Investing in Swiss Real Estate: Risks and Rewards

Discover unique opportunities in Switzerland's rental market. Learn to invest wisely with small sums for high returns amid rising costs.

Switzerland, known for its breathtaking landscapes and high standard of living, presents a unique landscape for property investment. With 58% of its population renting, the country boasts one of the lowest home ownership rates globally. This scarcity of available properties, coupled with high prices, creates a challenging environment for potential homeowners. However, for those looking to invest in Swiss real estate, there are avenues that allow for relatively small contributions while still offering the potential for significant returns, albeit with inherent risks.

The Crowdlending Revolution

One of the most innovative ways to invest in Swiss property is through crowdlending platforms. A notable example is Raizers, a property crowdlending platform that originated in Switzerland a decade ago. Raizers has expanded its operations to seven European countries, providing investors with an accessible entry point into the real estate market. With an initial investment of just CHF1,000 (approximately $1,182), investors can expect an average return of 10% over a 24-month period. This model democratizes property investment, allowing individuals to participate in the market without the need for substantial capital.

Crowdlending not only offers attractive returns but also diversifies investment portfolios. By pooling funds from multiple investors, platforms like Raizers can finance various real estate projects, spreading the risk across a broader base. However, potential investors should remain aware of the risks associated with crowdlending, including the possibility of project delays or defaults.

Co-Ownership Opportunities

In addition to crowdlending, another innovative approach to property investment in Switzerland is through co-ownership platforms. Foxstone, for instance, allows investors to contribute CHF25,000 to become co-owners of a building. This model has gained traction, as it provides investors with a tangible asset and the potential for steady returns. Buildings financed through Foxstone generate an average return of 6%. 

Since its inception six years ago, Foxstone has successfully raised over CHF250 million from approximately 22,000 investors, financing more than 60 properties. This co-ownership model not only democratizes access to real estate but also fosters a sense of community among investors, as they share in the ownership and management of the properties.

Market Dynamics and Tenant Concerns

While the prospect of earning yields of 6% or more is enticing, it has raised concerns among tenant advocacy groups, such as the Tenants’ Association. The association argues that the increasing presence of small and large landlords, crowdlending platforms, and large investment funds in the Swiss real estate market could lead to rising rents and reduced tenant protections. The market-driven logic that governs these investments often prioritizes returns over tenant welfare, prompting calls for regulatory measures to safeguard renters.