Investors' capital allocation into office and residential markets in ...

Master of Science Thesis
Title Investors’ capital allocation into office and residential
markets in Sweden and Switzerland
Author Ganna Tsyrkulenko
Department Royal Institute of Technology
Department of Infrastructure
Building and Real Estate Economics
Master Thesis number 456
Supervisor Hans Lind, Professor, Building and Real Estate Economics
Keywords Office market, residential market, legal framework, Sweden,
Switzerland, investment assets
Abstract
In the second half (H2) of 2007 and first and second quarters (Q1, Q2) in 2008 have been
prosperous for real estate markets in most European countries. Both in Sweden and
Switzerland there was an increase in GDP and the unemployment rate stayed low
compared to the same period in the previous years. In Swedish and Swiss commercial
markets vacancy rates decreased due to the strong labour market (strong demand for
office premises), with the increase in rental levels. Residential market developed rapidly
in both countries, having new supply of apartments and high prices. In Switzerland, due
to a strong migration, the demand for residential premises is likely not to decrease.
Property investment markets in Sweden and Switzerland have been attractive for the
foreign as well as domestic investors for a long time. The amount of foreign capital
invested in Sweden totals 70 per cent of all transactions. Swedish real estate market has
high transparency. However, Swiss property market benefits from the laws on ownership
of the properties by foreigners, which favours the inflow of foreign investments in the
country. Investment banks both in Sweden and Switzerland benefit from the new inflow
of the capital. The new funds are opened; they are specified by special regions or type of
property in the country, specifically in Switzerland.
In Swedish property investment market in the first half (H1) 2008, domestic and Nordic
investors have been quite active. These investors were affected less by the financial
crisis. To refurbish the property and deliver it to the market used to be a common thing
for Switzerland while for Sweden the refurbishment of the properties is a recent way of
delivering high quality properties to the market.
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