The different property valuation methods in Switzerland: what are your options for assessing your property ?

Valuing a property is a critical step for any owner or investor, whether for a sale, purchase, or financial planning. In Switzerland, several methods coexist, each with its own specificities and tailored to different needs. Here’s an overview of the main approaches used to estimate property value.

1. Hedonic evaluation: a fast and accessible method

Hedonic evaluation relies on a comparative analysis using statistical data from thousands of real property transactions.

• Advantages: quick and cost-effective, this method is particularly suitable for standard properties such as condominiums or single-family homes.
• Limitations: less appropriate for unique or luxury properties, as it doesn’t account for certain qualitative factors.

2. Real or intrinsic value: estimation based on replacement costs

This method estimates a property’s value by calculating the cost required to reproduce it identically, deducting depreciation (wear and age). It also includes the value of the land and external improvements.

• Advantages: independent of supply and demand fluctuations, this method is relevant for both standard and high-end properties.
• Limitations: it doesn’t incorporate local real estate market trends or economic dynamics.

3. Yield value: ideal for rental properties

Calculated based on net annual rental income (after deducting expenses such as heating or maintenance), this method applies a specific capitalization rate to each property.

• Advantages: suitable for income-generating properties, such as rental or commercial buildings.
• Limitations: heavily reliant on the capitalization rate, which is influenced by factors like location, operating costs, and more.

4. Discounted Cash Flow (DCF): a forward-looking approach

The DCF method evaluates a property based on projected cash flows over 6 to 10 years, considering rental income and resale value.

• Advantages: favoured by investors, it provides a detailed and precise analysis of a property’s future performance, particularly for income properties or shopping centres.
• Limitations: more complex to implement and requires reliable financial projections.

5. Market value: reflecting current market conditions

Market value represents the price a property could fetch at a given time, based on supply and demand.

• Advantages: a key method for transactions, as it reflects the realities of the real estate market.
• Limitations: highly dependent on economic conditions and specific market dynamics.

Factors influencing property valuation

Regardless of the method used, several elements affect a property’s value:

1. Type of Property: single-family home, apartment, rental building, luxury property, etc.
2. Location: accessibility, sunlight, nearby infrastructure, and potential nuisances.
3. Condition: year of construction, overall state, and equipment.
4. Size and Volume: living space, volume, and energy efficiency.
5. External Features: garden, swimming pool, garage, etc.
6. Local Regulations: legal and fiscal constraints specific to the region.

A tailored approach for every property

Real estate valuation methods in Switzerland are complementary. Their relevance depends on the property’s characteristics, its intended use, and the purpose of the valuation (sale, investment, estate planning).