Acquisition of commercial real estate: new rules for foreigners
The Swiss government intends to review the acquisition of commercial real estate by foreigners in the near future. The authorities came to this decision after the local companies were forced to put on the market a number of their assets. According to experts, there is a risk that non-residents will buy up properties in the country at low cost.
A number of Swiss companies could not withstand the difficulties associated with the pandemic, and to stay afloat, decided to sell some real estate. These objects are attractive in terms of profitability, and foreign investors began to take an active interest in the local market.
In order to limit the possibility of acquisition of commercial real estate by foreigners, the government introduced new rules in the current federal law Lex Koller. The latter regulates the process of buying housing by non-residents of the country in order to reduce their number as owners of local facilities. Under the changes, similar rules will now apply to commercial real estate.
According to analytical data from CBRE Switzerland, during the years 2011-2020, foreign investors have invested in the commercial real estate market in Switzerland more than 11% of the total capital share. Prior to 2011, this value was at 15%. During the period from 2017 to 2019 in the segment there was a decline in interest from foreigners, in addition, many non-residents left the country. The reason was the sharp rise in the exchange rate of the Swiss franc, which in turn led to higher prices for facilities. Over these years, the share of investment by citizens of other countries has fallen to 5%. In 2020, the situation has improved due to the conclusion of several large deals.
The main foreign buyers in the Swiss market are residents of Britain, France, Israel and Germany. As for the citizens of Asia, here they are not as active as in other markets. The only sector where their number is growing is the hotel segment.
Swiss investors are increasingly focusing on niche markets. This trend started in 2020, and with some fluctuations, continues today. Many businessmen have become disillusioned with commercial real estate and long-term leases and have decided to try new sectors. These include micro-apartments, nursing homes, and housing that can be rented out for short periods through Airbnb services. In addition, after the pandemic, co-working spaces are becoming increasingly popular. Experts note that the yield in such market niches demonstrates good results, but at the same time warn about the risks. The fact is that supply in these sectors is increasing faster than demand, which leads to imbalance and loss of money by investors.