Votes: A sigh of relief in the real estate industry
Real estate stakeholders welcomed in particular the rejection of the population cap and the Zurich Housing Protection Initiative. Important referendums were also held in Lucerne and Zug.
From the perspective of real estate investors in this country, Referendum Sunday on June 14 was an important day. Two landmark results were received very positively: First, the so-called Sustainability Initiative, which sought to limit Switzerland’s resident population to 10 million people, was rejected. From the perspective of the Swiss Finance & Property Group, its passage «would have sent negative signals to international companies and thereby weakened Switzerland as a business location and the real estate sector.» After all, international companies are major drivers of demand for office space; its passage would have diminished the country’s attractiveness as a business location.
The Zurich Chamber of Commerce commented on the result in a similar vein: In a press release, the ZHK wrote that voters had «sent a clear signal in favor of an open, interconnected, and forward-looking business location.» The decision strengthens the conditions that will allow Switzerland «to continue counting on a skilled workforce, maintain its innovative strength, and secure its prosperity in the future, and represents a clear commitment to the bilateral approach.» Nevertheless, the problems related to population growth, housing, and infrastructure remain unresolved. «It is now all the more important to tackle the existing challenges in a targeted manner while preserving Switzerland’s economic strengths.»
Votes in Zurich, Zug, and Lucerne
On the other hand, Zurich’s residents rejected the housing protection initiative by a relatively clear margin. Following the example of Geneva and Basel, this initiative sought to make renovations subject to permits and then cap rent. Investments in the building stock would have been penalized, which would inevitably have led to fewer investments in renovation. «The short-term effect of such rules can be seen in Basel, where construction investment plummeted by 80% after their introduction,» comments the SFP. «Geneva provides a case study of the long-term effects, where high rents and a tight housing market persist despite strict regulation.»
Two additional votes over the weekend demonstrated that the real estate market is gaining momentum. For example, voters in the city of Lucerne granted the city a right of first refusal on real estate sales. The residents of Zug approved the Zoning Plan for Metalli Approved. «In addition to the two referendums in Lucerne and Zug, the Swiss public voted »no« twice on caps—both on population growth and on rent prices,» according to the SFP. From the company’s perspective, the results are particularly positive for the construction industry and tradespeople, who would have suffered significantly had the measures been approved. “The outcome is also important for investors: The results provide clarity regarding the regulatory framework, which market participants are likely to view positively.”
«Risk Event» Canceled
Real estate analyst Zoltan Szelyes had previously classified the two referendums as a «potential risk event.» He observed that »many investors had avoided the canton of Zurich as an investment location in recent months.« Szelyes now expects the situation to return to normal. Regarding the sustainability initiative, he writes: »The key question now is at what level net immigration will stabilize in the coming years.” Since the conclusion of the Agreement on the Free Movement of Persons, the average had been 80,000 people per year. The 10-Million Initiative would have led to a reduction to 37,000 people and meant a drop in demand for 18,000 to 20,000 apartments. However, Szelyes does not believe that the previous average figures will be reached again even after the initiative was rejected.
- We had discussed the votes in more detail here reports.
