SWITZERLAND - Inflation fears have compelled institutional investors in Switzerland to renew their interest in real estate, according to a survey by Ernst & Young.
The consultancy said 85% of respondents agreed to the statement that 'mid-term inflation fears are driving investors onto the real estate market'.
Further, the majority expects transaction volumes to increase this year, with the return of international investors in the wake of the crisis also fuelling demand.
Respondents to the survey - which included insurance companies, banks, pension funds and other institutional investors - said Switzerland fared favourably compared with other
European countries, especially regarding residential property, which will be in the focus of 97% of investors this year, Ernst & Young said.
Prices are expected to rise for residential property in and around urban areas, but remain at the same level in rural areas.
Other real estate sectors will be less interesting for investors this year, with hotels and logistics being last on the shopping list.
Major sellers will be opportunity and private equity funds, the investors concurred.
Another focus this year will be ecological and sustainable buildings, with 87% of surveyed investors claiming to look out for such properties.
More than 60% of respondents said the financial crisis was over and 56% said there would be opportunities for making new purchases, but investors did not expect a lot of distressed sales or sales of whole portfolios.
The issue of possible bubbles forming in large Swiss conurbations such as Zurich or around Lake Geneva was not addressed by the survey.
However, Martin Scholl, head of the Zürcher Kantonalbank (ZKB), was recently quoted as saying bubbles might occur in those two areas given the low interest on loans mixed with high demand - a view that UBS shares.