How to generate a 5% yield from investing in Swiss real estate?
In the current global economic environment, investors across the globe are looking for an opportunity to generate a stable yield without taking on huge amounts of risk. With inflation across Europe at ultra-low levels, a yield of 4-5% looks particularly desirable.
For investors considering property in Switzerland, some of the best opportunities offering such a level of yield can be found in the Swiss-Italian canton of Ticino, where a yield of 4-5% on commercial real estate is commonplace.
Ticino is the southernmost canton of Switzerland, which lies on the border with Italy and counts Italian as its main language. It is particularly popular as a holiday destination, but boasts a strong business culture, particularly in its largest city Lugano.
One of the key reasons for investing in commercial property in Ticino is that the canton boasts opportunities that are not to be found in any other region in Switzerland. These properties often offer higher yields than commercial propositions in the German-speaking part of the country.
For example, according to the PwC Real Estate Investor Survey from October 2019, the average yields on office spaces in Southern Switzerland are 4.6%, compared to 4% in North-western Switzerland and 4.2% in Central Switzerland. PwC also predicts that in the next five years, yields in Lugano are expected to rise, while in cities like Zurich, Geneva and Basel growth will stagnate.
Many of these commercial properties are built and sold by construction companies, which usually build these properties based on specifications from other companies and then sell them on. These often offer stable yields
Another attractive investment opportunity is buy-and-lease-back property. These are sold by companies which need to create some cashflow but intend to rent the property back for the long-term following the sale. This adds another level of certainty for investors worried about the impact of the coronavirus on the rental market.
If you have never considered Italian Switzerland as an investment opportunity before, it may be worth your while to take a closer look at potential investment projects in Ticino.
Lawyer in private practice
4yWell maybe. I am Swiss via my mother, Argovienne. I recently sold a Vaud property that gained about your 5% rate. But my Valais home is scarcely worth what I paid 10 years ago and in this coronavirus era would probably not yield much more than the mortgage after expenses. Let’s get real: Switzerland is not a country of homeowners. My uncle, 12th child of a Grisons shepherd, succeeded only in the USA, ultimately as executive room service executive at the Plaza, latterly Trump’s playground. His daughter was a civil servant, his granddaughter a US Air Force Officer. My relatives who stayed in Switzerland had no children/grandchildren. I have 4 children, 9 grandchildren, all Swiss, all bilingual. Will they buy Swiss property and not the London or San Francisco property they made big bucks with? Answer honestly. Glad to discuss. But before you do, google <FATCA globalex>
Building the Future of [/insert]
4yGreat insights, Tatiana!