Switzerland looks set to be the lowest yielding country in the IPD property universe for 2005 as returns advanced 5.2%, little more than the preceding year, according to IPD figures released yesterday. Putting this into context, the UK earned investors 19.1% last year while Finland, the worst performer to have reported before today, earned 7.4%.
Commenting on the results, Andreas Arend, a senior analyst at IPD, said: There are hardly any international property buyers entering the Swiss market. This means it has has always been and seems set to remain very stable.
The total return came mostly from income return with next-to-no capital growth. Rental value growth in 2005 stabilized slightly from the year before but with economic expansion lack-lustre at little more than 1%, the impetus was minimal. The OECD said the Swiss economy was in a low-growth trap.
In sector terms, retail was again the best performer, returning 6% down from 6.4% in 2004. Strong rental value growth was largely responsible for this. Residential property returns increased to 5.3% up from 5% in 2004 while offices slipped, with total returns shrinking to 4.7% in 2005 from 4.8% the preceding year. Residential accounts for almost 50% of the index and thus has a major impact on the all property total returns.
Equities were the countrys best performing asset class in 2005, earning investors some 35.8% last year. Commercial property only just outperformed bonds which yielded 3.2% over the year.