Zurich housing protection initiative increases value at risk for real estate portfolios
The planned cantonal housing protection initiative in Zurich could substantially change the business model of institutional investors. An early risk analysis creates clarity and room for maneuver.
In February 2024, the Zurich housing protection initiative was submitted with over 20,000 signatures. Initiated by the Tenants’ Association, SP, Greens and AL, it is intended to give municipalities more leeway to intervene in the housing market in future. The vote is planned for 2026. However, property owners should already be analyzing the potential effects on their portfolios.
Flexible framework with unclear consequences
The cantonal bill is limited to framework definitions. Municipalities are given the right to define temporary rent caps in the event of housing shortages, conversions, demolitions or conversions into property. Whether and how these are implemented is at the discretion of the municipalities. Any municipal decree would be subject to a referendum. However, based on examples such as Basel-Stadt or Geneva, many municipalities are likely to adopt similar instruments.
Risks to value retention and investment momentum
The potential “value at risk” for real estate portfolios lies in restrictions on rent adjustments, uncertainty in project development and a declining willingness to invest. Experience from other cantons shows that rent caps dampen new construction and renovation activities, which can lead to supply bottlenecks and the erosion of residential quality in the medium term. Existing properties in tight markets are particularly affected.
Strategies required to minimize risk
For institutional investors, a differentiated scenario analysis is recommended, which takes into account possible reductions in value as well as tax and regulatory consequences. Strategic diversification, active asset management and timely communication with local authorities will be crucial in order to secure room for maneuver.