18th December 2017
Vitangelo Pagliarulo, Junior Financial Analyst
Since 2012, the Swiss office market has been experiencing an imbalance between supply and demand, which has resulted in increasing vacancy rates and falling rents. More precisely, between 2013 and 2016, the available office space on the market has increased by approximatively 40% and the rent price indexes of Zurich and Geneva have corrected, respectively by -3% and -6%.
After this negative period, the market has stabilised in 2017. As the economic environment has improved, rents have stabilised and demand has slightly increased. Though, it is not very likely that this continues. As a matter of fact, when we take a closer look to the construction statistics, we see a rebound of new construction permits and an increase in new applications (see chart). This phenomena can be explained by the actual low yielding bond market, which leads investors to seek stable and predictable returns on the real estate market and hence to develop new projects.