Middle East conflict: what are the impacts on the Swiss property market?

Geopolitical tensions in the Middle East—particularly the conflict involving Iran—are once again raising concerns about energy markets and their economic spill‑over effects. Rising oil and gas prices, inflationary pressures and interest‑rate trends could all have an indirect impact on the Swiss real estate market in the coming months. 

Interviewed by the AWP news agency in an article carried by several Swiss media outlets, including watson, Daniel Varela, Chief Investment Officer of Piguet Galland, shares his insights into these mechanisms and the potential scenarios ahead.  

Energy: a strategic pressure point

The conflict in the Middle East is unfolding in a region that is critical to global energy supply. The Strait of Hormuz, under Iranian control, is a key transit route:  

 “Between 15% and 20% of the world’s oil and around 20% of its gas consumption pass through this corridor.” 

This concentration explains the immediate sensitivity of energy markets to any military escalation. The recent rise in prices does not reflect an actual shortage alone, but also uncertainty over the duration and scale of the conflict:  

 “It is natural to see prices rise when a conflict breaks out, but this sharp increase is mainly driven by uncertainty about how long the situation will last.”  

While energy markets react quickly—particularly in heating gas prices—the consequences for households tend to emerge more gradually:  

 “Medium- and long-term contracts smooth out fluctuations. This is not the case for companies whose contracts allow for very frequent price adjustments.”  

Property and Interest Rates: Vigilance Rather Than Alarmism

In this uncertain environment, mortgage rates are a key point of focus. Geopolitical tensions tend to strengthen the US dollar and push up international bond yields, to which Swiss mortgage rates are indirectly linked. Nevertheless, Daniel Varela adopts a measured perspective:  

 “There is likely to be little impact on mortgage rates for the time being. However, if the conflict were to persist, one could envisage an upward trend in long‑term rates.”  

The recent experience of the war in Ukraine remains fresh in investors’ minds and calls for caution, without pointing to a single predetermined scenario.  

Several outcomes remain possible, particularly as current inventories are acting as a buffer: 

 “At the end of February, we had an excess supply of three million barrels per day.” 

In the event of a short‑lived conflict, a return to a situation of abundant supply remains conceivable. Conversely, a prolonged period of tension could intensify inflationary pressures and weigh more heavily on financial and real estate markets.

Read the full article published by watson (AWP)
(In french only)