As can be seen from the chart below, Swiss real estate has performed remarkably over the past 25 years.
Housing Index in Switzerland from 2003 to 2023
Source: Trading Economics
According to the Swiss National Bank (SNB), Swiss real estate wealth has more than doubled between 2000 and 2020, raising from CHF 942 billion to CHF 2.212 trillion. This significant growth can be attributed to several factors, including limited housing supply, increased institutional investment in real estate, an extended period of negative interest rates, and a rise in mortgage loans.
Moreover, based on the latest EY survey, a striking 92% of respondents still consider Switzerland to be an attractive or very attractive location for real estate investments in 2023.
As illustrated in the table below*, our research here at Le Bijou evidences that the Swiss real estate market has been outperforming the Swiss stock market for the last 20 years. In fact, it has also outperformed US real estate by a factor of 1.25. On the other hand, the S&P 500 did outperform Swiss real estate, but it was way more volatile – more on that later.
Comparison of US and Swiss stock vs. real estate market returns and volatility*
* The calculations were made using SXI Real Estate® Funds Broad TR (SWIIT) and Dow Jones U.S. Real Estate Index (DJUSRE) for the Swiss and US real estate markets, respectively. The Swiss Stock Market Index (SSMI) and S&P 500 (SPY) were used to measure the performance of both the Swiss and US stock markets.
Another way of comparing the performance of these indices is to consider a hypothetical investment of CHF 1'000 in each index 20 years ago and examine the outcomes. According to our calculations, if you had invested this amount in January 2003 in each of these indices and reinvested the returns using the power of compound interest, the results would have varied.
A CHF 1'000 investment in the S&P 500 would have generated close to CHF 5’000, whereas Swiss real estate would have returned CHF 2'800, which is 1.7 times less. Swiss stocks would have generated CHF 2’600, and US real estate would have yielded CHF 2’200, which is respectively 1.9 and 2.2 times less.
The returns of a hypothetical investment of CHF 1'000 in each of 4 indices
from Jan. 1, 2003 to Jan. 1, 2023**
** The calculations were made using SXI Real Estate® Funds Broad TR (SWIIT) and Dow Jones U.S. Real Estate Index (DJUSRE) for the Swiss and US real estate markets, respectively. The Swiss Stock Market Index (SSMI) and S&P 500 (SPY) were used to measure the performance of both the Swiss and US stock markets.