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Market Research- Geneva

Switzerland : Geneva office market - March 2020

Although market dynamics are weak, positive net absorption is keeping the vacancy rate stable

Vacancy stability

The absolute volume of vacant office space increased slightly between 2018 and 2019. According to OCSTAT, vacant stock now stands at 234,500 sqm, up 3.5% over the year and a much smaller rise than for the previous year (+44%). The average vacancy duration has also risen and now stands at 18-19 months compared to less than 10 months in 2013. The vacancy rate itself remains unchanged according to the canton statistics, at around 5%.

Vacancy stability is mostly the result of relatively good annual net absorption figure coming in at around 35,000 sqm. As such, the market is identical to that of the previous year, with a large stock of vacant office units and companies seeking to reduce their rented space, which of-ten weighs heavily on their balance sheets. Newer companies with a major need to expand rented space remain quite rare, as is the arrival of international companies to set-up operations. 

Similar to other European markets, less traditional leasing formats such as co-working also seem to be gaining currency, prompting a change in rental habits. Co-working’s evolution makes market projection more difficult as do the consequences of the latest votes on the corporate tax reform accepted in May 2019.


Investment volume remains solid with stabilization witnessed in yields


As expected last year, investment re-mained relatively high in the Gene-va region, with CHF 1.1bn invested in commercial real estate in 2018 and an almost identical trend for 2019. The 5 biggest real estate deals in 2018 ac-counted for over CHF680m, i.e. about 60% of the total for the year.
Given the historically low mortgage rates and the fact that institutional as well as private property owners are charged for their bank deposits, the appeal of property remains strong. The amount of investment is a good illustration of this situation. Gross prime yields have stabilised, but they were already very low.
Whereas yields on non-prime buildings, many of which are still new, in the in-ner suburbs are still falling slightly. The AFC rate shows this trend, with a slight upward correction in yields for zones 1 and 2 (hyper centre) and a decrease for the other zones (suburbs).


Geneva EOM March 2020
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