Rural vs. urban foreclosures: Where does the greatest potential lie?
June 20, 2025
On paper, all Swiss forced auctions follow the same legal logic. In practice, auctions in Zurich City differ significantly from those in the Toggenburg valley. The question is therefore not if, but where your capital can best thrive. This article compares the opportunities and risks in urban and rural areas, provides return benchmarks, and helps you choose the location that fits your strategy.
1 Market Structure: Supply, Demand, Competition
| Urban¹ | Rural² | |
|---|---|---|
| Share of CH Auctions | ≈ 40 % | ≈ 60 % |
| Bidders per Property | 15-25 | 4-10 |
| Ø Price Discount vs. Market | 8-12 % | 15-22 % |
| Vacancy Rate | < 1 % | 2-4 % |
| Construction Cost Index | +10 % above CH-Ø | −5 % below CH-Ø |
¹ Cities > 50,000 inhabitants (Zurich, Geneva, Basel, Bern, Lausanne).
² Municipalities < 10,000 inhabitants outside agglomerations. Figures: Averages 2023/24 from Gant protocols and HEV market reports.
Take-away: Rural auctions entice with higher discounts, urban ones provide predictable cash flow.
2 Capital Requirements and Return Profiles
2.1 Buy-to-Let Case
City: 3.2 % Net Yield at 65 % LTV.
Country: 5.1 % Net Yield at 70 % LTV, higher vacancy risk ↑
2.2 Fix-and-Flip Case
- City: Higher construction costs → Margin 10-12 %
- Country: Affordable craftsmen, but selling takes longer. Margin of 15 %+ is realistic for single-family homes < 1 million CHF
3 Urban Auctions: Opportunities and Pitfalls
3.1 Opportunities
- Liquidity-rich environment: Faster financing, short marketing paths.
- Predictable cash flow: Micro-vacancy → secure rent.
- Value increase through micro-upgrades: Balcony extensions, energy renovations, co-living concepts.
3.2 Pitfalls
- Sharp limits: A bid too high, margin gone.
- Household regulations & ESG standards: Strict cantonal energy regulations increase renovation costs.
- Bidding pressure: Professionals + family offices drive up final prices by up to 5 %.
4 Rural Auctions: Opportunities and Pitfalls
4.1 Opportunities
- Higher discount margins: Fewer competitors, hence lower bids.
- Expansion potential: Roof expansion, barn → holiday apartment / coworking loft.
- Low construction costs: Local tradesmen, lower demand.
4.2 Pitfalls
- Demographics: Shrinking communities reduce resale value.
- Mobility: Public transport stagnation can complicate rentals.
- Previous agricultural contamination: Silos, heating oil tanks, pesticides → expert appraisal required.
5 Decision Matrix: Which Location Suits You?
Show Matrix
Criterion / Weight
• Liquidity (30 %)
• Risk tolerance (20 %)
• Time horizon (20 %)
• Renovation know-how (15 %)
• Exit flexibility (15 %)
Evaluation:
• Score ≥ 75 → Land & City
• 60-74 → City preferred
• < 60 → First gain experience in micro-renovations
6 Two Case Studies, Same Investment, Different Story
6.1 Townhouse Winterthur
Winning bid 920,000 CHF, renovation 150,000 CHF → market value 1.25 million CHF. IRR: 11 %, renting from month 4.
6.2 Farmhouse Toggenburg
Winning bid 540,000 CHF, renovation 280,000 CHF → market value 1.02 million CHF. IRR: 15 %, sale after 18 months, but six months of vacancy.
7 Conclusion: Potential Lies in the Match, Not in the Place
You can find great potential both in the city and in the countryside. What matters is the alignment with your strategy, your capital, and your risk tolerance. If you’re searching for cash flow and master ESG rules, you are well-placed in urban areas. Those with expansion vision, time, and strong buffers can yield higher margins in rural areas. Thus, the best bargain hunt does not start with location but with a clear investor profile, leading each hammer strike to hit the mark.
