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Old 02.01.2021, 21:46
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Rent/sale prices in the new normal

Hi All,

Considering that a lot of companies will (hopefully) offer more flexibility relating to working from home going forward, does anyone have thoughts on how this will affect rental or sale prices in Switzerland?

I would imagine that bigger flats/houses with a dedicated office maybe out of the city could become more attractive, but there again demand is already high pretty much everywhere.

Will there be loads of offices converted into flats reducing demand?

I'd be interested to hear anyone's opinion on how dynamics could change.
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Old 02.01.2021, 22:31
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Re: Rent/sale prices in the new normal

I expect no changes.

Tom
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Old 02.01.2021, 23:12
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Re: Rent/sale prices in the new normal

I think people still consider it only temporary. Besides, even if the new norm would get finally accepted as our destiny for decades to come I don't think you can elevate the housing prices anywhere, especially in the middle of nowhere, but I believe the prices in big towns would get into recession (assuming the new norm becomes permanent).
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Old 02.01.2021, 23:25
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Re: Rent/sale prices in the new normal

I think there might be office space standing empty, or it will be allocated to another purpose.

In some companies, "before", Work From Home was unthinkable, "during" it is happening despite the former objections, and when "after" rolls around, some employees will but some won't want to return to the office, while some companies will but some no longer bother to rent the office space to accommodate them.
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Old 03.01.2021, 01:25
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Re: Rent/sale prices in the new normal

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I think there might be office space standing empty, or it will be allocated to another purpose.

In some companies, "before", Work From Home was unthinkable, "during" it is happening despite the former objections, and when "after" rolls around, some employees will but some won't want to return to the office, while some companies will but some no longer bother to rent the office space to accommodate them.
In our office building 4 offices with sizes ranging from 90m2 to 300m2 where empty for several years but they all where rented out in the Q4 of 2020 to small companies / entrepreneurs. Also all storage and parking spaces where rented out. House is full for the first time in years.

Maybe this is just a coincidence or maybe covid pushes people to become more creative / start something on their own (which is great!).
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Old 03.01.2021, 02:11
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Re: Rent/sale prices in the new normal

A conservative country like Switzerland would not change so easily, so don't expect much.
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Old 03.01.2021, 23:48
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Re: Rent/sale prices in the new normal

I remember reading an article some months back that house prices <2m were up and those >2m down in 2020, not sure what followed. There were also things like increasing demand for bigger apartments, places out of city, etc.

I think people are given a possibly false sense of security in Switzerland with the "kurzarbeit" thingy. I don't have an impression crisis is felt yet by the majority. Depends if it will ever come on many factors. If this drags on (and is likely to) something will happen. It may be a crisis, inflation, something else. Whatever comes at least some segments of RE will be affected. It is difficult to predict, but am interested to hear opinions

As Son of Mom mentioned, crisis can indeed push people to be creative. Covid has speeded up some processes. My fear is that the kurzarbeit is postponing this and potentially dangerous in the sense that we support also some of the jobs that are doomed to disappear and does not give enough initiative to people to find alternatives they should. On the other hand, kurzarbeit does keep the social order and that is one of Switzerland's commodities also affecting its RE market.

Also I wonder if the recent change on calculation of rent limits will push up the prices. Or did they change it to prevent a decrease in prices...

Last edited by minimimi; 04.01.2021 at 00:36.
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Old 04.01.2021, 00:20
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Re: Rent/sale prices in the new normal

So far, there's a lot of unmet housing demand. If things really change, I'd bet on a slow down in construction and renovation of housing units before any movement in rental prices. Thus, wait for construction companies crying before expecting any rental price change.
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Old 04.01.2021, 00:42
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Re: Rent/sale prices in the new normal

It seems that around the world, people are at least considering renovating office space and converting it into apartments. In my opinion Zurich could do with a dose of that.

The hurdles lie in the zoning, and in the health regulations, including any to do with building materials, and in the land prices which may simply [still] be too high to set any realistic rental price for accommodation.

https://www.stuff.co.nz/business/114...ousing-problem
Nelson, NZ

https://www.researchgate.net/publica...s_into_housing
Delft, NL

https://theconversation.com/if-more-...lanning-136261
AUS

https://www.iol.co.za/dailynews/offi...reads-17315802
South Africa

https://blog.homegate.ch/de/die-umwa...in-wohnraeume/
Switzerland
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Old 04.01.2021, 11:34
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Re: Rent/sale prices in the new normal

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I think people are given a possibly false sense of security in Switzerland with the "kurzarbeit" thingy. I don't have an impression crisis is felt yet by the majority. Depends if it will ever come on many factors. If this drags on (and is likely to) something will happen. It may be a crisis, inflation, something else. Whatever comes at least some segments of RE will be affected. It is difficult to predict, but am interested to hear opinions
The 'elephant in the room' questions are how many jobs will be lost in 2021, and willt WFH have an effect on salaries? And then will there be a knock-on effect in the property market?

How many companies will start laying off staff due to COVID financial difficulties?

How many companies will use COVID as a cover to increase their annual staff reduction targets?

How many people who are currently working from home will find that, having shown management that their work can be successfully done from afar, their job is will soon move to a lower cost country?

How many WFH will be asked to take lower salaries?

How many will find that their expected bonus (i.e., total comp) has been radically cut, or disappears, due to their company's COVID-related financial difficulties?

How many will find that their expected bonus (i.e., total comp) has been radically cut, or disappears, because while working from home your manager isn't so clued in to what you do day to day and so does not feel the need to fight for your share of a reduced bonus pool?

Interesting times....

---

But the one thing going for the property market is it's scarcity. There will likely never be enough decent housing in Switzerland.
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Old 04.01.2021, 15:43
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Re: Rent/sale prices in the new normal

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But the one thing going for the property market is it's scarcity. There will likely never be enough decent housing in Switzerland.
Actually some of your arguments go against this. There can be less people migrating to Switzerland due to Covid effects.

There was a short nice podcast by The Economist stating that mobility may decrease if flight prices go up.

Also despite bigger number of kids at the en of 2020, less are expected for the time to follow.
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Old 04.01.2021, 17:15
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Re: Rent/sale prices in the new normal

At least in our apartment block I see few more empty flats than usual. It might be just a coincidence but who knows. Need more time to make a better guess.

I was thinking if WFH becomes more popular and acceptable, maybe people will start moving further away from big cities. At least I would consider commuting for longer distance 2 days and 3x WFH. If there are more people thinking the same, could it shift rental prices between village/city?
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Old 05.01.2021, 13:16
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Re: Rent/sale prices in the new normal

Well, there's something better than any opinion: data

https://www.blick.ch/wirtschaft/immo...d16276171.html

On the last year, average 5% increase in the sales price of single-family homes and 1% increase in rentals (houses and apartments). But.......prices can still be affected by local unemployment or reduction of salaries.
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Old 05.01.2021, 15:01
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Re: Rent/sale prices in the new normal

Was just reading an article that says housing prices are up in 2020. Single family houses are up 5.6%, and co-property apartments up 5.5%. Overall rents did not reach these levels, up 1.1% overall, althouth in the Arc Leman area up 2.5%. In most of the swiss german area they were stagnant or up minimally, but tessin down 2.6%.

It further states that coronavirus has pushed a number of persons to re-evaluate their living situation.

Read at arcinfo.ch
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Old 05.01.2021, 18:01
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Re: Rent/sale prices in the new normal

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The 'elephant in the room' questions are how many jobs will be lost in 2021, and willt WFH have an effect on salaries? And then will there be a knock-on effect in the property market?

How many companies will start laying off staff due to COVID financial difficulties?

How many companies will use COVID as a cover to increase their annual staff reduction targets?

How many people who are currently working from home will find that, having shown management that their work can be successfully done from afar, their job is will soon move to a lower cost country?

How many WFH will be asked to take lower salaries?

How many will find that their expected bonus (i.e., total comp) has been radically cut, or disappears, due to their company's COVID-related financial difficulties?

How many will find that their expected bonus (i.e., total comp) has been radically cut, or disappears, because while working from home your manager isn't so clued in to what you do day to day and so does not feel the need to fight for your share of a reduced bonus pool?

Interesting times....

---

But the one thing going for the property market is it's scarcity. There will likely never be enough decent housing in Switzerland.
Companies that don't pay bonuses because COVID affected their business are not finding an excuse to not pay bonuses. They probably dodn't have enough to distribute. Same for staff reduction etc. I don't think companies fire people that need when they can afford them.

Of course, there are always stupid companies, that in recovery mode still cite crisis issues and do awful things like being profitable and not sharing the love with employees by raises/bonuses/hiring, but those companies will always have higher turnover and people will want to not work there in any case.


I think the issue with WFH will depend a lot on the company, but in general WFH would increase a bit. Places that were in touch with remote working of some sort will probably allow more, and places that it was thought impossible will maybe allow some since it has been proven to work.

At the end, it will always depend on the manager. Even in companies with the best practices and policies, all it takes is one moronic manager to send an email along the lines "I don't care about xyz, my team will be in the office" and then you're stuck even in these unsafe times...
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Old 05.01.2021, 18:23
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Re: Rent/sale prices in the new normal

Our properties are in the centre of Lugano and what we are seeing is increased demand to purchase as well as a gradual upward movement in rent. We have now been approached by a few tenants to see if they can rent a larger flat from us giving up the one they currently have. So yes, I think demand for larger residential accommodation will increase, and for commercial decrease in the short term.

One of the problems will be changing use from commercial to residential as the permissions, if granted, can take quite some time to happen as the "piano di quartiere" (I think that's how it's spelt) will need to be changed. Communes have to review this every 10 years and then it takes about 3 years to happen - if there are no objections.
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Old 05.01.2021, 22:01
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Re: Rent/sale prices in the new normal

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Interesting times....

---

But the one thing going for the property market is it's scarcity. There will likely never be enough decent housing in Switzerland.
More precisely not enough one family houses in not-so-remote areas, which is precisely what many people are looking for right now.

Last edited by greenmount; 05.01.2021 at 22:22.
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