In a market where assets are expensive, should you change strategy?
Buy-to-let investment remains a sound strategy: structural residential demand, relatively predictable income and a housing supply that is still insufficient. But in the most sought-after regions of French-speaking Switzerland, the purchase price compresses yields. Buying today can therefore mean accepting a limited initial yield and betting on the stability of the asset, rent growth and its long-term appreciation.
Another approach is to look for development or conversion projects. The aim is no longer simply to buy an existing yield, but to create value: an under-used plot, densification, conversion, change of use or renovation can create value that does not appear in the current yield.
This strategy, however, involves more risks: permits, construction, costs, financing, timeframes and marketing. Development is therefore not automatically more profitable; above all, it rewards the ability to control and optimise the project.
The real opportunity may then lie between the two strategies: a building that already generates income but still has potential for value creation. Adding a storey, additional homes, conversion of space, energy renovation, space optimisation or densification can thus turn a conventional income-producing building into a genuine investment project.
In French-speaking Switzerland, this approach is particularly relevant in markets where entry prices are high, such as the Arc lémanique (Lake Geneva region), but it can also apply to more accessible markets in Valais, Fribourg or Neuchâtel. The challenge is no longer simply to look for the best yield, but for the best balance between entry price, risk and value-creation potential.
Immersia’s view
Before buying, three questions should guide the investor:
What yield does the asset generate today?
What yield could it generate tomorrow?
What additional value can I create?
In a market where good buildings are expensive, performance may come not from buying the best asset, but from identifying an asset whose potential is still under-exploited.
Buying to let remains relevant. Buying to convert and create value can, in some cases, be even more attractive. The key is to identify the strategy that offers the best yield / risk / potential combination.
We will give you our opinion on your project, with no obligation: contact us at eric@immersia.ch