Thanks, especially, to the synergies resulting from the combination of the stable-income real-estate portfolio with the activity of a general contractor, Allreal enjoys convincing preconditions for continued success in its business activity.
Although the two markets, real estate and general contracting, are growing increasingly demanding, they always offer opportunities. Thanks to its short decision-making routes and sound financing, Allreal is in a favourable position to exploit these opportunities to its own advantage in all respects.
As a result of the very low vacancy rate, the low number of rental agreements up for renewal, and the growth of rental income connected with the continued portfolio expansion, a stable development is emerging in the Real Estate division despite the evolving increase in real-estate expenses. This is of significance as the level of profit distribution to shareholders depends on the division’s operating net income. Projects from Allreal’s own development and realisation and selective acquisitions continue to allow for an expansion of the portfolio by means of properties profitable in the long term.
Allreal expects the development of construction activity in Switzerland to decline and produce lower volumes. However, considerable differences may be recognized with regard to region and the different segments. Peripheral and insufficiently developed locations are already under pressure and will continue to show disadvantages. The order situation will slow down at a high level and further increase the pressure on margins. This will affect the entire construction industry, albeit with gradual differences.
The Projects & Development division, which is geared to profitability and quality, is distinctly and well positioned in the market thanks to own development, calculation and the experienced Realisation department focused on the completion of demanding new construction and conversion projects. The projects started in Zurich in the period under review at Hardstrasse 301 and on the Grünhof site will contribute toward an increasing share of profitable own projects in a slightly larger project volume.
On the basis of our proven business model, financial prowess and the development expected to emerge in both divisions based on the current level of information and knowledge, Allreal estimates the future economic and entrepreneurial perspectives to be guardedly optimistic despite numerous challenges and imponderables.
The company expects operating net profit for the 2019 financial year to remain approximately at the level of the year under review.