Outlook

Allreal expects the overall economy in 2018 to remain robust with stable interest rates and economic growth comparable to that of the previous year. Lively construction activity will inevitably further accentuate vacancies in both residential properties outside the urban and economic centres and commercial properties in selected regions and areas. Consequently, institutional investors will tend to pay increasingly more attention to the risks connected with the acquisition of real estate.

The perspective of the slowdown becoming apparent in the real estate market will in the medium to long term probably lead to giving higher significance to the economic and construction-related quality of real estate.

Allreal enjoys outstanding preconditions to succeed in a competitive market environment and to take advantage of opportunities as they arise by continuing along the path it has chosen: a stable-income real estate portfolio, Project Development geared toward innovation and efficiency, and Realisation oriented toward profitability and a high standard of execution.

The portfolio expansion carried out in the period under review and the historically low vacancy rate will result in clearly higher rental income in 2018. Continued growth of the real estate portfolio in the coming years by means of several own projects is foreseeable. It is planned that the share of residential property in the medium to long term will again rise above the 20% margin.

The Projects & Development division enjoys an advantageous position in the market owing to its orientation toward developing and realising economically attractive and qualitatively convincing new buildings and conversion projects.

The scheduled construction start of the projects on the Escher-Wyss and the Grünhof sites will increase the share of own projects in the completed project volume.

As from this year the level of profit distribution is based on the Real Estate division’s predictable operating net profit of which up to 100% is to be paid out to shareholders.

Allreal expects business development to remain stable based on the development emerging in both divisions.

Consequently, the company expects operating net profit for the 2018 financial year slightly above that of the period under review.