immo!nvest – Die Plattform für Standorte und Immobilien

Category: Business

  • Canton of Zug strengthens its property portfolio

    Canton of Zug strengthens its property portfolio

    The Building Directorate is legally responsible for the construction and maintenance of the canton’s own buildings. The financial framework conditions are carefully analysed in order to make targeted use of both the maintenance and investment budgets. Sound, long-term planning is becoming increasingly important in order to ensure that the buildings retain their value.

    Strategic guidelines for property management
    The Canton of Zug’s real estate strategy is based on the overarching objectives of the Cantonal Government and the specific guidelines of the Building Department. Priority is given to maintaining existing infrastructures rather than building new ones. The targeted use of resources ensures future-orientated buildings that meet the requirements of sustainability and efficiency.

    Cost and benefit efficiency as guiding principles
    The Building Directorate pursues a differentiated strategy that focuses on cost control and the fulfilment of public tasks.
    Properties that do not directly serve a public purpose are used for value creation or exchange transactions in order to optimise the management of the portfolio.

    Investment requirements and future developments
    The Building Department has further expanded the cantonal property portfolio. With the projects realised, the value of the portfolio has risen to CHF 1.06 billion by 2023. Further investments are planned for the coming years. Planned major projects in the education and administration sectors will contribute to the canton’s infrastructural development and strengthen the economic attractiveness of the region. A forward-looking real estate strategy ensures that the canton of Zug makes optimum use of its property portfolio and is equipped to meet future requirements.

  • Affordable living in Zug

    Affordable living in Zug

    The canton of Zug and the city of Zug suffer even more than other cantons and cities from a lack of living space. The canton of Zug has the lowest vacancy rate in the country at 0.2% for the fourth year in a row. The lack of supply and the persistently high demand are leading to strong competition for the few advertised rental flats: the re-letting period is record-breakingly short. There are plenty of affluent tenants moving in and out who are prepared to pay ever higher rents¹.

    Because asking rents are now 50% higher than the Swiss average, complaints that rental flats are no longer affordable have spread far into the middle classes². Even those with normal household incomes who want to move or relocate to the canton have little chance of accessing the housing on offer.

    In this context, the question arises as to what profit-orientated owners who have or would like to develop housing stock in the canton and city of Zug can contribute to the provision of housing for broad sections of the population.

    How should affordable housing be defined?
    The first question is how “affordable” housing should be defined. There is an object-orientated, a market-orientated and a target group-orientated approach³. Affordable housing can be defined as housing rents that are calculated using the maximum fixed investment costs for a residential property. For this calculation to work for yield-orientated owners, a consensus is needed on what constitutes a sensible limit for investment costs. The market-oriented approach categorises low-priced residential rents in certain quantiles of market rents. This requires a consensus on which quantiles are affordable. Finally, affordable housing rents are defined as those that are financially viable for tenants. This requires a consensus that households should not spend more than a third of their gross income – or more generously, their taxable income – on rent, for example.

    Room for manoeuvre via the subject-oriented approach
    The approach based on financial affordability is the most meaningful for a broad-based housing supply. Unlike the approach based on investment costs, this approach recognises that many people in the canton of Zug earn more than in other cantons and can therefore afford higher rents (Fig. 1). However, unlike the approach using the quantiles of market rents, it is not based on the willingness to pay of those moving in and out, but on the real income of the population. This approach helps to target the needs of specific income groups.

    An affordable flat for a person from the lower middle class living alone, who earns between 70 and 100% of the median income, should therefore cost between CHF 1,400 and 1,900 in the city of Zug. How much living space is offered for the price is decided by the provider based on his assessment of the marketability of a flat. Because affordability is based on the unit price of the flat and not the price per square metre, yield-oriented investors have more leeway to integrate affordable housing into their profitability calculations.

    Optimising the distribution of existing affordable housing
    Building flats takes a long time and is often associated with uncertain planning processes. Owners and investors are also not free to decide where and how much additional living space they want to realise. Owners have direct options for action with their portfolio: they can contribute to supplying the wider population if they optimise the distribution of their vacant rental flats. Every change of tenant offers the opportunity to consider the most suitable tenant in line with the “best owner principle”. Owners can instruct lettings teams to maximise the affordability of rental properties that are affordable to the middle class and choose the tenant who can least afford the property – assuming a full salary, for example. Letting teams simply need a matrix that shows them the maximum rental prices affordable for the middle class (or the targeted income group) for each number of rooms. If a vacant flat in the corresponding price range becomes available, the rule would apply.

    Conclusion
    In order to ease the situation in the housing market, the lengthy tasks of reducing barriers to housing construction and developing a cross-party understanding of how affordable housing is defined and how its provision should be regulated must be tackled. In the meantime, yield-orientated owners can make a contribution by approaching the provision of affordable housing with a subject-orientated approach that fits into their market logic. In doing so, they also remain fair to the legitimate interests of their direct stakeholders.

  • Property market remains attractive

    Property market remains attractive

    The Swiss property market remains attractive for 93 per cent of property investors, EY Switzerland reports in a press release. The auditing and consulting firm based its findings on the latest edition of its annual “Real Estate Investment Market Trend Barometer”. EY Switzerland surveyed a representative cross-section of 106 property market players.

    Six out of ten respondents anticipate growth in investment volumes this year. 85 per cent expect property to become more attractive than alternative investment opportunities. “This result demonstrates a remarkable consensus regarding the assessment of future developments on the property investment market and reveals the collective confidence that investors have in the real estate asset class,” Daniel Zaugg, Sector Leader Real Estate, Construction & Building Material at EY in Switzerland, is quoted as saying in the press release.

    Within the property market, residential property continued to gain in attractiveness. A total of 74 per cent of respondents now want to focus more on residential property, compared to 67 per cent in the previous year. Investments in apartment buildings are seen as a safe investment strategy by 96 per cent. The willingness to invest in logistics and office properties increased by 9 to 10 percentage points year-on-year to 52 and 48 per cent respectively. The overwhelming view is that demographic change and interest rate trends will have the greatest impact on the property market in the coming years.

  • Strong price increase for condominiums

    Strong price increase for condominiums

    Raiffeisen anticipates a further rise in residential property prices in the fourth quarter of 2024. According to a press release, the transaction price index for single-family homes fell slightly by 0.1 per cent compared to the previous quarter, but rose by 4.2 per cent compared to the previous year. The balance for condominiums was more pronounced. The increase here was 1.4 per cent compared to the previous quarter and 2.4 per cent compared to the same period in 2023.

    “Thanks to significantly lower financing costs and very good prospects for a further fall in interest rates, demand is likely to increase further at the start of the new year and thus accelerate the price trend once again,” Fredy Hasenmaile, Chief Economist at Raiffeisen Switzerland, was quoted as saying in the press release.

    The strongest price increases for single-family homes compared to the previous year were again reported in southern Switzerland (7.7 per cent) and central Switzerland (6.3 per cent). An increase of 0.7 per cent was also recorded in western Switzerland, which had declined in the previous year, and 1.0 per cent around Lake Geneva. Central Switzerland ( 4.4 per cent) and Eastern Switzerland ( 3.5 per cent) are leading the way in condominium ownership. Tourist centres are again the most popular, with residential property prices rising by 3.8 percent.

    The index is compiled quarterly and is published at the beginning of each quarter. It is based on real estate transaction data from Raiffeisen and the Swiss Real Estate Datapool (SRED).

  • Cost rent and rising land prices

    Cost rent and rising land prices

    The cost rent model is based on the cost-covering return on the total investment costs of a new building. In many cities, building land now accounts for up to half of these costs. In Zurich in particular, land prices have risen massively in the last 15 years, from CHF 1,419 per square metre in 2007 to over CHF 5,800 in 2023.

    Even with a conservative calculation, the share of land value in the total investment costs is currently just under 50 %. This means that a reduction or increase in the land price has a direct impact on rental costs. To compensate for a 10 % increase in the land price, the cost rent would have to rise by around 5 %.

    Cost rent compared to market rent
    An analysis of the Werdwies housing estate in Zurich Altstetten shows that construction costs have risen by 32.5 % since 2007. The cost rent of a newly constructed housing estate would currently be barely below the market rent.

    According to a calculation with a gross yield of 4.25 %, the market rent for a 70 m² flat would be CHF 2,567 per month. Reducing the gross yield to 4 % could lower the rent, but without subsidisation it would only be affordable for 56.6 % of local households.

    Subsidies as a control instrument
    Various subsidy models are conceivable to reduce the rent burden.

    Land subsidies: A public subsidy of 20% of the land value could increase affordability by 7.1 percentage points.

    Subject subsidies: Direct subsidies to households could provide targeted relief to those who need it most.

    Object promotion: A reduction in value-added taxes could promote the development of affordable housing, provided that clear control mechanisms are in place.

    Spatial planning and planning certainty are key
    A decisive lever for controlling housing costs is the early and transparent definition of building regulations. Uncertainty about future rental regulations or value-added levies can lead to bad investments.

    In order to ensure affordable housing in the long term, municipalities should consistently use planning surplus values to reduce rents or subsidise subjects. In addition, measures must be aimed at getting a grip on rising land prices, as cost rents will increasingly rise to market levels without intervention.

  • Record sales of Swiss multinational speciality chemicals group

    Record sales of Swiss multinational speciality chemicals group

    Sika set a new sales record in the 2024 financial year. At 11.76 billion Swiss francs, the record result of 2023 was exceeded by 4.7 percent, the global speciality chemicals company for construction and industry announced in a press release. Increased synergies from the integration of the construction chemicals business MBCC acquired in 2022 and local acquisitions of Kwik Bond in the USA, Vinaldom in the Dominican Republic and Chema in Peru contributed to the sales growth. Organic sales growth amounted to 1.1 per cent.

    In addition to the acquisitions, all regions contributed to the record sales. At 11.2 per cent in local currencies, sales growth was strongest in the Americas region. In the EMEA and Asia/Pacific regions, growth rates of 7.3 and 2.4 percent respectively were realised in local currencies.

    “Over the past twelve months, Sika has successfully held its own in a market environment that remains very challenging and achieved a new sales record,” said Thomas Hasler, CEO, in the press release. “Our growth initiatives, our powerful and sustainable innovations and our consistent sales strategy for further market penetration are successful and impressively demonstrate that we are gaining further market share.” Sika will communicate its full Annual Report 2024 on 21 February. The Group expects operating profit at EBITDA level to increase at a faster rate than sales.

  • Life cycle assessment calculator supports sustainable building

    Life cycle assessment calculator supports sustainable building

    The environmental product declarations (EPD) in accordance with SN EN 15804 make it possible to transparently present the ecological impact of a building material over its entire life cycle. This provides building owners with a sound basis for making decisions on sustainable construction that goes beyond individual environmental parameters and allows a comprehensive assessment.

    Baustoff Kreislauf Schweiz provides its members with independently verified average EPDs for various types of concrete and aggregates. This data forms a reliable basis for sustainable construction projects.

    Life cycle assessment calculator as a digital tool
    An industry-specific life cycle assessment calculator has been developed to calculate CO₂ emissions, energy consumption and other environmental indicators. This verified calculation tool offers the construction industry a practical way to determine and optimise environmental product declarations.

    The online tool at oekobilanz-rechner.ch enables an orientating analysis, but does not replace a complete EPD preparation. On request, the data entered can be further processed to create an officially verified environmental product declaration.

    Transparency and optimisation for the construction industry
    The life cycle assessment calculator provides the construction industry with a valuable tool for making sustainable material decisions based on data. By optimising the recording and evaluation of environmental impacts, the tool contributes to reducing the ecological footprint in the construction industry and supports a resource-conserving circular economy.

  • Property company secures financing for green projects

    Property company secures financing for green projects

    Basel-based HIAG Immobilien Holding AG has placed its first green bond for CHF 100 million with a term of 5.25 years and a coupon of 1.42 per cent, according to a press release. The proceeds from the issue will be used to finance and refinance sustainable buildings and projects in accordance with HIAG’s Green Financing Framework, the press release continues. Payment of the subscribed shares will take place on 23 January 2025 and trading of the green bond on the SIX Swiss Exchange has been applied for.

    With this issue, HIAG was able to benefit from the favourable interest rate environment and secure financing over a longer time horizon, the statement continues. The green bond and the sustainable syndicated credit line of CHF 500 million launched in summer 2023 are in line with HIAG’s sustainability strategy, the statement continues.

    The property company HIAG is listed on the SIX Swiss Exchange and, according to its own information, has a property portfolio with a total value of CHF 1.95 billion. HIAG currently operates on an area of around 743,000 square metres with 58 projects and an expected investment volume of CHF 3 billion. According to HIAG, the portfolio comprises 41 sites with well-developed office, commercial and logistics properties as well as selected residential properties in future-oriented growth regions in German- and French-speaking Switzerland.

  • Office supply continues to grow

    Office supply continues to grow

    The vacancy rate for office space in Switzerland has increased further in 2024, Jones Lang LaSalle(JLL) reports in a press release on its new office market study. In it, the commercial property and investment management company examined developments in the largest office markets. In the five largest office markets of Zurich, Geneva, Bern, Basel and Lausanne, the supply of available office space increased by 9 percent year-on-year to 995,500 square metres at the end of 2024.

    Construction activity for office space is expected to have bottomed out at 57,000 square metres in the reporting year, according to the press release. After peaking at around 343,000 square metres in 2020, newly constructed office space had steadily declined in the following years. JLL expects construction activity to increase again in the current and next two years.

    Overall, demand for space remains intact, writes JLL. The company has observed high demand for modern, flexibly usable space with good transport connections. Space in older buildings without a railway station within walking distance, on the other hand, is more difficult to let.

    JLL expects the market for office space to pick up momentum in the future. “Many market players are confident about the coming months and want to utilise the improved investment environment for transactions,” Jan Eckert is quoted as saying in the press release. According to the CEO Switzerland & Capital Markets Lead DACH at JLL, this trend can be seen in both the quantity and quality of incoming bids. “The short-term prospects are more favourable than they have been for three years.”

  • Zurich’s economy faces major challenges

    Zurich’s economy faces major challenges

    The so-called labour market gap, the ratio of people entering and leaving the labour market, is increasingly becoming a problem. For some years now, more people have been leaving the labour market for age-related reasons than young workers are joining. In 2029, the canton of Zurich will have around 16 % more 65-year-olds than 20-year-olds, while the difference across Switzerland is 30 %. Although the gap could narrow again briefly in the 2030s, an even greater difference is expected from the 2040s onwards.

    Immigration alone is not enough
    Study results show that even immigration at twice the average rate of the last 10 years could not compensate for the decline in the labour force. Without immigration, the labour market gap would widen even more dramatically, with an annual deficit of over 5700 people by 2050. The proportion of the working-age population in the canton of Zurich is expected to fall from 63% to 59% by 2050 – a development that will also affect economic performance and the dynamics of the labour market.

    Zurich’s economy better positioned than Switzerland as a whole
    Thanks to Zurich’s attractiveness as a place to work, live and train, the canton of Zurich is in a better position than Switzerland as a whole. The proportion of the labour force here is falling less sharply than the national average. However, Zurich is not immune to the effects of demographic change.

    Solutions and strategic measures
    Director of Economic Affairs Carmen Walker Späh emphasises the importance of strategic measures to overcome the labour shortage. Making better use of the domestic labour force potential, for example by integrating women and older workers more strongly into the labour market, plays a central role. Equally important is increasing productivity, which can be achieved through technological innovation and progress. In addition, adjustments to the retirement age could help to utilise the labour force potential for longer.

  • Property sale strengthens liquidity and reduces debt

    Property sale strengthens liquidity and reduces debt

    Swiss Estates AG, based in Freienbach, has sold several properties on Badenerstrasse in Zurich to a private limited company with effect from the end of 2024, the real estate company announced in a press release. A profit was realised from the sale of the properties, which were acquired in 2007 and have been continuously developed since then, reducing Swiss Estates’ liabilities by around CHF 30 million. At the same time, the company’s liquidity has been “significantly strengthened”, writes Swiss Estates.

    The real estate company intends to use the profit realised in the annual financial statements as a result of the transaction to pay out a dividend. Its exact amount currently depends on the calculation of the property gains tax by the City of Zurich’s tax office. Swiss Estate expects a profit of several million francs for the 2024 annual financial statements.

    One of the reasons given by the real estate company for the sale of the properties at Badenerstrasse 288 – 296 is that the value appreciation cycle of the properties has essentially come to an end. In addition, Swiss Estate intends to concentrate on properties with purely residential use in future. The company is currently negotiating the acquisition of five new properties.

  • Wave of bankruptcies continues in 2024

    Wave of bankruptcies continues in 2024

    In 2024, 23 companies had to file for bankruptcy every day. That’s around 5500 by August. Forecasts predict more than 8,000 insolvencies by the end of the year, which corresponds to an increase of over 12 per cent compared to previous years. What is particularly striking is that the bankruptcy figures are almost a third higher than in the pre-corona years of 2018 and 2019. However, it is not only the official insolvencies that are causing concern, but also cases in which claims are written off without bankruptcy proceedings being initiated.

    Abusive bankruptcies and challenges
    The statistics also reveal abusive bankruptcies in which controlling bodies such as boards of directors evade their responsibilities or deliberately bring about insolvency in order to secure unlawfully generated profits. In addition, the prospect of a bankruptcy dividend remains sobering for creditors. In 58 per cent of cases, there are insufficient assets, while 40 per cent of proceedings are concluded summarily.

    Affected sectors and prominent cases
    The mechanical engineering and metal industries are particularly hard hit. Traditional companies such as the Kreuzlingen-based metal construction company Neuweiler and Marton AG from Flawil had to file for insolvency in 2024. The reasons include high energy prices, material shortages and weakening demand in international markets. The bankruptcies not only cause financial damage, but also social damage, as many employees lose their jobs.

    Credit checks as a protective measure
    In view of the ongoing uncertainties, it is advisable to check the creditworthiness of business partners, including existing customers, every time a business transaction is concluded. Tools offer quick insights to minimise risks and, in case of doubt, to opt for advance payment. Although losses can never be completely avoided, a solid credit check can make them calculable.

    Start-up boom and young companies at risk
    In parallel to the wave of bankruptcies, there is a start-up boom. In 2024, around 53,000 new companies were entered in the commercial register. However, young companies are particularly susceptible to insolvency in the first five years. Covid-19 after-effects in particular, such as outstanding bridging loans, increase the risk for many of these companies.

    Difficult framework conditions
    Recession fears among trading partners such as Germany and Austria, the strong Swiss franc and geopolitical conflicts are further complicating matters. In Switzerland, overregulation and outstanding government debt are a burden for many companies. However, the introduction of mandatory bankruptcy proceedings for state claims from January 2025 could lead to a market shakeout by weeding out so-called zombie companies.

  • Abolition of the imputed rental value tax

    Abolition of the imputed rental value tax

    With the approval of the new federal law by both chambers of parliament, a long-awaited change to the system of residential property taxation has been agreed. The imputed rental value tax, which was considered unsatisfactory and unfair, is now a thing of the past. In future, income taxation of the notional “own rent” for owner-occupied residential property will no longer apply, which will significantly simplify the tax system.

    Promoting financial stability and home ownership
    Another key point of the new law is the reduction of private debt. The limitation of the deduction for private debt interest and the cancellation of additional deduction options lead to a strengthening of financial stability. Young families benefit from a time-limited debt interest deduction, which makes it easier for them to purchase residential property. This fulfils the constitutional mandate to promote home ownership.

    Adjustments to tax deductions
    The abolition of imputed rental value tax entails the cancellation of previous deductions such as maintenance costs and insurance premiums in line with the system. At the same time, it is up to the cantons to retain deductions for energy-related renovations or environmental protection measures in order to continue to promote these.

    No discrimination against landlords
    Private landlords will retain the option of deducting costs such as maintenance or debt interest from their taxes. This will ensure that the new regulation has no negative impact on the letting of private properties.

    Constitutional amendment for compensation
    The entry into force of the new law is linked to a constitutional amendment. This allows cantons to introduce a property tax for second homes in order to compensate for tax losses on owner-occupied second homes. Tourism cantons in particular should be able to compensate for the financial impact in this way.

  • Rental prices in Switzerland rise slightly again

    Rental prices in Switzerland rise slightly again

    The monthly rental index compiled by the digital property marketplace Homegate in collaboration with Zürcher Kantonalbank closed at 128.1 points in November. Compared to the previous month, the index rose by 0.3 per cent, Homegate reported in a press release. This means that “the brief decline in October has levelled out again and the advertised rental prices are once again at the level of September 2024”. A year-on-year increase in advertised rents of 3.1 per cent was observed across Switzerland.

    Within the cantons, Homegate’s experts only identified major changes compared to September in individual cases. The canton of Graubünden stands out the most with a 4.4 per cent decline in asking rents. However, “such outliers” are mostly short-term changes, according to the press release. Only the canton of Nidewalden reported an increase in rents of more than 2 per cent month-on-month at 2.1 per cent.

    The experts attest that the eight Swiss cities included in the index are returning “to the expected normality”. They attribute this primarily to the 1.6 per cent growth in asking rents in Zurich and Lausanne. The other six cities analysed showed only marginal changes compared to September. In a year-on-year comparison, however, significant growth was observed in all eight cities. This was strongest in the city of Lucerne at 7 per cent.

    Homegate is a division of SMG Swiss Marketplace Group AG. This combines the digital marketplaces of TX Group, Ringier and Mobiliar.

  • New CEO to take over management of the construction supplier from January 2025

    New CEO to take over management of the construction supplier from January 2025

    From 1 January, the Arbonia Group will once again be led by a CEO who is not also a member of the Board of Directors. As announced by the company, the Board of Directors has appointed Claudius Moor as CEO. Born in Switzerland in 1983, he has worked for Arbonia since 2015 and has been CEO of the Doors Division since 2020. Previously, he was Head of Group Strategy and Corporate Development at the Arbon-based building supplier.

    Alexander von Witzleben will remain Chairman of the Board of Directors “until further notice”. Born in Germany in 1963, he has chaired the Board of Directors since 2015, was also Delegate of the Board of Directors and CEO ad interim until 2022 and has been Executive Chairman of the Board of Directors since then.

    “We are very pleased to welcome Claudius Moor in his new role as CEO of Arbonia”, Alexander von Witzleben is quoted as saying in the press release. “With his extensive knowledge of the industry, his commitment and his great passion for the door business, he has everything it takes to lead Arbonia into a positive future.”

  • Increasing value through global presence and technological innovation

    Increasing value through global presence and technological innovation

    Siemens Smart Infrastructure raises the bar. The Zug-based Siemens business unit increased its revenue by an average of 11 per cent annually between 2020 and 2024, Siemens announced in a press release. A record operating result margin of 17.3 per cent was achieved in 2024. This is well above the medium-term target of 11 to 16 per cent set in 2021.

    In the coming years, the company is aiming for sales growth of 6 to 9 per cent and an earnings margin of 17 to 18 per cent. “We have set ourselves ambitious targets and achieved them,” said Matthias Rebellius, member of the Managing Board of Siemens AG and CEO of Smart Infrastructure, in the press release. “Now we are raising the bar even higher to reach the next level of value creation.”

    In the coming years, SI intends to strengthen its global presence and expand local capacities. At the same time, it plans to promote talent in high-growth markets such as India and the USA. Both should lead to scalable results in SI’s established end markets, such as data centres, healthcare and energy utilities. The company expects the market it addresses to grow by 5 to 6 per cent annually in the medium term. According to the press release, SI has realised “above-market growth in all areas”.

  • Building materials supplier plans IPO in the USA

    Building materials supplier plans IPO in the USA

    Building materials producer Holcim, headquartered in Zug, will fully spin off its branch in the United States and list on the New York Stock Exchange as Holcim United States, according to a press release. Holcim in the USA is headquartered in Chicago, but also has a presence in 350 locations in 43 states and employs 7,000 people in the USA.

    According to the press release, Holcim is making progress with the planned complete spin-off of its North American business. The North American business is to be listed on the New York Stock Exchange as a “domestic issuer” in accordance with SEC regulations, report under US rules and seek inclusion in relevant US stock indices. An additional listing on the SIX Swiss Exchange is planned in order to meet the needs of European investors.

    The planned spin-off is subject to shareholder approval at Holcim’s Annual General Meeting on 14 May 2025, with a positive resolution expected to be implemented by the end of the first half of 2025, according to Holcim.

    Holcim is a global provider of construction solutions with sales of CHF 27 billion in 2023 and around 63,000 employees. The company says it offers a wide range of advanced solutions, from the sustainable building materials ECOPact and ECOPlanet to the recycling technology ECOCycle and modern roofing and insulation systems from its subsidiary Elevate in Zaventem, Belgium.

  • Standstill in the owner-occupied rental value debate

    Standstill in the owner-occupied rental value debate

    The abolition of the imputed rental value, a tax that is unique in Europe, is in danger of failing once again. There is broad agreement in both councils that the system needs to be reformed. However, its implementation remains highly controversial. The issues of property tax for second homes and the debt interest deduction in particular are causing conflict.

    In its third deliberation on Thursday, the Council of States maintained the abolition of the imputed rental value for primary residences only. It also maintained its position on the debt interest deduction. In future, deductions of up to 70 per cent of taxable property income should remain permitted. The National Council, on the other hand, is calling for a complete system change and also wants to exempt second homes from tax.

    Tourism cantons put the brakes on
    The majority rejection in the Council of States is primarily due to the concerns of the tourism cantons. They fear a considerable loss of revenue due to the abolition of the imputed rental value for second homes. The proposal of a property tax to compensate for this has met with resistance there. “We need to focus on primary residences,” emphasised Martin Schmid (FDP/GR). The introduction of a property tax would present “extremely high hurdles”, as it would require a constitutional amendment with a double majority.

    Realistic collapse of the bill
    The collapse of the bill seems increasingly likely. Even the abolition of the imputed rental value for primary residences is facing headwinds. The tenants’ association has already announced a referendum. Its president, Carlo Sommaruga (SP/GE), criticised the bill as a “tax giveaway for rich homeowners” that does not solve the inequality between tenants and owners.

    Doubts are also growing within the centre-right parties. Pascal Broulis (FDP/VD) warned that the bill would unnecessarily complicate the tax system. The National Council must first decide on the bill again before a possible conciliation conference could follow. However, there is currently no majority solution in sight.

  • Switzerland on course for net zero

    Switzerland on course for net zero

    Switzerland compares favourably with other countries. Its carbon intensity is the lowest of all OECD countries and electricity generation is already largely CO₂-free. Emissions were reduced by 24% between 1990 and 2022. This is a remarkable achievement while at the same time doubling its economic strength. This strong starting position offers Switzerland the opportunity to take a leading role in green technologies such as carbon capture or low-carbon cement.

    Renewable energies and energy storage are key
    In order to continue decarbonisation, electricity generation capacity must be increased from the current 27 gigawatts to over 60 GW by 2050. This is particularly challenging as the four remaining nuclear reactors will be shut down by 2034. A massive expansion of renewable energies and innovative solutions for the seasonality of supply and demand are required. Increasing energy storage capacities and efficient demand management will also play a key role.

    Michael Baldinger, Chief Sustainability Officer at UBS, explains: “For sectors that cannot completely eliminate their emissions, carbon capture technologies are crucial. This presents Switzerland with technological, logistical and financial challenges, but at the same time opens up opportunities in green markets.”

    Regulatory changes set the course
    The legal basis for the transition will be defined by significant regulatory changes in 2025. These include the Electricity Act, the CO₂ Act and the Climate and Innovation Act. Adapting to EU requirements will also increase the number of Swiss companies subject to reporting requirements from 300 to 3,500. These changes require targeted investments and close cooperation between the business, political and financial sectors.

    Financial sector as a key player
    According to estimates by the Swiss Bankers Association (SBA), CHF 13 billion is required annually to achieve net zero. The Swiss financial sector plays a decisive role here. It offers financing options such as bank loans, bonds and blended finance solutions that support the market entry of new technologies. It can also advise companies on the transformation and act as a link between investors and companies.

  • Blockchain platform strengthens property trading in Spain

    Blockchain platform strengthens property trading in Spain

    The Spanish stock exchange Bolsas y Mercados Españoles(BME), a SIX Group company, has become one of the main shareholders of OpenBrick, according to a press release. The Madrid-based company founded by Grupo Lar, Renta 4 Banco and ioBuilders is developing a platform using blockchain technology. This connects issuers, investors and financial intermediaries with a large number of property projects whose tradable securities can be purchased on a primary market and then traded on a secondary market. In addition to BME, Garrigues and Teras Capital are also new strategic partners.

    The market will act as a financing channel outside of banks. The aim is to enable property players to obtain funds for the development of their projects more quickly and cost-effectively. BME will assume the role of platform operator via the Spanish central securities depository Iberclear and will be responsible for managing the trading and settlement system under the DLT (Distributed Ledger Technology) Pilot Regime of the European Securities and Markets Authority.

    OpenBrick received authorisation to sandbox from the Spanish Securities and Exchange Commission(CNMV) in February 2023 with a positive preliminary assessment. The company reportedly expects to receive the EU licence for operations via BME 2025. The first project will start with the Madrid-based property manager Alquiler Seguro.

    “With this investment, SIX is positioning itself as a key player in the EU’s digital agenda and in the further development of the financial markets,” said Javier Hernani, Head Securities Services and member of the Executive Board of SIX. SIX is convinced “that this is the first step on a long and successful journey”.

  • Partnership for climate protection and innovation

    Partnership for climate protection and innovation

    The Bern-based ClimateTech company Neustark has been awarded a long-term contract by AXA Switzerland to reduce CO2 emissions. From 2026 and until 2030, the company is to reduce 1800 tons of the greenhouse gas with its technologies for capturing and mineralizing carbon dioxide, according to a press release. The project is part of AXA’s strategy, which aims to reduce operational carbon dioxide emissions by 43 percent between 2019 and 2030. AXA is also working with the German-Brazilian start-up InPlanet, which aims to remove a total of 1950 tons of CO2 by 2028 and store it for the long term.

    “By supporting these projects, we are making a contribution to net zero and at the same time promoting future-oriented technologies and Switzerland as a location for innovation,” said Daniela Fischer, Chief Sustainability Officer at AXA Switzerland, in the press release.

    Neustark has developed a technology that captures CO2 from biogas plants and stores it in demolition concrete. “Partnering with pioneering companies like AXA Switzerland that are investing in permanent CO2 removal helps us to scale the carbon removal industry,” explains Lisa Braune, Head of Carbon Removal at Neustark.

  • Stagnation characterises the construction industry

    Stagnation characterises the construction industry

    From January to September 2024, the construction industry generated nominal sales of CHF 17.5 billion, an increase of 0.6 per cent compared to the previous year. Adjusted for inflation, however, there was a decline of 0.5 per cent. While civil engineering increased by 2.6 per cent in real terms, building construction recorded a decline of 3.4 per cent.

    Declining incoming orders
    Incoming orders fell by 2.5 per cent in real terms to CHF 17.3 billion. In building construction in particular, rising interest rates, higher construction costs and a shortage of public funds led to a noticeable decline. Only civil engineering was able to achieve an increase in orders in both the public and private sectors.

    Falling order backlog
    The order backlog in the main construction sector shrank by 3.7 per cent to CHF 14.9 billion by the end of September 2024. This corresponds to an order backlog of around 7.7 months. The entire industry is facing a gloomy outlook: While civil engineering is expected to remain stable, residential construction is not expected to grow again until the third quarter of 2025.

    Noticeable decline in employment
    The uncertainties are having an impact on employment. The number of full-time positions in the sector fell by 4.0 per cent to 89,000 employees. Despite the Swiss National Bank’s key interest rate cut from 1.75 to 1.0 per cent in 2024, the effect will be delayed.

    Construction activity in Switzerland is stable, but characterised by stagnation and challenges. Developments in residential construction in particular will be decisive in providing the urgently needed impetus for renewed growth.

  • Timber construction as the key to CO2 reduction in the construction sector

    Timber construction as the key to CO2 reduction in the construction sector

    The European research project TIMBERHAUS was launched in Copenhagen at the beginning of November, Empa announced in a press release. It is one of 19 partners from a total of ten countries participating in the project, which is funded by the EU and the State Secretariat for Education, Research and Innovation to promote timber construction in Europe. Within four years, innovative timber construction technologies and structures are to be developed with which CO2 emissions in the construction sector can be significantly reduced.

    According to Empa, the construction sector is responsible for 40 percent of global CO2 emissions. The use of wood could help here. Currently, however, European forest resources, half of which consist of hardwood, are only used “very inefficiently” and limited to a few types of softwood for construction, explains project coordinator Anders Kjellow from the Danish Technological Institute. “With TIMBERHAUS, we are trying to overcome this challenge in order to increase the sustainable use of wood in construction.”

    Empa is contributing to the project with innovative prototypes created using digital tools such as machine learning and artificial intelligence. “The prototypes will serve as practical examples of how we can effectively utilize a wider range of wood resources,” Empa researcher Mark Schubert is quoted as saying in the press release. “Our goal is to provide the construction sector with viable and efficient products that meet current building standards while promoting the principles of the circular economy and supporting European climate goals.”

  • Owner-occupied homes remain very popular

    Owner-occupied homes remain very popular

    “The dream of owning a home is still very popular among the Swiss population,” writes the Lucerne University of Applied Sciences and Arts(HSLU) in a press release. This is based on the latest edition of the Retail Banking Study, which is compiled annually by the Institute of Financial Services Zug(IFZ) at HSLU. According to the study, four out of ten people in Switzerland would like to buy a property.

    The IFZ has identified two groups of people interested in property. In the first group, the majority are “dreamers” from the younger generations who are looking for their first home. They are primarily confronted with financial problems. In the second group, the majority are members of older generations who already own their own property. These “second-time buyers” have fewer financial problems than difficulties in finding a property that meets their current needs. Both groups rely primarily on personal recommendations and chance when searching for their own home.

    The interest rate plays an important role for home seekers both when taking out a new mortgage and when extending an existing one. The willingness to change mortgage provider is particularly low in the case of an extension, with three out of ten property owners refusing to do so regardless of the difference in interest rates. “In many cases, the house bank still enjoys great loyalty, especially if a change is associated with additional hurdles,” explains Andreas Dietrich, head of the study, in the press release.

  • Swiss Life Asset Managers increases dividend for property funds

    Swiss Life Asset Managers increases dividend for property funds

    The Swiss Life REF (CH) ESG Swiss Properties real estate fund closed the 2023/24 financial year with a profit of CHF 64.2 million, Swiss Life Asset Managers announced in a press release. The asset manager, which is part of the Swiss Life Group, intends to distribute CHF 58.3 million of this to investors. To this end, the dividend will be increased from CHF 2.60 for the previous financial year to CHF 2.70 per share.

    In the year under review, Swiss Life Asset Manager integrated 47 newly acquired properties into the fund. At the same time, the sale of seven properties generated a net capital gain of CHF 7.2 million for the fund. The value of the properties held over the entire reporting period increased by 0.4 per cent net year-on-year. Rental income was 4.5 per cent higher than in the previous year. The vacancy rate rose from 1.5 per cent to 1.6 per cent.

    At the end of the financial year on 30 September 2024, the fund comprised 201 portfolio properties with a total market value of CHF 3.21 billion. The net asset value per unit before distribution remained unchanged year-on-year at CHF 113.73.

  • 62. Meeting of the EEA in the European Economic Area

    62. Meeting of the EEA in the European Economic Area

    The EEA Joint Parliamentary Committee serves as a platform for dialogue between the parliaments of the EEA/EFTA states (Norway, Iceland and Liechtenstein) and the EU. Switzerland, a member of EFTA but not of the EEA, plays an observer role on this committee. This enables the Swiss delegation to follow important developments in the EEA and actively participate in debates on foreign and economic policy issues.

    Focus of the talks
    The meeting will centre on current developments in the European Economic Area. In particular, it will focus on the functioning of the EEA Agreement, European security and competitiveness, as well as the priorities for EEA and Norwegian grants to reduce social and economic disparities. Another focus will be on relations between Switzerland and the European Union, on which the Swiss delegation will inform the Committee.

    Swiss delegation
    The EFTA/EU delegation is represented by National Councillor Thomas Aeschi (SVP, ZG) as Chairman, Councillor of States Damian Müller (FDP, LU) as Vice-Chairman and National Councillors Hans-Peter Portmann (FDP, ZH) and Nicolas Walder (Greens, GE).

    Significance for Switzerland
    Participation in the Committee enables Switzerland to keep abreast of European developments and maintain important contacts. Particularly in the areas of competitiveness and international cooperation, the observer role offers a valuable insight into topics that are also of central importance to Switzerland.

    The meeting in Oslo strengthens networking between Switzerland and the EEA states and the EU. Switzerland’s observer role emphasises the importance of the EEA for Swiss foreign and economic policy and enables it to participate in relevant debates.

  • Strong property market in Aargau shows high prices and low vacancy rates

    Strong property market in Aargau shows high prices and low vacancy rates

    The latest property barometer from Aargauische Kantonalbank(AKB) attests to the “strong momentum” of the Aargau property market. The canton’s strong appeal as a place to live is reflected in “continued above-average increases in property values”, write the AKB experts in the barometer. Specifically, they noted a 4.6 per cent year-on-year increase in residential property prices.

    Among the individual regions of Aargau, Aarau/Seetal stands out with a 5.1 per cent increase in house prices and Rheinfelden/Fricktal with a 6.1 per cent increase in the price of owner-occupied flats. According to the experts’ research, in the majority of the canton’s 230 municipalities, more than CHF 1 million must be paid for a detached single-family home with a neighbouring plot. Prices are even higher in the catchment markets of the surrounding major centres.

    The AKB experts have recorded a 4.7 per cent year-on-year increase in asking rents. The average rent for a modern 4.5-room flat is therefore around CHF 2,200 to 2,300 excluding ancillary costs. The vacancy rate across the canton is currently 1.3 per cent.

    The property experts at Kantonalbank expect prices for residential property and asking rents to continue to rise in the future. They are basing this forecast on continued strong population growth coupled with a continuing stagnation in construction activity. They also expect further reductions in key interest rates, which will have a positive effect on the return on property investments compared to comparable investments such as government bonds.

  • Property prices in Aargau continue to rise at an above-average rate

    Property prices in Aargau continue to rise at an above-average rate

    The property market in the canton of Aargau continues to record an above-average increase in value. As the latest real estate barometer from Aargauische Kantonalbank shows, prices for residential property have risen by 4.6 per cent and asking rents by 4.7 per cent. “The canton’s strong appeal as a place to live is reflected in sharply rising property values,” say the experts at AKB.

    Aarau/Seetal and Rheinfelden/Fricktal in the lead
    Particularly significant price increases were recorded in the regions of Aarau/Seetal with a 5.1 per cent rise in house prices and Rheinfelden/Fricktal with a 6.1 per cent increase in condominiums. In most municipalities in the canton, buyers now have to pay more than CHF 1 million for a detached single-family home, and prices are even higher in the catchment areas of the surrounding major centres.

    Increased level with falling vacancy rate
    The rents on offer have also risen sharply. The average rent for a modern 4.5-room flat is between CHF 2,200 and 2,300, excluding ancillary costs. The canton-wide vacancy rate is comparatively low at 1.3 per cent, which indicates high demand with limited supply.

    Prices set to rise further
    AKB property experts assume that both residential property prices and asking rents will continue to rise. The reasons for this are:

    • Strong population growth in the canton of Aargau
    • Stagnating construction activity, which limits supply
    • Expected reductions in key interest rates, which will make property investments more attractive

    The combination of high demand, limited supply and economic conditions will ensure that the Aargau property market remains dynamic in the future. Both buyers and tenants should be prepared for further price increases.

  • Aargau energy subsidy programme limited until 2026

    Aargau energy subsidy programme limited until 2026

    The Aargau energy promotion programme will be continued until 2026 with a gross credit of CHF 97.2 million. This decision by the Grand Council, which was passed by 89 votes to 47, deviates from the original proposal by the cantonal government. The government had envisaged an extension until 2028 and a total budget of CHF 176.5 million. The shorter period was chosen due to possible cost-cutting measures by the federal government, which could make cantonal co-financing more difficult.

    Controversy surrounding the funding
    While the SP, Centre Party, GLP and Greens welcomed the increase in the credit, the FDP and SVP were sceptical. The FDP called for a budget of CHF 88.25 million, which would cover half of the originally proposed total costs for four years. The SVP rejected the programme in principle and criticised state intervention.

    Focus of the programme
    The funding programme supports measures to improve energy efficiency and reduce CO₂ emissions. Among other things, the programme supports

    • Improvements to the building envelope
    • Wood heating systems and heat pumps
    • Connections to heating networks
    • Solar thermal systems
    • Projects for the development of heating networks

    Funds are also available for pilot projects. According to the cantonal dispatch, previous programmes have shown that energy efficiency has been increased and CO₂ emissions have been significantly reduced.

    Funding from CO₂ levies
    The majority of the funding comes from federal contributions, including from the CO₂ partial earmarking and the federal impulse programme. The canton itself bears around 25 % of the total costs.

    Prospects for homeowners
    The two-year limit raises questions about long-term planning. Homeowners and builders emphasised the need for continuity in funding programmes in order to promote investment in sustainable building technologies.

    The Canton of Aargau’s energy subsidy programme remains an important instrument for reducing CO₂ emissions and increasing energy efficiency. However, the limited duration of the programme until 2026 reflects the uncertainties surrounding federal funding and poses planning challenges for the future.

  • Prices for property in Bern remain on an upward trend

    Prices for property in Bern remain on an upward trend

    “Living in the canton of Bern remains expensive” is the headline of the Berner Kantonalbank(BEKB)’ s latest property barometer. It is compiled every six months by BEKB in collaboration with the Zurich-based property service provider IAZI. According to the autumn 2024 edition, prices for flats and houses in the canton of Bern have risen by 3.3% year-on-year.

    Asking rents are also on an upward trend. The experts at BEKB and IAZI point to strong population growth in the canton coupled with low new construction activity as the background to rising rents and prices on the housing market. “The unemployment rate in the canton remains at a historically low level and the number of job vacancies is steadily increasing,” the press release also states. As long as this remains the case, the housing market is not expected to ease.

    Within the individual regions of the canton, experts have observed a normalisation of price dynamics in tourist regions. Prices in the Oberland regions and especially Obersimmental-Saanen have been strongly driven by the second-home market in recent years. A stabilisation was registered here at the end of the third quarter of 2024. In Oberaargau, on the other hand, prices rose by an average of 3.9 per cent year-on-year. The experts attribute this to a shift in demand for residential property to regions with comparatively moderate price levels.