Investors' capital allocation into office and residential markets in ...

market. Sweden is also famous for high construction costs which influence the price of
the apartments. Zoning regulations are the hindrance to new construction (supply) in
Swedish real estate market.
4.2 Switzerland
Switzerland is situated in the Central Europe and borders with France, Austria, Italy,
Germany and Liechtenstein. Berne (population 129,000) is the capital of the country.
Country’s financial and commercial centre is Zurich (population 364,000) and the other
major cities are Basel (population 199,000), Geneva (population 180,000) and Lausanne
(population 124,000). Compared to other countries in Europe Switzerland has a strong
economy and it performed strongly during 2007 with GDP growth of 3.1 per cent. In
2008 the GDP growth is expected to be 1.9 per cent and 1.3 per cent in 2009. In Q2 2008
its real GDP was CHF 122,879 billion. The unemployment rate declined and is 2.3 per
cent, as of June 2008. During H1 2008, the inflation rate increased dramatically at 2.9 per
cent as of June 2008, compare to June 2007. On average the inflation rate is expected to
be 2.5 per cent in 2008. An exchange rate of the Swiss franc against the Euro is 1.61, as
of end of June 2008, which is considered to be weak (CBRE, Zurich and Geneva property
market view, Q2 2008, retrieved in October, 2008, see Table 4).
Table 4 Economic overview Sweden vs Switzerland
Sweden Switzerland
Population, million 9 7
GDP growth, % 2.4* 1.9*
Inflation rate,% 4.4** 2.9**
Unemployment rate,% 6.6* 2.3**
* forecasted in 2008
** in later part of H1 2008
(Sources: IMF, ISA,CBRE and Wuest & Partner )
In Q1 2008, house price index continued to grow slowly at 0.4 per cent, which is lower
than current inflation rate of 1.0 per cent. Swiss housing market reached a peak at the end
of 2002 when the price index was almost 5.5 per cent (Knight Frank report, May 2008,
see Table 4.1).
Table 4.1 Global House Price Index (annual % growth)
Country 2007 Q1 2008 Q1
Sweden - 0.3 9.1
Switzerland 2.5 0.4
(Source: Knight Frank, May 2008)
There are discussions going on for Switzerland to enter the EU, and even Swiss laws to
become compatible with EU legislation. In June 2006 Swiss Government report
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