Commercial real estate is likely to become cheaper
This year, KPMG's Swiss Real Estate Sentiment Index is at its lowest level since measurements began in 2012. Due to the Corona crisis, market participants are expecting falling prices, especially for commercially used spaces. Residential properties are less affected.
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KPMG 's Swiss Real Estate Sentiment Index is an indicator of expected developments in the real estate investment market. Last year the index reached an all-time high. This year it has fallen to its lowest level since measurements began in 2012. According to a statement from the consulting company, it is -13.1 points.
Market participants' assessment of economic development contributes 20 percent to the overall index. The corresponding value fell by 60.9 points to -73.8 points. The second component is the expectation of price developments. After 43.5 points in the previous year, the value here is just above the stability axis at 2.1 points.
In the case of residential real estate, price expectations remain positive and are close to the 2015 high. Contrary to expectations, actors in the real estate investment market are also not assuming falling prices for real estate in peripheral locations. However, the prices of commercial real estate are likely to fall. A total of 76 percent of those surveyed assume that the demand for office space in the extended business belt will decrease as a result of the Corona crisis. Sales areas are also likely to be used far less in the future. The respondents see less need for shopping centers in particular. However, experts see more demand for real estate in the healthcare sector and for logistics space.
The results show that the Corona year has clouded the mood on the real estate investment market. "Because of the expected effects on future demand, the market participants also see opportunities that new user segments will move into the investment focus," Beat Seger, partner and real estate expert at KPMG, is quoted as saying. In addition, residential real estate would contribute to the stability of the asset class.
