Event review: “Investment Opportunities in the Economic Hub of Basel: Trend in Supply and Demand for Commercial Properties Contrasting with the Rest of Switzerland?”
On 15th September 2015, the Canton of Basel-Stadt’s economic development invited companies from the property sector to discuss upcoming challenges and opportunities on the commercial property market, together with representatives from CBRE Switzerland. The pleasing number of guests reflected investors’ interest in Basel as a location.
In a precarious economic situation, the Canton of Basel-Stadt is robust
Despite tricky economic conditions, the economy in Basel has grown steadily in recent years. According to the Swiss Federal Statistical Office the number of persons employed in the Canton of Basel-Stadt increased by over 18,000 between 2005 and 2013. There was an increase of almost 7,000 between 2011 and 2013 alone. The fact that the increase took place in both the secondary and tertiary sectors is also exciting. Along with robust growth in employment, the above-average economic prospects are also on track for the Canton of Basel-Stadt. The planned Corporate Tax Reform III is also interesting for the property market. This reform aims to improve prevailing conditions for innovative companies, which could result in further incentives for expansion and establishment of research and development departments.
Investment decisions by existing businesses - downstream jobs as an opportunity
This is down to the robust chemical-pharmaceutical industry, in particular. In recent years, this industry has been characterised both by the increase in employees and by increasing added value. The pharmaceutical industry is a significant growth engine for the regional economy that also brings with it growth in employment beyond the sector. For every job in the pharmaceutical industry, more than three jobs are required in the supply industries. This also affects the Basel commercial property market as a whole.
However, the growth engine is not just made up of pharmaceutical companies. Various companies have supported Basel as an economic hub with property projects for their own requirements. Along with companies such as Roche, Novartis and Syngenta, Basler Versicherungen, the Bank for International Settlements (BIS) and Helvetia Versicherungen have planned projects for their own needs or are already carrying them out. All of these investments will have downstream effects. Projects also have to be carried out on the property market to meet the demand that this causes. There is exciting demand for property in this area and lucrative investment opportunities in the commercial property market in the Basel region as a result.
Increasing demand and decreasing supply on the commercial property market
The growing economy is having a dynamic effect on the commercial property market. To be able to assess investment opportunities, it is worth taking a look at the existing commercial property market. While the amount of unoccupied offices is increasing across Switzerland, the number of empty commercial properties in the Canton of Basel-Stadt has fallen for the fourth year in a row. A survey of empty properties in the Canton recorded a decrease in empty industrial and business premises between 2011 and 2015 of around 169,000m2 to around 104,000m2. The amount of empty office space, in particular, has decreased. The number of empty properties in this area decreased by 19% last year alone.
The decrease in empty properties is also having an effect on the properties available for companies in the city of Basel. The office market report by CSL Immobilien AG confirms that Basel is a special case. In comparison with the cities of Zürich, Geneva and Bern, the city of Basel now has the lowest supply of available office space. For a long time now, the supply rate has been below five percent, which would be necessary for a functioning market.
The experiences of the economic development show that there are different gaps in supply on the property market. These circumstances and the good economic prospects will offer lucrative investment opportunities for investors on the Basel commercial property market in coming years.
Project Manager for Economic Area Strategy
Phone: +41 61 267 65 17