Residential property remains coveted, even in the crisis

The special position of the Zug real estate market remains unaffected, even in the Corona crisis. Residential properties remain sought after, while business premises are exposed to greater challenges.

The favourable financing environment, a diversified sectoral structure with attractive jobs, excellent transport connections and a decline in new construction activity, even before the crisis: according to a press release from Zug Cantonal Bank, these factors strongly support the residential market in the canton of Zug, even in these challenging times. If working from home become established as a result of the crisis, the flexible use and living quality of real estate will become even more important. Business premises will not be able to avoid the effects of the crisis. on the other hand, and a new demand for the storage and logistics areas is also emerging.

Housing market barely affected by Corona crisis
The housing market in Zug is likely to be only marginally affected by the impact of the Corona crisis. Any short-term decline in demand will be due, among other things, to the difficult in carrying out property viewing and sales negotiations during the pandemic. In the longer term, however, the outlook remains positive. Peter Bucher, Head of Real Estate Investors at Zug Cantonal Bank, was quoted as follows in the communication:

"The housing market in the canton of Zug is structurally healthy. The strong demand is offset by a very limited supply. And if some of the demand overhang were to disappear as a result of the crisis, sufficient buyers would still be retained."

This special position of the Zug real estate market will support the transaction prices.

The headquarters of Zug Cantonal Bank in the city of Zug.

Rental housing market likely to defy crisis
According to the communication, the rental housing market in the canton of Zug will prove to be resilient to crises, as it is in a robust state. The decline in new construction activity, which was already declining before the crisis and is 5.8% below the previous year's figure, has had a stabilising effect. Another major advantage of the canton of Zug is its approximately 40,000 commuters, who represent a high potential as possible tenants. The marketing of high-priced and luxurious properties will become more demanding, as lower total wages are possible in higher-income classes. Thanks to the high-quality supply, the Zug office space market should be able to cushion a limited decline in demand in the medium term. The retail space markets, on the other hand, are facing greater challenges, as the brick-and-mortar retail business is particularly affected by the crisis.

Housing quality will gain in importance
As a result of the fight against the pandemic, people have mainly spent weeks at home. The perception of the quality of housing is likely to become more important after the crisis – a higher quality of stay and opportunities for retreat are coming to the fore. The flexible use of individual rooms – for example, working from home – could also be of greater importance. In the business premises sector, the trend towards online shopping is becoming even more apparent. If this change in purchasing behaviour continues after the crisis, more storage and logistics space will be needed in the future.