Swiss PropTech Study 2021

Real Estate Market The most real estate companies have service-oriented businesses that pursue transaction or property holding activities. The real estate is an inherently heterogeneous and fragmented sector. There are many fields of activities, both parallel and sequential, along a building’s life cycle (planning, building, management and demolition). Real estate firms are active in one, or more than one, field, as well as in one, or more than one, market. Additionally, real estate firms range from family-owned businesses, private to publicly listed companies.

The real estate market is facing a tremendous upheaval, new digital technologies in planning, construction, asset management, marketing, operation and maintenance, facility management and administration are revolutionizing the entire life cycle of a property. The Swiss real estate markets increasingly with new faced challenges. The real estate portfolios are getting older and at the same time the usage requirements change, as well as the desire for flexibility. This goes hand in hand with a proven renovation potential of the current real estate portfolio. These developments are influenced by social trends, such as a change in values towards sustainable buildings and an increasing acceptance of digital change. The sustainability criteria for purchasing decisions by institutional investors will be given crucial importance in the future.

The location is still an absolutely central criterion in the real estate industry. It has a significant impact on real estate valuations, portfolio strategies and the success of real estate projects.

A full recovery from the corona pandemic this year across all real estate business areas is rather unrealistic. The business hotel industry is confronted with negative development prospects, insolvency risks and thus falling prices. A negative price correction is to be expected for retail space and even for office properties outside of the "prime locations”.

However, the accelerated price increase in recent years has leveled off at a moderate level. The most sought-after properties in Switzerland include single-family houses in central locations. In contrast, prices for condominiums have already fallen slightly in some regions. Buyers continue to pay top prices for building plots. The reason for this is the lack of arable land, which is particularly noticeable in metropolitan areas. Properties in southern and western Switzerland are less expensive. The real estate boom has gradually reached its limit and in some places prices have already dropped significantly.

The digitization of all real estate business areas is now opening up opportunities because it allows central information to be collected and evaluated more easily. The COVID-19 pandemic has shown how important it is to be able to access data as a basis for various search queries. The effects of the pandemic gave digitization an additional boost. When large parts of the employees work in the home office, the resilience of digital processes is simply a matter of survival. However, digitization will also have a major impact on future office use and space requirements. PropTechs will always have good ideas that will put the classic real estate players under pressure.

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