Swiss Prime Site Group operates in the Swiss real estate market with its core business. The most significant influencing factors for the Company include the rental, transactions and capital markets. Other important impulses emanate from the national retail trade as well as the demand for senior services.
The market for commercial properties on which Swiss Prime Site focuses is in motion. On the one hand, a substantial supply of floor space has been constructed in recent years, which could be absorbed very well from the growing demand. This trend was spurred on primarily by growth of the Swiss economy and the resulting partially correlating immigration of workforce. Swiss Prime Site exploited this market situation to develop and complete projects. On the other hand, digitalisation has affected all sectors and even all levels of the economy in the interim. The stationary retail sector, in particular, has come under pressure from the online retail trade. This dynamic change goes hand in hand with the growing needs of tenants and consumers. Start-ups, services providers and online enterprises are flexible and desire such real estate products. These market-influencing factors pose challenges, but also offer opportunities for Swiss Prime Site. Indeed, the Company’s attractive and modern portfolio of existing properties as well as project pipeline – boasting substantial reserves and thus harbouring significant potential – is regarded as a great opportunity.
The Swiss real estate market has achieved new record highs for years. This trend is based particularly on the aforementioned effects of the country’s favourable economic performance as well as correlating immigration activity. Residential in addition to commercial properties have enjoyed robust demand in recent years. Furthermore, the demand for senior residential housing has increased due to demographic growth. The global financial markets also had an additional strong indirect impact on the transactions market. National and international monetary policy heavily influenced the interest rate landscape, in which capital could be obtained and invested at very attractive conditions. The positive trend in market prices continues to prevail. Pressure still looms on transaction yields in prime locations. Swiss Prime Site succeeded in achieving good growth amid this environment, which was mostly focused on development projects rather than capital-intensive transactions.
+ 8 percent p.a.
average annual performance
(total return) of the
Swiss Prime Site AG share from IPO in
2000 to end-2017.
Investments in first-class properties with focal point on Switzerland are associated with significant capital expenditures. National and international monetary policy decisions in recent years have led to such a noticeable change in the interest rate environment that investments increased in direct as well as indirect real estate assets. From the perspective of the overall cycle, Swiss Prime Site was able to obtain favourable financing on the capital market in addition to upholding its performance on the stock market. In fact, since the Company’s initial public offering, the Swiss Prime Site share has realised an above-average performance (total return) of +8% per annum, which surpassed the performances turned in by the sector and the market. The Swiss Prime Site share also achieved an outperformance in 2017, with a total return of +12.6%.
Rental market: Trend in rents and floor space
Transactions market: Trend in prime initial yields
Capital market: Swiss Prime Site share price performance versus sector and market
Sources: Credit Suisse, Wüest Partner, Swiss Prime Site, Thomson Datastream