Switzerland鈥檚 real estate market is too small for Pensionskassen looking for investments with good returns, delegates were told at Swiss pension conference Fachmesse 2. S盲ule.
The market, said Fidelity鈥檚 European real estate director Keith Sutton, has overheated in the last two to three years, bringing the option of investing abroad into discussion.
鈥淪wiss institutional investors are looking at other markets,鈥� Sutton said. 鈥淏ut they are still very sceptical.鈥�
Zurich Invest head of institutional mandates, S茅bastien Dirren, agreed that some investors are already changing their minds on solely investing in Switzerland and are more willing than before to look at other countries, such as Germany, the UK and France. Switzerland鈥檚 stable real estate market, Dirren noted, meant that Swiss investors are 鈥渟poiled鈥�.
Interest for broader diversification from investors has also been observed by Adrian Bamert, portfolio manager at Pensimo, which runs Anlagestiftung Testina, a collective investment foundation.
Hans J眉rg Stucki, managing director at Ecoreal Anlagestiftung, explained that 鈥渁 Swiss investor will always remain a Swiss investor 鈥� they want to have a say in everything and have a look at every rental agreement鈥�, which he added is 鈥渟ometimes impossible鈥� with foreign investments.
Stucki said Swiss investors need to rethink their position 鈥渋n order to achieve a real breakthrough鈥�. Until then, Swiss institutions will not increase their real estate exposure - or face several years of waiting to get a Anlagestiftungen slot.
Panel moderator Oliver Kunkel, senior consultant at PPCmetrics said: 鈥淚 am working with a pension fund which has been waiting for seven years for a slot in an Anlagestiftung.鈥�
Southern European markets are off limits, the panel heard. Sutton stressed 鈥渘o Pensionskasse wants to go into markets like Portugal, Greece or Spain鈥�, warning that the euro crisis is 鈥渇ar from over, as risks remain from devaluations of tangible assets鈥�.
He added investors have to take capital costs into consideration when looking at investment. In major cities like London, Paris or Munich, Pensionskassen have to compete with sovereign wealth funds and high-net-worth individuals which 鈥渨ill always outbid them鈥�.
Sutton recommends to 鈥渓ook left and right of prime鈥� and 鈥渢wo streets down鈥� from prime locations.
