Real Estate Price Indices

The offered rent indices for rental properties are based on online advertisements for rental apartments. In contrast to actual transaction prices, these are asking prices from the landlord’s perspective.

To reliably reflect the actual development of offers, the database must be continuously checked and cleansed for duplicate advertisements. Further, property and location characteristics are controlled for.

A distinction must be made between offered rents and existing and old rental contracts. Existing rents are taken from current rental contracts of various terms, i.e. from newly concluded contracts to long standing relationships, whose pricing is subject to Swiss rental laws. Sitting tenant rents are a subset of existing rents, in which the paid rents of ongoing rental contracts without tenant change, i.e. of longer standing tenants, are evaluated. IAZI offers princes indices for a full range of perspectives on rental price changes.

The performance index (also known as total return) of investment properties is made up of the changes in the price index and the net cash flow yield according to the IAZI Swiss Property Benchmark®. The performance is the sum of the net cash flow and the change in value (capital gain/loss) of a property at the end of the subject year, divided by the value of the property at the beginning of the year.

The net cash flow is calculated by subtracting all property expenses including facility management, administration, utilities, insurances, taxes, maintenance and investments from rental income. Depreciation and capex provisions are not taken into account. The net cash flow yield is then calculated by dividing net cash flow by the market value of the property at the beginning of the subject year. The net cash flow yield is based on the IAZI Swiss Property Benchmark®, which covers investment properties (direct investments) with a market value of over CHF 280 billion (approximately 15% office and retail, 20% mixed use, 65% residential).