Investment Properties on the Rise: Prices for Apartment Buildings Increase in Q2 2026

A Look at the Numbers

The price index compiled by IAZI and published at the beginning of July separates investment properties from owner-occupied residential property. For apartment buildings and mixed-use properties, growth in the second quarter reached 1.3 percent compared to the first quarter and 4.3 percent compared to the same quarter last year. Condominiums also rose by 1.3 percent, while single-family homes performed significantly weaker, with an increase of just 0.5 percent over the previous quarter. Across the residential segment as a whole, the values add up to growth of 0.8 percent over the previous quarter and 3.5 percent year-on-year.

This continues a pattern that has emerged since the end of 2025: investment properties are increasing more strongly than owner-occupied residential property. However, the lead has become noticeably larger this year, as institutional investors and high-net-worth private investors search for real returns that are currently hard to find in the capital market.

Why Prices for Apartment Buildings Are Rising

IAZI attributes the upward trend to three overlapping factors. First, the Swiss National Bank is sticking to its key interest rate of zero percent, prolonging the investment emergency for institutional investors. Second, geopolitical and macroeconomic risks are prompting a shift to tangible assets, with real estate considered particularly robust due to its regular cash flows. Third, the shortage of supply in the rental housing market remains tangible, as new projects are approved and realized more slowly than demand is growing.

This combination means that investors are willing to accept higher prices for an apartment building, even though gross yields have dropped below three percent in many regions. The market is currently prioritizing capital preservation and stable returns over pure yield maximization.

How Banks Finance Investment Properties

Anyone financing an investment property is confronted with different rules than when buying their own home. The most important difference concerns the loan-to-value ratio. While owner-occupied residential property in Switzerland can be financed with up to 80 percent of the market value, banks usually accept a maximum of 65 to 75 percent for investment properties. The higher equity requirement reflects the greater rental and vacancy risk as well as the lower value stability during downturns. The second mortgage must be repaid linearly to 65% within 10 years.

The affordability calculation also follows a different logic. It is not the buyer's personal income that is decisive, but the property's calculated net rental income. This must be sufficient to cover the costs of the mortgage at an interest rate of 5%, amortization, as well as maintenance and ancillary costs. Only then is an investment property considered self-sustaining from the bank's perspective.

SARON or Fixed-Rate Mortgage for Investment Properties

The choice between a SARON mortgage and a fixed-rate mortgage for investment properties follows its own logic. Professional investors in the current interest rate phase often prefer SARON mortgages. They offer the flexibility needed to make adjustments to the portfolio and are currently very attractive in terms of interest rates. However, long-term investors are also currently opting for long-term fixed-rate mortgages at the current levels. They provide predictability and stability. Alternatively, a split is also possible—a tranche of the mortgage sum divided into SARON and fixed-rate mortgage.

Smaller private investors who hold a single rented property in their portfolio are generally better served with a higher share of fixed-rate mortgages. The reason lies in the lower diversification and the greater impact of a sudden increase in interest rates on the profitability of a single property. In both cases, early coordination with the lender is important, as the conditions for investment properties depend much more on the property value, location and tenant profile than for owner-occupied homes.

Regional Differences and Outlook

The IAZI figures are national averages and conceal significant regional differences. According to market observers, price increases for apartment buildings in the urban core regions of Zurich, Geneva, Lausanne, and Basel are above the national average, while rural areas and peripheral locations are growing much more weakly or stagnating. The lead of the cities is likely to continue as long as immigration continues and construction activity remains below demand.

For the second half of 2026, the industry expects a slight slowdown in price growth, as the supply side is slowly recovering and investors are increasingly paying attention to valuation metrics. However, a fundamental trend reversal is not in sight. As long as interest rates remain low and alternative asset classes deliver limited returns, demand for Swiss investment properties is likely to remain robust.

Conclusion

The IAZI price index shows that investment properties are the price drivers in the Swiss real estate market in the second quarter of 2026. For investors, the price increase means a further compression of returns, and for lenders, good security on the property side. The financing structure still clearly differs from owner-occupied housing: higher equity, a different affordability logic and differentiated interest rate strategies characterize the market. Whether the upward trend continues in the third quarter depends mainly on the SNB's monetary policy communication and on whether the supply shortage persists.

Source: IAZI Real Estate Price Index Q2 2026