Returns come from implementation, not from the market

Falling interest rates are traditionally seen as a positive stimulus. Following the SNB’s interest rate cuts in 2025—most recently in June to 0%—the interest rate environment has eased. Inflation remains moderate (around 0.3% in March 2026), and asking rents continue to rise, albeit at a slower pace (around 0.7% in Q1 2026, and about 2.3% year-over-year).

In the long term, demographics will become increasingly important: falling birth rates and smaller household sizes mean that demand for housing is increasingly driven by structural factors rather than natural population growth. However, lower financing costs alone do not automatically lead to higher returns. Nor is a structurally stable demand environment sufficient on its own. The asset class remains attractive, but execution is key.

On the cost side, a return to normalcy is evident. After rising by about 16% since 2020, construction costs have recently stabilized, with annual inflation currently standing at around 0.2%. At the same time, recent inflation data show that energy-driven price pressures are on the rise again. Selective cost increases are therefore expected in the medium term.

At the same time, the sources of value creation are changing. Market-driven factors are becoming less important, while operational factors are taking center stage. These include selective access to investment, value creation throughout the project phases, and structured management with clear governance. Risks are identified early on, categorized, and actively managed.

What makes the difference now 

• Disciplined investment decisions in a tight market
• Value creation throughout the project phases, from planning to implementation
• Clear decision-making structures and transparent management of quality, timing, and risks
• Efficient processes and consistent implementation despite high costs

Practical Implementation At Aeschenplatz in Basel, an office building is being transformed into a mixed-use urban district. By 2030, approximately 200 apartments and additional spaces will be created. On Hohlstrasse in Zurich, a building permit was obtained within four months. This was made possible by early coordination with authorities and a clear project concept. Both examples demonstrate that additional return potential does not arise from the market itself, but rather from location selection, concept, and consistent implementation.

Outlook:
The overall conditions remain stable but lack dynamism. The importance of selection, structure, and implementation will continue to grow. The difference lies less in the environment itself and more in the quality of implementation.