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The global environment in 2025 is characterized by heightened uncertainty. Geopolitical tensions, notably the Russia-Ukraine war, the ongoing conflict in Gaza, and the return of Donald Trump as US President in November 2024, have all contributed to increased economic and trade policy uncertainty. The global economic policy uncertainty index reached a high of just under 600 points after ‘Liberation Day’ in April 2025, and although there has been a slight easing, uncertainty remains elevated, especially regarding US tariffs and their impact on the global economy.

Switzerland recorded robust GDP growth of 0.8% QoQ in the first quarter of 2025, driven by preponed exports ahead of Liberation Day, but this momentum slowed in the second quarter, as the quarterly growth figure dropped to 0.1%.

The US tariff ‘hammer’ – with tariffs at 39% affecting around 60% of Swiss exports to the US, currently primarily impacts the watch, machinery, and precision instrument sectors, leading to regional disparities in the economic effects. Provided trade disputes do not worsen, the overall impact on the Swiss economy is anticipated to be limited, as the economy is still expected to expand by 1.3% in 2025.

Swiss real estate remains attractive as a ‘safe haven’ amid uncertainty, seeing a renewed increase in demand. While capital market transactions surpassed CHF 4 billion in 2024, further growth is anticipated for 2025.

The fundamentals of the housing market are stable: even if tariffs fully materialize, the impact should remain contained as long as the pharmaceutical sector is spared.

Immigration, projected at around 70,000 in 2025, continues to drive demand for residential space though the numbers are calming slightly. Planning activity is up, but remains below the long-term average, with yearly building permits nearing 40,000 in 2Q25. Asking rents continue to rise with 1.3% year on year in 2Q25, with particularly strong rises in Zurich and Central Switzerland. The commercial segment faces challenges as economic momentum slows and high tariffs impact logistics and industry directly and other commercial segments indirectly through dampened business sentiment.

Office space demand has softened with lower employment growth, but the vacancy rate still has fallen to 5.4% in 2Q25. Prime office rents rose by 3.4% year on year and also average rents are showing positive development. Retail space remains mixed, with ongoing structural challenges and volatile consumer sentiment. Swiss hotels continue to post record figures: 20.4 million overnight stays were recorded between January and June 2025, with a new annual record expected.

In summary, real estate values are rising, led by residential properties where total returns are forecast at 5.6% for 2025. Performance is expected to be somewhat more subdued in 2026 amid an expected upward movement in interest rates and regulatory pressures, but remains positive.