Review of the 101st Swiss Real Estate Forum

Michael Trübestein FRICS, professor at the Lucerne University of Applied Sciences and Arts and moderator of the 101st Real Estate Talk, opened the event with a brief review of the past few years. Switzerland, praised as an "island of bliss" until the summer of 2022 due to its low interest rates and economic stability, was also hit by the effects of global challenges after the interest rate turnaround: Rising inflation, higher interest rates and increasing regulatory intervention posed significant difficulties for the industry. The former stability was shaken, and even assumptions that had previously been considered safe began to falter. However, compared to many other European countries, Switzerland was largely spared and was able to hold its ground in the "eye of the storm" - a place of relative calm surrounded by threatening storm clouds, said Trübestein, outlining a more optimistic perspective with a view to the coming year 2025: the dark clouds are beginning to dissipate and Switzerland could regain its role as an "island of bliss". Central to this change is the question of how institutional investors can operate successfully in a new investment cycle.

Opportunities in Swiss commercial real estate

Giorgio Engeli, Head of Real Estate Portfolio Management Switzerland at Swiss Life Asset Managers, shed light on the dynamics of the Swiss real estate market and its recent developments. His presentation focused on the stabilization of prime yields in the residential and commercial real estate sectors. While residential properties continue to benefit from strong demand, commercial properties are becoming increasingly polarized. Average rents for office space are falling, while prime rents in first-class locations are rising significantly. This trend has been further reinforced by the changed requirements following the pandemic, as companies are increasingly looking for high-quality, modern office space with an optimal location and facilities. However, Engeli emphasized that commercial properties in particular offer interesting opportunities for conversions and redensification. Using a specific example from Zurich, he showed how new living space could be created by converting an office property. ESG criteria play a particularly important role in such projects, as they not only promote sustainability but can also increase profitability.

Alternative investment opportunities in Europe

Dr. Rainer Suter, Co-Head Core Fund Strategies at AXA Investment Management, also focused on the growing importance of ESG criteria and emphasized that sustainability certificates increase the attractiveness of real estate while reducing operating costs. He also pointed out that alternative asset classes are gaining in importance: According to Suter, sectors such as life sciences, medical office, student accommodation and self-storage offer investors interesting investment opportunities. The AXA manager illustrated this with a number of real examples of current construction projects in Europe.

Structural change in the United States

Dr. Paola Prioni, Investment Manager at Pensimo Management AG, focused on the US real estate market and presented a differentiated analysis of current developments. She explained that the recent interest rate cuts by the US Federal Reserve have helped to stabilize the market. While many sectors continue to benefit from solid fundamentals, the office sector remains a weak point. Institutional investors are therefore increasingly focusing on residential and logistics real estate, which are proving to be resilient and fast-growing. In the logistics sector in particular, the restructuring of supply chains and technological innovations such as artificial intelligence are driving growth. Prioni also pointed to the increasing importance of alternative sectors such as medical facilities, data centers and student and senior housing projects, which offer attractive opportunities for investors. In Prioni's view, the current market offers a promising entry point in view of the recent value corrections, supported by strong fundamentals.

Growth potential in the Asian region

Zoltan Szelyes, CEO of Macro Real Estate AG, shed light on the prospects for the Asia-Pacific real estate market, a region that is proving to be attractive due to its broad diversification potential.

investment location and macroeconomic stability in many countries. He particularly emphasized Singapore's role as a new prime business hub, which is increasingly replacing Hong Kong. Japan also impressed with its strong demand for rental apartments and good yields. According to Szelyes, established markets such as Australia and South Korea offer growth potential again after a phase of correction; at the same time, there is promising long-term dynamic development in emerging markets such as Indonesia and Vietnam. Szelyes is currently critical of China, where the situation has deteriorated further in 2024. In fact, capital flows are increasingly shifting from China to India. Finally, Szelyes used a few current examples of funds to illustrate the impact of hedging costs on returns.

The presentations were followed by a lively panel discussion with all four guest speakers on the challenges and opportunities of the current market polarization and the role of ESG criteria and technological innovations for the future of the industry. The evening ended with an extended networking aperitif.

The next Real Estate Talk will be hosted by Immobilien Business/Galledia Fachmedien AG on February 25, 2025 at the Casino Bern, this time in collaboration with the University of Applied Sciences Biel/Bern. The topic: "Interest rates down - all good?".