SWITZERLAND Trends and Developments Contributed by: Martin Furrer, Alexander Wyss, Samuel Marbacher and Charles Gschwind, Baker McKenzie
– to Swiss heavyweights PSP Swiss Property and Swiss Prime Site, respectively, in two major transactions that rank among the largest single asset transactions in Switzerland and Europe of the past year. Several major institutional actors remained active as buyers in the market, such as Swiss - canto/Zürcher Kantonalbank. For example, Swisscanto Anlagestiftung acquired a major real estate portfolio including nine properties across the cantons of Bern, Zurich, St. Gallen and Aargau by way of an asset transfer under the Swiss Merger Act, a novel transaction structure between investment foundations. Meanwhile, the relative retreat of other well- established players provided opportunities to newer players, such as Geneva-based Swiss - roc and Arab Bank Switzerland. While the former purchased 60,000 sq m of freehold land in the heart of Geneva’s industrial zone from the Stel - lantis Group in a share deal, the latter carried out two major real estate club deals in French- speaking Switzerland. Finally, there were several noteworthy hotel transactions, with the acquisition of the famous 5-star hotel “Le Richemond” in Geneva by Dubai-based Jumeirah Group in early 2023 rep - resenting a standout example. Sustainability The newly passed Climate and Innovation Act provides that real estate portfolios must be carbon-neutral by 2050. In Switzerland, heating buildings accounts for approximately 40% of total energy consumption, and generates almost a quarter of greenhouse gas emissions. Conse - quently, the replacement of heating systems is a priority for the authorities and is incentivised with major subventions.
The CO2 Act serves as a further instrument for implementing climate targets and is currently undergoing the parliamentary amendment pro - cess for the period after 2025. Following the rejection by the Swiss voters of an earlier draft of the law, it no longer contains any far-reaching obligations for the construction sector. The only relevant levy is the CO2 levy, which remained unchanged at CHF120 per ton of CO2. Nevertheless, the proportion of office space meeting ESG criteria was assessed for the first time at the end of 2023 and was estimated to be approximately 30% of office space in Swit - zerland. The largest office markets, Zurich and Geneva, have the highest percentage of ESG- compliant office space, in both absolute and relative terms. In Zurich, 32.9% of the total sup - ply of office space meets ESG standards, while in Geneva this figure rises to 47.5%, according to JLL. ESG is becoming an increasingly important topic for investors, and is now one of the key driv- ers in real estate acquisitions or sales. Many institutional investors are seeking to make their portfolios sustainable by either renovating or selling properties that do not meet ESG criteria. Meanwhile, ESG conformity is becoming more and more important in buyside due diligence processes. A new dynamic in the retail market The estimated proportion of vacant retail space in Switzerland has fallen slightly since the tem - porary peak during the pandemic, and is now just over 4%. One reason for this may be that construction investment in the retail space mar - ket has fallen sharply since 2020. Some retail space has even been converted into office space. This happened even in prime locations such as Zurich’s Bahnhofstrasse, which saw
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