Positive Voting Sunday for Real Estate Investors

Firstly, the so-called Sustainability Initiative, which sought to limit Switzerland’s resident population to 10 million people, was rejected. According to the Swiss Finance & Property Group ( SFP Group), its acceptance would have sent negative signals to international companies and thereby weakened Switzerland as a business location and the real estate sector. International companies are important occupiers of office space and provide well-paid jobs. Any reduction in Switzerland’s attractiveness as a business location would not have been beneficial from the perspective of the SFP Group.

Secondly, the population of Zurich clearly rejected the Housing Protection Initiative. Following the examples of Geneva and Basel, the initiative aimed to make renovations subject to approval requirements and subsequently cap rents. Investments in the building stock would have been penalised, inevitably leading to fewer renovation investments. The short-term effects of such regulations can be observed in Basel, where construction investment declined by 80% after their introduction. Geneva provides a lesson in the long-term effects, where despite strict regulation, rents remain high and the housing market continues to be under pressure.

Two further votes over the weekend also demonstrated the real estate market’s ability to mobilise voters. The electorate of the City of Lucerne approved a right of first refusal for real estate transactions. Meanwhile, voters in Zug approved the development plan for the Metalli site.

In summary: in addition to the two votes in Lucerne and Zug, the Swiss population voted “No” twice to forms of capping—both regarding population growth and rents.

The electorate has therefore rejected initiatives that addressed real existing problems, but which, in the opinion of the population, offered the wrong solutions to them. From the perspective of the SFP Group, the results are particularly positive for the construction industry and tradespeople, who would have suffered considerably had the initiatives been accepted. The outcome is also important for investors, as it provides clarity regarding the regulatory framework, which market participants are likely to welcome.