Demography, the study of the social characteristics and statistical makeup of a population, serves as a fundamental lens to understand the trajectory of societies – shedding a light on spending habits, wealth distribution, concerns, and aspirations. Given its profound implications for societal evolution, it comes as no surprise that demographic factors hold substantial importance when it comes to forecasting trends in real estate development and investment.

This raises some crucial questions: How significant is demography in shaping future real estate landscapes? More specifically, what implications does it hold for Swiss real estate investment?

Case Study – India vs. Japan – What Is the Ideal Demographics for Real Estate Investment?

Logically, the ideal country for real estate investment has a preponderance of relatively young people (under 40 years old), who are key contributors to productivity gains in the labor force. This demographic segment represents one of the most economically active cohorts of any population, often comprising lots of young married couples aspiring to buy a home.

This demographic profile is a significant factor driving the current optimism among investment analysts regarding the economic outlook for India, which is also backed by the country’s ‘population pyramid’ as of the end of 2023.

India’s population pyramid for 2023
Source: Central Intelligence Agency (CIA)

Demographically speaking, India is a ‘young’ country, boasting a massive cohort of men and women aged between 20 and 40. The median age is relatively low, at 29.8 years, while the total population is growing at 0.72% annually.

This demographic landscape, coupled with various other factors, is why authoritative commentators expect India to grow by 6% annually over the next five years. This is a faster rate than most other large economies, not to mention that India is already one of the world’s 5 biggest.

The rationale behind such projections is simple and logical. First off, a large proportion of younger people means that there are plenty of working-age men and women available to grow economic output. Secondly, this age group exhibits the highest inclination toward spending on the products which will stem from such growth.

India could become the world’s 3rd largest economy in the next 5 years.
World Economic Forum article

Of course, all of this presupposes, that the other factors which are essential to growth are already in place. In particular, there should be business-friendly economic policies, as well as abundant savings that will fund investment in production, education, infrastructure, and so forth.

In India, most of these factors are indeed in place. Consequently, the country has experienced a real estate boom in recent years, with a compound annual growth of no less than 9.2%. With this in mind, it’s instructive to compare India’s population pyramid with that of Japan’s, both calculated at the end of 2023.

Japan's population pyramid for 2023
Source: Central Intelligence Agency (CIA)

The dominant age groups are much older than those for India, with prominent bulges in the pyramid for the 50-54 and 70-plus segments. With a median age of almost 20 years older, at 49.1, and a population declining at a rate of -0.54% annually, the country faces demographic challenges. This explains why despite support from growing domestic consumption and exports, the Japanese economy is only expected to grow by 1% in 2024, with an even lower gain of 0.8% in 2025.

As a result, the Japanese residential real estate market has manifested mixed performance at best. After several years of relative stagnation, a sharp recovery finally began in 2020. Mainly, that reflected renewed government efforts to stimulate the economy after the Russian invasion of Ukraine in February 2022. However, the recovery began to fade away in the final quarter of 2023 and demand is now falling.

The point of this detailed exposition is this: Without a growing economy, it's very difficult for real estate valuations to increase. In order to have a strong housing market, buyers must be confident that they will be wealthier in the future or, at the very least, not worse off.

Where Does Switzerland Lie on This Demographic Spectrum – Closer to the Indian or Japanese End?

Switzerland’s population pyramid for 2023
Source: Central Intelligence Agency (CIA)

At first glance, the pyramid looks dispiriting. The 55-59 age group is large, as are the middle-aged groups in general. Luckily, the 30-34 and 35-39 segments are also substantial. Nevertheless, with a median age of 44.2 years, Switzerland skews toward an older population profile.

On the other hand, thanks to our progressive immigration policies, the Swiss population is steadily growing at an even faster pace than India’s. In fact, this growth has become so pronounced that the Swiss people were forced to vote on limiting measures to stop the population from hitting 10 million before 2050. Estimated at +0.75% for 2024, this expansion serves as a foundational pillar for Switzerland’s economic outlook over the next few years.

Switzerland’s population and net immigration for the past 25 years
Source: Bloomberg

It’s a mixed picture, therefore, but moderately encouraging overall for both the economy and, therefore, for real estate valuations. While we may not mirror India's situation, our nation appears to be at little risk of suffering what’s become known as “Japanification.”

Switzerland's GDP outlook for 2024 and 2025
Source: The Federal Council

More importantly, all of the data cited so far pertains to the nationwide circumstances of Switzerland’s demography and economy. That said, significant variations exist across the country's 26 cantons, particularly within the four major urban areas of Zurich, Geneva, Bern, and Lausanne, which serve as focal points for real estate investors.

Zurich Demographics Analysis: How Attractive Is It?

At Le Bijou, our special area of interest is Zurich, so let’s see what we can find out about this specific city’s demographic profile. Below is the local population pyramid, based on estimated data as of the end of 2022.

Zurich’s population pyramid for 2022

The largest segment, by far, is the significant 30-39 age group, with an encouragingly youthful median age of 38.5 years as of 2022. This figure is far below the national median of 44.2 in 2023, as previously highlighted. Just as positively, the city’s population has been growing at a fast pace in recent years, rising +0.94% annually from 2020 to 2023, and thus comfortably outpacing the estimated 2024 Swiss national growth of 0.75%, also mentioned earlier. It’s even faster than India’s rate of population growth.

As is the case with certain other major European urban areas, residential real estate prices in Zurich fell a little in the first quarter of 2023. Mainly, that was the result of rising mortgage rates and general economic uncertainty following the Russian invasion of Ukraine in February 2022. All of this being said, since last April, valuations have been recovering across Europe, with Zurich taking a strong lead, as shown in the chart below.

Year-on-year changes in residential prices according to Bloomberg City Tracker
Source: Bloomberg

An important factor in this recovery has been Zurich's exceptionally strong financial condition. In fact, Fitch, one of the three world leaders in credit rating, confirmed an AAA rating of Zurich last November, while S&P, another of the three, raised its long-term assessment from AA+ to AAA, the highest possible rating, the month prior. Both agencies cited the city’s long-term stability and strong financials as the primary reasons for their top-level evaluations.

While, therefore, there can be little doubt that demographic factors have a strong bearing on the attractiveness of real estate investment in Switzerland and, especially, in Zurich, it’s equally clear that other conditions also play an important role.

Some of these are intangible and qualitative but crucial, nonetheless. For example, most people – who probably don’t know Switzerland very well – believe that Geneva and Lausanne are the only scenic jewels of our nation. Although these cities are indeed exceptional, being set among lakes and mountains, with charming medieval districts to walk through – Zurich is also a gem in itself. It is situated at the head of a lake and offers fine views of the surrounding hills and mountains. It is an old city, too, dating back some 2'000 years and replete with beautiful historic buildings.

Historic city center of Zurich with river Limmat
Source: Adobe Stock

More prosaically, but also more significantly from an investor’s point of view, Zurich is the financial capital of Switzerland and, arguably, of the entire mainland of Europe as well. This means that Zurich has all of the amenities and expertise to facilitate the process of real estate investment: top law firms, world-class auditors and accountants, knowledgeable realtors, and modern domestic and international transit systems.

What’s more, Zurich is a city with varied business interests. While financial services, especially banking, provide about a third of the city’s wealth and a quarter of its jobs, it also serves as a pivotal European hub for biotechnology and life sciences. Additionally, the aerospace and automotive supplies industries are prominent.


Consequently, pivoting back to the original topic: yes, demographic factors play a pivotal role in shaping the landscape of Swiss real estate investing, particularly evident in the dynamic city of Zurich.

Zurich has a diverse population, with one-third of its 1.4 million residents being of non-Swiss origin, coming mainly from Germany, Italy, and Portugal. This cultural mosaic makes the city ethnically vibrant and outward-looking, increasing its attractiveness for real estate investors.

As demographic trends continue to evolve, it’s essential for investors to remain attuned to shifting patterns and preferences. By leveraging demographic insights, investors can make informed decisions, capitalize on emerging opportunities, and successfully navigate the challenges of the dynamic Swiss real estate landscape.

Start InvestingInvest  Book CallCall  Join NowApply