Property A: A multi-family building from 1965 in Solothurn, CHF 1'200'000. Six apartments, solid building fabric, but the kitchens date from the nineties and the windows are single-glazed. Gross rental income: CHF 72'000 per year. Gross yield: 6 percent.

Property B: A new-build multi-family building on the outskirts of Olten, CHF 2'400'000. Six apartments, Minergie standard, heat pump, comfort ventilation, underground parking. Gross rental income: CHF 96'000 per year. Gross yield: 4 percent.

At first glance, the case is clear: Property A delivers higher returns. But anyone who thinks this way is making a mistake. The gross yield says nothing about the actual costs, value development, and risk. Only when you calculate both properties over 20 years does it become clear which investment truly performs better.

That is exactly what we do in this article.

The Purchase Price: Why Old Buildings Are Cheaper

Old buildings in Switzerland are significantly cheaper per square metre than new builds. The reasons are obvious:

Wear and tear: A 60-year-old building shows its age. Pipes, windows, heating, insulation. All of this affects the value.
Energy performance: Older buildings consume more energy. In times of rising energy prices and tightening regulations, that is a penalty.
Floor plans: Apartments from the 1960s and 1970s often have small rooms, cramped bathrooms, and little open space. This no longer matches today's living preferences.

For investors, the lower purchase price primarily means one thing: a higher gross yield. In our example, it is 6 percent (old building) versus 4 percent (new build). That is a massive difference. But the purchase price is just the beginning.

Maintenance Costs: Where Old Buildings Get Expensive

The biggest cost factor with old buildings is the ongoing and future maintenance costs. And this is where the equation starts to shift.

Old Building: What to Expect

A multi-family building from 1965 that has never been comprehensively renovated will likely need the following over the next 10 to 15 years:

Item	Estimated costs
Window replacement (6 apartments)	CHF 90'000 to CHF 120'000
Heating replacement (oil to heat pump)	CHF 80'000 to CHF 120'000
Facade insulation	CHF 100'000 to CHF 150'000
Roof renovation	CHF 60'000 to CHF 80'000
Kitchen and bathroom renewal	CHF 120'000 to CHF 180'000
Electrical renovation	CHF 40'000 to CHF 60'000
Total	CHF 490'000 to CHF 710'000

That is CHF 500'000 to CHF 700'000 you need to invest additionally over the first 15 years. On a purchase price of CHF 1'200'000, that is 40 to 60 percent of the purchase price. Suddenly, the return picture looks different.

New Build: The First 15 Years Are Affordable

A new build from 2025 needs practically no major investments in the first 15 years. Ongoing maintenance costs are limited to:

Service contracts (lift, heating, ventilation): approx. CHF 5'000 to CHF 8'000 per year
Minor repairs and tenant changeovers: approx. CHF 3'000 to CHF 5'000 per year
Reserves for future maintenance: approx. CHF 10'000 to CHF 15'000 per year

Over 15 years, this totals around CHF 270'000 to CHF 420'000. That is not nothing, but significantly less than the renovation costs of the old building.

Rental Income: Quality vs. Quantity

Old Building: Higher Yield but More Vulnerable

Old building apartments achieve lower rents per square metre than new builds. In return, the yield on the purchase price is higher. This works as long as the apartments are rented out.

The problem: old building apartments are harder to rent when the market turns. In a tenant's market (oversupply), tenants choose the most attractive apartments. And a new build with a modern floor plan, balcony, and dishwasher beats an old building apartment with a bathtub in the hallway.

New Build: Lower Yield but More Stable

New build apartments are popular with tenants. Modern fittings, low ancillary costs (thanks to better energy efficiency), and contemporary floor plans ensure high demand. The vacancy rate is typically lower than for old buildings.

Additionally, lower ancillary costs can be a selling point. A new build apartment with CHF 150 in ancillary costs per month is more attractive to tenants than an old building apartment with CHF 280 in ancillary costs, even if the net rent is higher. The gross rent (including ancillary costs) that the tenant actually pays is the relevant comparison.

Vacancy Risk: The Silent Return Killer

Vacancy is the greatest enemy of any return calculation. An apartment that sits empty for three months costs you not just the lost rent but also listing fees, viewings, and possibly agent commissions.

Old Building: Higher Risk

The vacancy rate in Switzerland was around 1.1 percent in 2024. That sounds low but varies significantly by segment:

New build apartments in urban locations: below 0.5 percent
Old building apartments in mid-sized cities: 1.5 to 3 percent
Old building apartments in peripheral locations: 3 to 6 percent

For our Property A in Solothurn, we conservatively estimate 3 to 4 weeks of vacancy per tenant changeover and one changeover every 4 to 5 years per apartment. This yields an average vacancy of around 1.5 to 2 percent of gross rent.

New Build: Lower Risk

For Property B on the outskirts of Olten, we estimate 1 to 2 weeks of vacancy per changeover and one changeover every 6 to 8 years. Average vacancy is below 1 percent.

Value Appreciation: Where the Money Is Long-Term

This is where it gets interesting because value appreciation often determines the total return.

Old Building: Value Appreciation Through Renovation

An unrenovated old building has value appreciation potential. If you invest CHF 500'000 in a comprehensive renovation, the property value may increase by CHF 600'000 to CHF 800'000. The difference is your profit, at least on paper.

This works because renovated old buildings in good locations combine the charm of existing stock with modern comfort. And because the land value (which for old buildings often represents a higher share of total value) tends to rise.

New Build: Moderate Value Appreciation

A new build is already state-of-the-art. Value appreciation comes mainly from general market developments and land value. Disproportionate growth through your own efforts is hardly possible because there is nothing to improve.

On the other hand, there is less risk of the value dropping due to a renovation backlog. The new build ages slowly and evenly, while the old building loses value rapidly without investment.

Run the Numbers with the Forecast Tool

Both scenarios can be modelled with the forecast tool. Enter the expected renovation costs, rent increases, and planned holding period and compare the total return of both properties over 10, 15, or 20 years.

Tax Optimisation: The Old Building Advantage

From a tax perspective, old buildings have a clear advantage: maintenance and renovation costs are tax-deductible. In Switzerland, you can choose in your tax return whether to claim the flat-rate deduction or the actual costs.

Old Building: High Deductions Possible

With a comprehensive renovation, large amounts of maintenance costs accrue. These can be deducted from taxable income. In high-tax cantons, this can mean tax savings of 30 to 40 percent of the maintenance costs.

Additionally, energy-efficient renovations (windows, insulation, heating replacement) often receive additional tax benefits. Some cantons also provide subsidies that further reduce net renovation costs.

New Build: Little Deduction Potential

A new build generates minimal maintenance costs in the first years. Accordingly, there is little to deduct. The flat-rate deduction (typically 10 percent of the rental value for buildings under 10 years, 20 percent for older ones) almost always pays off for new builds because the actual costs are lower.

For a detailed analysis of the tax aspects, I recommend the article on return calculation for real estate, which also covers tax optimisation.

The 20-Year Comparison: The Full Picture

Let us calculate both properties over 20 years.

Property A: Old Building Solothurn

Item	Amount
Purchase price	CHF 1'200'000
Equity (25%)	CHF 300'000
Mortgage (75%)	CHF 900'000
Gross rental income (20 years, 1% growth p.a.)	approx. CHF 1'590'000
Mortgage costs (avg. 2%, 20 years)	approx. CHF 360'000
Maintenance and renovation costs	approx. CHF 600'000
Management and non-recoverable ancillary costs	approx. CHF 120'000
Vacancy losses (2%)	approx. CHF 32'000
Net cashflow (20 years)	approx. CHF 478'000
Estimated sale value (after renovation)	approx. CHF 1'800'000
Value appreciation	approx. CHF 600'000

Property B: New Build Olten

Item	Amount
Purchase price	CHF 2'400'000
Equity (25%)	CHF 600'000
Mortgage (75%)	CHF 1'800'000
Gross rental income (20 years, 1% growth p.a.)	approx. CHF 2'120'000
Mortgage costs (avg. 2%, 20 years)	approx. CHF 720'000
Maintenance costs	approx. CHF 350'000
Management and non-recoverable ancillary costs	approx. CHF 160'000
Vacancy losses (0.8%)	approx. CHF 17'000
Net cashflow (20 years)	approx. CHF 873'000
Estimated sale value	approx. CHF 2'900'000
Value appreciation	approx. CHF 500'000

What Do the Numbers Say?

The new build delivers more cashflow in absolute terms and a higher value appreciation. But: it requires twice as much equity. Relative to the equity invested, the picture looks different.

Return on equity, old building: Cashflow CHF 478'000 plus value appreciation CHF 600'000 on equity of CHF 300'000. Total return: approx. 360 percent over 20 years, around 7.8 percent per year.

Return on equity, new build: Cashflow CHF 873'000 plus value appreciation CHF 500'000 on equity of CHF 600'000. Total return: approx. 229 percent over 20 years, around 6.1 percent per year.

The old building wins, but only if the renovation is well planned and executed without nasty surprises. That is a big "if."

Who Is Each Strategy Suited For?

The Old Building Investor

You are an old building investor if you:

Have experience with renovations or are willing to build it
Want to develop a network of reliable tradespeople
Accept higher risk for higher returns
Want to use tax optimisation through maintenance costs
Enjoy actively developing a property

The New Build Investor

You are a new build investor if you:

Want to spend little time on property management
Prefer predictable, stable cashflows
Value low vacancy risk
Do not want to take on renovation risk
Have sufficient equity and accept lower volatility in return

The Hybrid Strategy

Many experienced investors combine both approaches: a new build as the stable foundation of the portfolio, supplemented by one or two old buildings with renovation potential. This balances stability and return opportunities.

Three Warning Signs with Old Buildings

Not every old building is a good investment. Watch out for these warning signs:

1. Asbestos and other contaminants. Buildings from the 1960s and 1970s frequently contain asbestos in floor coverings, adhesives, and insulation materials. An asbestos remediation can increase costs by CHF 50'000 to CHF 150'000. Have a hazardous materials report prepared before purchase.

2. Structural defects. Cracks in load-bearing walls, damp basements, foundation settlement. These are not cosmetic issues but existential risks. A structural engineer must inspect before purchase.

3. Unfavourable location. An old building in a shrinking municipality is not a value investment, it is a loss-making venture. The renovation costs exceed the value appreciation, and vacancy eats into returns.

Conclusion

Old building or new build? Both can be good investments. The old building offers higher returns on invested capital but demands more effort, experience, and risk appetite. The new build delivers more stable returns with less effort but requires more equity and offers less return potential.

The right choice does not depend on the property but on you. What suits your profile, your experience, and your strategy? Run both scenarios through the forecast tool before you decide. The numbers do not lie.

Frequently Asked Questions

Is the gross yield on old buildings really higher than on new builds?

Yes, generally speaking. Old buildings have lower purchase prices per square metre, which leads to a higher gross yield at comparable rents. Typical figures are 5 to 7 percent for old buildings versus 3 to 4.5 percent for new builds. However, the gross yield says nothing about actual profitability because it does not account for maintenance costs.

How much does renovating a multi-family building cost in Switzerland?

A comprehensive renovation of a multi-family building from the 1960s to 1970s typically costs CHF 80'000 to CHF 120'000 per apartment. For a 6-unit building, that is CHF 500'000 to CHF 700'000. The costs depend heavily on the building condition, scope of works, and region. Energy-efficient renovations can be partially subsidised through grants.

What tax advantages does an old building have over a new build?

Maintenance and renovation costs are higher for old buildings and can be deducted from taxable income. Particularly with comprehensive renovations, large deduction opportunities arise. Additionally, energy-efficient measures are given extra tax benefits in many cantons. For new builds, minimal deductible maintenance costs arise in the first years, so the tax advantage is small.

Is an old building in a peripheral location worthwhile?

The risk is high. In peripheral locations with declining population and rising vacancy, the renovation costs can exceed the value appreciation. An old building is worthwhile mainly in locations with stable or growing demand, where the renovation leads to higher rents and property value appreciation. In shrinking municipalities, a new build or no investment at all is the better choice.

Old Building or New Build: Which Delivers Higher Returns?