Swiss Life Asset Managers has more than 160 years of experience in managing the assets of the Swiss Life Group. This insurance background has exerted a key influence on the investment philosophy of Swiss Life Asset Managers, which is governed by such principles as value preservation, the generation of consistent and sustainable performance and a responsible approach to risks.
Our objective is to achieve stable, long-term investment returns, creating the basis for our clients to make solid, long-term plans with self-determination and financial confidence. Due to its comparatively attractive risk-return profile of the asset class, Swiss Life has committed its balance sheet capital to Real Estate for over 120 years. Swiss Life Asset Managers co-invests with many of its clients providing strong alignment of interest.
Swiss Life Asset Managers offers this proven approach to third-party clients in Switzerland, France, Germany and the UK with over 1450 real estate professionals in 26 offices around these five countries.
As at 31 December 2018 assets under management for third-party clients amount to EUR 63.3 billion. Together with insurance assets for the Swiss Life Group, total assets under management at Swiss Life Asset Managers stood at EUR 206.7 billion.
Swiss Life Asset Managers is the leading real estate manager in Europe1. Of the assets totaling EUR 206.7 billion, EUR 55.7 billion is invested in real estate. In addition, Swiss Life Asset Managers has real estate under administration of EUR 25.3 billion through its subsidiaries Livit and Corpus Sireo. Total real estate under management and administration at the end of December 2018 thus came to EUR 81.0 billion. Swiss Life Asset Managers employs over 1800 people in Europe.
1 Property EU, Top 100 Investors, December 2018
INDUSTRIAL: Ongoing strong demand for logistics is visible in increasing transaction volumes. Demand is driven by good fundamental such as the economy and growth in e-commerce. Due to demand/growth, yield compressed quiet strongly during the past three to four years. We expect the same movement in 2018, after that more sideways movements. At the moment it is probably the one sector with the strongest pressure on yields. Main sector activity stems from ‘traditional’ companies but trends in logistics, ie, in e-commerce and also increases in consumer spending offer a good basis for growth of the sector.
OFFICE: Office markets still see highest demand and appetite keeps up, for one given by overall attractiveness of the real estate markets, for the other as good economic fundamentals keep demand for office space up. The lack of new supply and of existing good quality has somewhat aggravated in the course of 2017, pushing rental growth in most markets. Overall, there we also expect rents to grow in 2018. We expect momentum to uphold until 2019, before slightly changing direction or only being stable. Also the office markets undergo some structural changes, as space for companies isn’t just a cost anymore, but an asset to attract and motivate good employees. We expect strongest growths in cities that exhibit a strong base in technology and creative sector along with a good quality of life.
RESIDENTIAL: Due to demographics, housing remains a major trend in Europe. New forms of housing with high flexibility for younger people are being developed as well as senior-friendly facilities for older people. Markets that are less known for residential investment are attracting attention (ie, Dublin, France and Spain). In this early stage, the residential market may qualify as an alternative sector, so investors need to be cautious.
RETAIL: Remains challenging, as structural change ongoing and retailers need to adapt. Continuing low inflation should buoy up retail sales. Only exception is the UK, where e-commerce, an economic slowdown and low wage growth are strongly impacting the sector. Overall, we believe in the adaptability of store-based formats to compete with e-commerce in the long run, but we remain sceptical for the medium term given the challenging situation.
OTHERS: Growing importance of the residential sector underlines the shift to other alternative segments such as hotels and healthcare. The mature phase of the cycle has prompted some investors to focus on the higher-yielding alternative sector. Hunt for yield is only one part of these sectors’ growth, given that they also benefit from Europe’s ageing population (senior housing) and increasing travel activity (hotel).
Investment principles & strategy
The world and the economy are changing and demanding more from real estate. This has manifested as a shift in the way that occupiers use property and the lease terms they are seeking. Against this backdrop, we are focused on ensuring our clients’ portfolios reflect this ‘new world’ that is being shaped by globalisation, digitalisation and changes within our society. For us, managing assets and risks means protecting wealth and increasing earnings potentials over the long term. Our asset management is based on understanding our clients’ risk and return expectations and accurately reflecting them in the market. Our top priority is to invest responsibly and act prudently with the assets entrusted to us.
Investment decisions are based on in-house research expertise, strict analysis and approval procedures. Given this our rigorous real estate investment process consists of four main steps:
- Market analysis and definition of property criteria
- Property analysis resulting in non-binding offers
- Detailed due diligence
We manage risk actively and perform risk controls systematically on an ongoing basis to monitor the individual portfolios. These controls enable our clients to review at any time whether the risks incurred are within the set limits and whether the predefined investment process is being observed. The aim is to identify risks early, to avoid them, and to exploit opportunities for the benefit of our clients.
Strategic corporate development
Over the past years, Swiss Life Asset Managers has constantly grown its business activities organically and inorganically. We offer comprehensive services across the full real estate value chain with strong European routes and 26 offices in Europe with over 1,400 real estate professionals.
- Capabilities: closed & open ended real estate funds (listed and non-listed), investment foundations, fund of funds, JVs, club deals.
- Sectors: office, retail, residential, healthcare, hotel, logistics, student housing.
- Broad range of investment strategies across the risk return spectrum with specific focus on well diversified Pan-European core/core capabilities.
- Thematic investment strategies such as European retail, healthcare, hotel and leisure.
- Swiss Life Asset Managers also acts as a partner for co-investments in Europe.
This publication does not constitute an offer or a recommendation to buy or sell financial instruments, but is provided for information purposes only.
News from Swiss Life Asset Managers (Real Estate)
Insights - Real Estate March 2019 download
As we move further into spring, thoughts turn to the direction markets and trends will take. Despite the initial uncertainties, there are many positive avenues to explore both for active asset management and investment opportunities, all of which raise value and generate attractive returns in the long run.
UK real estate returned 2.2% in the second half of 2018 and 6.0% on an annual basis, according to the MSCI All Property quarterly index. Capital growth of 1.4% was achieved over the year, largely due to the yield compression, although this was supported by 0.5% rental value growth.
Real Estate House View - Europe download
Investors are relatively unimpressed by the slowing in economic dynamics. Attractive risks spreads compared to other asset classes are keeping up the interest in European real estate and hence also the volume of transactions.
Real Estate House View - Switzerland download
Swiss real estate investments remain popular among investors. The attractiveness of the high risk spread seems to be clouded neither by structural changes in the office and retail sector nor by vacancy rate increases in the residential sector.
Swiss Life Asset Managers reports positive results for its real estate business in 2018. Last year, the asset management company reported a real estate transaction volume throughout Europe amounting to around EUR 10 billion.