How to invest in Swiss Real Estate

As a whole, Swiss real estate has steadily gained in value over recent decades, as shown by the Swiss Residential Property Price Index (IMPI) and the SWX IAZI indices, among others. While there is no sure way to predict future developments, Swiss real estate has historically been a relatively secure investment with steady growth potential.

Before you begin investing in Swiss real estate, it is important to acquaint yourself with these three indices published by the SIX Swiss Exchange:

• The SXI Real Estate Broad (SREAL) index tracks all real estate stocks and real estate funds with a primary listing on SIX whose investment portfolios include at least 75 percent Swiss real estate.

• The SXI Real Estate Funds Broad (SWIIT) is a sub-index of the SREAL which only includes the real estate funds, but not the stocks of real estate corporations. 

• The SXI Real Estate Shares Broad Index (REAL) is a sub-index of the SREAL which only includes the real estate stocks, but not the real estate funds.

Here, moneyland.ch explains the most relevant ways in which you can invest in property in Switzerland as a private investor.

1. Swiss real estate ETFs

One of the easiest and least risky ways to invest in Swiss property is to buy shares in an exchange-traded fund (ETF) that, in turn, buys shares in many different Swiss real estate companies and/or real estate funds. The real estate companies and funds, in turn, invest in many different properties. So by investing in just one ETF, you invest in numerous properties all over Switzerland. ETFs offer a number of advantages:

• Your capital is spread out across numerous Swiss real estate companies and/or real estate funds, each of which invests in many different properties throughout the country. The result is that your investment capital is spread across a huge number of properties and kinds of real estate in many different regions. If the market for one kind of real estate or in one region falters, the impact on your overall investment will be relatively small.

• You can easily buy and sell shares in a real estate ETF using an affordable online trading platform.

• You do not need a very large amount of capital to begin investing in Swiss properties using ETFs. You can begin investing in Swiss real estate less than one hundred francs.

• ETFs generally do not have the one-time sales charges and deferred sales charges which are charged by many actively managed real estate mutual funds. Additionally, the total expense ratios (TERs) of ETFs are lower than those of some mutual funds (compare Table 1 with Table 4).

If you live in Switzerland and want to invest in Swiss companies, then it is generally advantageous to use an ETF that is domiciled in Switzerland and denominated in Swiss francs. ETFs that physically replicate the underlying index are preferable because they invest in real assets, rather than using swaps to replicate the index (which is the case with synthetically replicating ETFs). Currently, there are just two Swiss real estate ETFs that meet these criteria.

Table 1: Swiss real estate ETFs for private investors

Performance data is calculated by moneyland.ch based on the trading day closing prices on September 20, 2013, and September 20, 2023. Figures are rounded to the second decimal. The ETFs in Table 1 are domiciled in Switzerland, denominated in Swiss francs, and use full physical replication. TER figures are for 2023.

2. Swiss real estate index funds

Like ETFs, index funds invest in real estate corporations and mutual funds with the aim of replicating an index. But unlike ETFs, index funds are not traded on stock exchanges. Currently, only one real estate index fund is available for Swiss private investors.

Table 2: Swiss real estate index funds for private investors

Performance data is calculated by moneyland.ch based on the trading day closing prices on September 20, 2018, and September 20, 2023. Figures are rounded to the second decimal. Table 2 only includes index funds that are domiciled in Switzerland, denominated in Swiss francs, and use full physical replication. TER figures are for 2023.

3. Swiss real estate stocks

You can also invest directly in the stocks of Swiss real estate corporations instead of using an ETF. Investing in just a few select stocks is riskier than investing in a whole index, because individual companies can lose value or even go bankrupt, so it is not recommended for inexperienced investors. However, there are situations in which it can make sense to create your own portfolio of Swiss real estate corporations (by replicating the SXI Real Estate Shares Broad (REAL) index, for example). This could be the case, for example, if you have a lot of capital to invest, and want to avoid paying the fees charged by Swiss real estate ETFs and index funds.

All you need in order to invest in Swiss real estate stocks is a stock brokerage account. Using the cheapest bank for your trading needs will help you minimize investment costs that detract from potential returns. Simply search for the ISIN of the stock you want on your bank’s online trading platform, and buy shares for the amount you want to invest. You can also sell your shares on any trading day using the online trading platform.

The Swiss real estate corporations in Table 3 are included in the SXI Real Estate Shares Broad Index (REAL) index. They have primary listings on the SIX Swiss Exchange and at least 75 percent of their real estate investments are in Swiss property. The stocks are denominated in Swiss francs.

Table 3: Swiss real estate stocks tracked by the REAL index

Both the SIX Swiss Exchange and the BX Swiss exchange list additional real estate stocks which are not included in the REAL index. Additionally, the stocks of some Swiss small and mid-sized real estate companies that are not listed on stock exchanges can be traded on over the counter (OTC) exchanges like the OTC-X and the OTC exchange operated by Lienhardt and Partner.

In addition to investing directly in companies that develop and own Swiss properties, you can also invest indirectly in companies that are linked to the Swiss real estate market, but are not focused on developing or owning Swiss real estate. For example, you can invest indirectly by buying shares in construction companies, companies that manufacture building materials and/or machinery, facility management companies, and hotel operators.

4. Buy your own home

If you live in Switzerland, then buying or building your own home can be a property investment if these criteria are met:

1. The costs of owning your home are lower than those of renting your home. In this case, the money saved could be considered a return on your investment. You can calculate potential savings using the rent or buy calculator on moneyland.ch.

2. The property is in a location where property prices are likely to go up. Past price developments can serve as a reference point, but they are no guarantee of future performance. You can see property price developments by canton in the guide to property prices in Switzerland.

3. You properly maintain and renovate the property so that it keeps its value.

4. You have a fairly large amount of investment capital. At an absolute minimum, you must be able to cover the down payment (typically 20 percent) yourself. It is generally possible to use Swiss pillar 2 and pillar 3a assets to buy a primary residence. Refer to the guide to using Swiss retirement savings to finance home ownership for more information.

5. You meet the affordability criteria for a Swiss mortgage (unless you will pay the full price in cash).

6. Your tax situation will not be adversely affected by owning your own home. It can be beneficial to consult a tax expert who specializes in your canton and municipality.

There are other factors to consider too, such as municipal requirements for homeowners and land use. You can find a list of important points to consider when buying a home in Switzerland here.

Online property platforms like Comparis, Homegate, immoscout24, and Newhome provide a simple way to find many Swiss homes or building plots for sale. You can also find property using a real estate agent, or through your personal network of friends and acquaintances. If you plan to use a mortgage, then the cost of the mortgage directly detracts from your potential returns, so using the cheapest available mortgage is beneficial. You can compare mortgage guide rates using the moneyland.ch Swiss mortgage comparison.

The Swiss Residential Property Price Index (IMPI) and the SWX IAZI Private Real Estate Index provide an overview of how the prices of Swiss residential properties have developed.

5. Buy a Swiss property as an investment

If you are a Swiss citizen, a citizen of an EFTA or EU country, or hold permanent residence status in Switzerland (C permit), you can buy investment properties without a special license. Citizens of other countries who are not permanent residents must obtain a license in order to buy a Swiss property that will not be used as their primary residence.

Mortgage requirements for investment properties are also stricter, and you cannot use retirement savings. For these reasons, you need to have more investment capital available than you would if you were buying a primary residence. You can find more information in the guide to buying investment properties in Switzerland.

If you want to use an investment property for short-term rentals (on Airbnb, for example), you should also carefully review the municipal rules governing holiday homes and short-term rentals when looking at potential properties to invest in.

6. Swiss real estate bonds

A number of major Swiss real estate companies issue corporate bonds. These can be worth considering if you want to earn interest at a fixed rate without the risk of your money losing its nominal value.

Bonds that are listed on the SIX Swiss Exchange can be purchased using a Swiss stock broker. Refer to the guide to minimizing the cost of investing in bonds to learn how to keep investment costs low.

Swiss real estate companies whose bonds are listed on the SIX exchange and denominated in Swiss francs include:

• Allgemeine Baugenossenschaft Zürich (ABZ)

• Allreal Holding AG

• Intershop Holding AG

• Investis Holding SA

• Mobimo Holding AG

• PSP Swiss Property AG

• Sitex Properties Holding AG

• Swiss Prime Site AG (and its subsidiary Swiss Prime Site Finance AG)

• Zug Estates Holding AG

7. Asset management and fund savings plans

Many Swiss asset management services and robo advisors include Swiss real estate in their investment portfolios. That is also true of Swiss fund saving plans. However, these services generally do not give you a lot of control over the specific investment vehicles used. There are exceptions though. For example, the Saving and Investing with ETF robo advisor from VZ Depotbank gives you the option of adding a real estate ETF (the UBS ETF (CH) – SXI Real Estate Funds (CHF) A-dis) to your portfolio.

8. Pillar 3a and vested benefits

Many Swiss retirement funds include Swiss real estate in their investment portfolios, to varying extents. You can find the average real estate component of Swiss retirement funds on the product information pages of funds in the interactive Swiss retirement fund comparison on moneyland.ch. Note, however, that the figures shown are for real estate as a whole, and may not be limited to properties in Switzerland.

Some Swiss online asset management services for retirement savings give you the option of adding real estate funds to your investment portfolio. For example, Viac lets you invest in two Swiss real estate funds that are otherwise reserved for institutional investors: the Swisscanto (CH) Index Real Estate Fund Switzerland indirect NT CHF (TER: 0.72 percent), and the CSIF (CH) I Real Estate Switzerland Blue ZB (TER: 0.77 percent). Viac limits the Swiss real estate component to a maximum of 30 percent of your portfolio. The 3a pillar with ETF offer from the VZ Depotbank gives you the option of using the UBS ETF (CH) – SXI Real Estate Funds (CHF) A-dis.

9. Actively-managed real estate funds

There are many actively-managed mutual funds that invest primarily or exclusively in Swiss properties. The easiest and least risky way to invest in Swiss real estate funds is to buy shares in an ETF or index fund that, in turn, invests in the actively-managed Swiss real estate funds tracked by the SXI Real Estate Funds Broad (SWIIT) index. This index includes more than 40 different real estate funds that are listed on the SIX Swiss exchange and have a Swiss real estate component of at least 75 percent. You can find ETFs and index funds for investing in the SWIIT in Table 1 and Table 2.

Alternatively, you can also buy shares in individual real estate funds. If a Swiss real estate fund is listed on the SIX Swiss Exchange, you can buy its shares using an online trading platform from a Swiss bank. Be aware that many actively managed investment funds have sales charges that apply when you buy or sell shares. These one-time fees add a substantial cost to short-term investments, but they become less significant the longer you hold your shares.

Table 4: Swiss real estate funds tracked by the SWIIT index

TER data as per most recent AGMs as of October, 2023.

There are a number of other Swiss real estate funds that are not included in the above list because they do not meet the criteria to be included in the SWIIT index. Shares in funds that are not traded on a stock exchange often can only be purchased from the fund itself, or from the bank that manages it. Some Swiss real estate funds are available on Swiss OTC exchanges like OTC-X operated by the Berner Kantonalbank and the exchange operated by Swiss private bank Lienhardt & Partner.

10. Real estate crowdfunding

Another way to invest in Swiss real estate is to buy a property together with other investors. In this arrangement, you become an actual co-owner of a physical property itself. You share ownership with other co-owners, and divide up dividends (rents collected, less expenses) and capital gains (if the property is sold at a profit) between you.

It is perfectly possible to invest this way on your own, but the administrative burden is high. Because of this, there a number of real estate crowdfunding services in Switzerland that offer property co-ownership platforms for investors. You can find useful information in the moneyland.ch guide to real estate crowdfunding in Switzerland.

More on this topic:
How to Invest Money in Switzerland
Investing in the SMI: What You Should Know
How To Invest In the SPI