, through three graphs, to help investors – and in particular female investors – to better understand this market and make informed decisions.
A structural rise in real estate prices in Switzerland
GRAPH 1. The increase in real estate prices in Switzerland remains strong
The rise in real estate prices in Switzerland is not a temporary phenomenon. It is part of a long-term trend, driven by solid structural factors.
“At the beginning of the 2000s, approximately 40% of the Swiss population had the financial means to become homeowners. Today, this proportion has fallen below 20%,” Fabio Simonici noted in his introduction. This figure alone illustrates the scale of the market’s recovery.
This dynamic is primarily explained by the constraints inherent to the Swiss territory. As a small country, Switzerland has limited available land for construction. The structurally restricted land supply mechanically supports the appreciation of existing properties. A significant easing of supply appears unlikely.
Land supply is structurally limited, which mechanically supports the appreciation of existing properties. A significant easing of supply appears unlikely.
In addition to these geographical constraints, there are increasing regulatory obstacles. The Land Use Planning Act (LAT) restricts the possibilities for building on new land, while opposition to real estate projects is growing. Again, these factors limit the expansion of supply and increase downward pressure on prices.
At this stage, beyond potential geopolitical or growth shocks, the main identified risks that could impact valuations are legislative in nature. Some initiatives aimed at regulating rents or strengthening market regulation are occasionally mentioned. However, these risks remain contained and do not call into question the fundamentals of the Swiss real estate market, which continues to evolve within a stable and predictable framework for long-term investors.
How to invest? Deciphering indirect investments
GRAPH 2. Difference between the dividend yield of real estate funds and 10-year Swiss government bonds
The yield spread between the dividend yield of listed funds and the yield on the 10-year Swiss government bond narrowed to 1.88%, primarily due to the rise in the 10-year federal bond yield to 0.42%. The SNB’s decision in December 2025 did not have a significant impact on the dividend yield, thus increasing the attractiveness of Swiss real estate.
Chart 2 highlights a key point: the persistent gap between the dividend yield of Swiss real estate funds and that of 10-year Swiss Confederation bonds. In a historically low interest rate environment, this gap enhances the appeal of real estate funds for investors seeking regular income, a factor frequently cited by real estate investors.
Investing in real estate can indeed take two forms: direct investment and indirect investment. Two very different approaches, both in terms of operation and return, liquidity and taxation.
Direct investment involves acquiring a building, renting it out, and then collecting returns. This approach requires significant capital, generates high costs (maintenance, renovation, management, taxes), and involves direct exposure to increasingly complex and time-consuming operational constraints. Ultimately, the final net return is sometimes less attractive than anticipated.
Conversely, indirect investment relies on purchasing shares of real estate funds, which are listed on the stock exchange and traded daily, like a stock. The fund owns the properties, collects the rent, manages the renovations, and oversees the asset management. Once a year, it pays a dividend (or “distribution”) to investors. The share price fluctuates according to supply and demand in the market.
Indirect investment is based on the purchase of shares in real estate funds, which are listed on the stock exchange and traded daily, like a share.
A decisive tax advantage for funds
Taxation is one of the main advantages of indirect investment. There are indeed two levels of taxation: dividend tax and wealth tax.
Some real estate funds are considered “tax-advantaged” or “tax-exempt,” making them significantly more tax-efficient. For example, dividends paid by these funds can be up to 100% tax-exempt. As for the invested capital, it is almost entirely exempt from wealth tax. This is because taxation occurs at the fund level, at tax rates that are generally much more favorable than those applied to individuals.
Some real estate funds are described as “tax-advantaged” or “tax-exempt,” which makes them significantly more tax-efficient.
Numerical simulations to compare approaches
To illustrate these differences concretely, Fabio Simonici presented several cost and return simulations, using the example of an income-producing building valued at CHF 20 million, located in the canton of Geneva.
The estimated net annual returns are as follows:
- 0.7% for a property held directly, without a mortgage,
- 1.15% for a property held directly, with a 30% mortgage,
- 0.41% for a taxable real estate fund,
- 1.88% for a tax-advantaged real estate fund.
Finally, for purely illustrative purposes, an annual cash flow estimate was presented for an investment property worth CHF 8 million, excluding financial expenses, demonstrating the efficiency gains between the operational management of the private owner and the same building managed by a real estate fund.
Owned directly by an individual, this property generates an estimated annual cash flow of CHF 115,804. Held through a real estate fund, the cash flow reaches CHF 160,560 per year net (after deduction of fund management fees), representing a gain of over 40%.
Solid fundamentals and a sustainably supportive environment
GRAPH 3. Switzerland’s attractiveness should support increasing net immigration, which in turn will support demand for real estate
The fundamentals of real estate markets are highly sensitive to demographic factors. From this perspective, the outlook remains very favorable in Switzerland. As illustrated in Figure 3, the trend in net immigration is expected to remain strong, a key factor for housing demand in a country where supply remains structurally limited.
Switzerland remains highly attractive to both skilled professionals and wealthy individuals. Political stability, legal certainty, and high-quality infrastructure continue to attract long-term residents and support real estate demand, particularly in economic centers.
This attractiveness is reinforced by the political and geopolitical uncertainties observed elsewhere. In this context, Switzerland confirms its status as a safe haven, offering a predictable and stable environment for investors.
For investors focused on long-term visibility and capital preservation, these elements provide a solid foundation for real estate investment in Switzerland.
Switzerland confirms its status as a safe haven, offering a predictable and stable environment for investors.
The end of rental value, financing and inheritance: the legal and asset-related challenges of real estate
During the conference, Lea Baracchin , wealth management advisor at Lombard Odier, discussed a major turning point for the Swiss real estate market: the end of imputed rental value, approved in a referendum last September. This reform fundamentally alters the tax framework for real estate ownership.
Generally speaking, homeowners will no longer be able to deduct renovation costs or investments related to energy efficiency improvements, except in certain cases. While some cantons have indicated their intention to maintain deductions for energy-efficient renovations, the framework remains uncertain at this stage: they have until the end of 2028 to decide. The reform also paves the way for the cantons to create a tax on second homes. For more details on this topic, we invite you to consult our article dedicated to the consequences of the end of imputed rental value for investors.
Beyond tax considerations, Lea Baracchini emphasized the importance of a comprehensive wealth management approach in any real estate project. Who is acquiring the property? What financing options are available? Equity, mortgage, Lombard loan: each choice must be analyzed in light of the buyer’s financial status, long-term objectives, and family situation. Formalizing these elements upfront is essential, particularly with a view to preserving and transferring wealth.
Beyond tax considerations, Lea Baracchini emphasized the importance of a comprehensive asset management approach in a real estate project. Who is acquiring the property? What are the sources of financing?
During the panel, Delphine Barbaud, senior banker, also pointed out that, for eligible clients, it may be advantageous to consider tax-advantaged investment solutions such as defensive structured yield products, which allow them to collect coupons that will partially or fully cover interest payments. This approach can also be applied over longer time horizons through the implementation of, for example, private equity programs. The objective here is to generate net, tax-free cash flows, which can also partially cover outflows related to mortgage and/or Lombard loan interest payments.
Finally, the asset swap mechanism was also discussed. This involves a property owner transferring ownership of a property to an investment fund and receiving, in return, shares of that fund. Beyond the tax advantages and reduced administrative burden associated with direct management, this approach can be particularly relevant for estate planning: it is indeed simpler to distribute fund shares among heirs than an indivisible real estate asset.
The asset swap mechanism was also discussed. It involves a property owner transferring ownership of real estate to an investment fund and receiving, in return, shares of that fund.
These reflections echo another LO Women event held in Lausanne in early March, during which our specialists analyzed the wealth management challenges that mark each stage of women’s lives. Some of these analyses and recommendations can be found in the latest edition of our publication, LO Women Invest, available for download below.
