Annual reports focus on numerical information. Despite this, their ability to provide a real portrait of a company – its business, its customers and everyone else with whom it interacts – is somewhat limited. The market in which Swiss Prime Site and its Group companies operate is a dynamic one and the activities of its individual business fields have a significant influence on each other.
Operating in a changing environment
The size and structure of Switzerland’s population are constantly evolving. This affects the demand for real estate. Our customers are becoming increasingly aware of the need for a sustainable economy and sustainable lifestyles, as indeed is society as a whole. The technical standards used in construction continue to develop. The resources required to build and operate properties are diminishing. The intelligent control technologies used in «smart homes» are not only spearheading the trend towards sustainable use of water and energy, they are also making buildings more comfortable to live in. The same applies to commercial and industrial premises. Communication with customers is making ever greater use of electronic media. Digital tools have become indispensable, both in property management and the analysis and evaluation of existing buildings and new projects.
Politicians and legislators are beginning to espouse these developments by setting new minimum requirements and defining new standards. Moreover, because they also regulate the financial environment, they can facilitate or constrain investment in real estate, as the debate on the laws governing the purchase of Swiss real estate by foreign nationals demonstrates.
Integrated reporting creates transparency
Our objective is to create value for all our stakeholders. We apply ethical principles in pursuit of that aim. Because a conventional, numerically focused annual report cannot adequately illustrate this, we have incorporated integrated reporting into our sustainability report. From now on, instead of reporting economic and financial facts in isolation, we will present them in their broader social context. In other words, our intention is not only to document results, but to explain what we do, what resources we use and how we ensure that they are deployed sustainably.
Capital is the term we apply to the resources we use. These include financial capital, physical capital, intellectual capital, human capital, relationship capital and natural capital. When used to describe the work in which our Group companies are engaged, these somewhat dry, technical terms assume a life of their own.
Overview of business activities in 2017
I would also like to take the opportunity of providing a brief overview of our business activities in 2017. Last year, we continued to pursue our successful strategy of focusing our Group companies’ efforts on their core areas of expertise. While ancillary disciplines such as construction execution, facility management and property valuation were generally assigned to expert third parties, some were insourced on a case-by-case basis.
Our Group companies achieved good results in its various business fields, from portfolio and asset management, to real estate sales and purchasing, to single-property and large-site development, to property administration. Real estate rental income amounted to some CHF 470 million, up from CHF 453 million in 2016. Vacancy rates were cut further, to 5.2%. Both results are clear testimony to our success in maintaining client loyalty and fine-tuning our offering to the needs of the markets we serve.
The net yield on our property portfolio came in at 3.7%, in line with our 2016 results. New acquisitions totalled CHF 284 million, with real estate development sales generating a profit of some CHF 28 million. Our project pipeline places considerable emphasis on Assisted Living. This reflects projected increases in demand for senior accommodation across the quality spectrum. The aggregate value of our overall project pipeline amounts to CHF 2.1 billion.
Investing in quality rather than volume
Our Wincasa and Tertianum Group companies have increased their operating income to impressive levels. The strategy of investing in quality rather than volume is clearly paying off, further strengthening the economic foundations on which our Group is built. We have achieved positive results in 2017, not only for our shareholders, but also for our employees, our real estate clients, our cooperation partners and service providers and everyone else who is associated with Swiss Prime Site.
I trust that you will enjoy reading this account of Swiss Prime Site’s activities in 2017 and that it will provide you with new insights into the work of our Group and our Group companies