10 Investment real estate
CHF million | 30.06.2017 | 31.12.2016 | ||
Residential real estate | 808.0 | 805.8 | ||
Commercial real estate | 2 691.5 | 2 699.2 | ||
Yield-producing properties | 2 499.5 | 3 505.0 | ||
Investment real estate under construction | 94.5 | 69.5 | ||
Investment real estate | 3 594.0 | 3 574.5 |
The changes in the first half of 2017 can be summarised as follows:
CHF million | Residential | Commercial | Total yield- | Investment | Total investment | |||||
As at 01.01.2017 | 805.8 | 2 699.2 | 3 505.0 | 69.5 | 3 574.5 | |||||
Purchases | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |||||
Value-enhancing investments | 0.4 | 5.5 | 5.9 | 20.8 | 26.7 | |||||
Capitalised building loan interest | 0.0 | 0.0 | 0.0 | 0.3 | 0.3 | |||||
Disposals | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |||||
Reclassifications | 0.0 | –16.0 | –16.0 | 0.0 | –16.0 | |||||
Market value adjustments | 1.8 | 2.9 | 4.7 | 4.0 | 8.7 | |||||
As at 30.06.2017 | 808.0 | 2 691.6 | 3 499.5 | 94.5 | 3 594.0 | |||||
of which pledged or subject to transfer restrictions | 741.6 | 2 355.0 | 3 096.6 | 0.0 | 3 096.6 |
Within the commercial real estate portfolio, the value-enhancing investments relate to Bellerivestrasse 30, Zurich (CHF 3.5 million), Grüngasse 27–31 / Badenerstrasse 119–133, Zurich (CHF 1.0 million), and five other properties (CHF 1.0 million).
The reclassification from yield-producing properties to development real estate relates to Grindelstrasse 3/5 in Bassersdorf. Following the merger with an undeveloped 6,000 square metre adjacent plot carried as development reserves since 2008, the land area reserved for project development increased to approximately 12,000 square metres.
Largest tenants, commercial real estate
Share in total rental income from commercial real estate:
30.06.2017 | 31.12.2016 | |||
Canton Zurich | 18% | 18% | ||
Allianz Suisse Insurance Company Ltd | 8% | 8% | ||
MAN Diesel & Turbo Switzerland Ltd | 7% | 7% | ||
IBM Switzerland Ltd | 6% | 6% | ||
UPC Switzerland GmbH | 6% | 6% | ||
Total | 45% | 45% |
In the first half of 2017, the five largest tenants accounted for 45% of rental income from commercial real estate. The ten largest tenants generated 58% of rental income from commercial real estate.
The five largest tenants’ share of total rental income from all yield-producing properties (commercial and residential) declined to around 36% in the first half of 2017.
The weighted remaining term of fixed-term rental contracts is 7.4 years (31.12.2016: 7.1 years).
Investment real estate under construction as at 30 June 2017
Location | Property | Acquisition/ | Area of | Register of | Minergie | Market value | Estimated | Target rental | Expected | |||||||||
Bülach | Fangletenstrasse | 2011 | 11 250 | yes | yes | 15.2 | 38.5 | 2.0 | 2018 | |||||||||
Zurich | Schiffbauplatz | 2002/2014 | 11 180 | yes | yes | 79.3 | 74.5 | 4.7 | 2017 | |||||||||
Total investment real estate under construction | 94.5 | 113.0 | 6.7 | |||||||||||||||
1 As per 30.06.2017 valuation
2 Building and land costs
Schiffbauplatz, Zurich
New-build five- to six-floor commercial building to Minergie standard with lettable floor space of 13,100 square metres. The project comprises 10,700 square metres of office space on the first to fifth floors, 1,800 square metres of space for catering and commercial businesses on the ground floor, 600 square metres of storage space and 36 parking spaces in the underground car park. Ten-year rental contracts have been concluded for the whole of the office space and part of the storage space. The project is being built by the Projects & Development division and, upon completion in the second half of 2017, will be reported under the portfolio of yield-producing properties. For the market valuation as at the balance sheet cut-off date, nominal discount and capitalisation rates of 4.50% and 4.00% were applied (31.12.2013: 4.60% and 4.10%).
Fangletenstrasse, Bülach ZH
Four new-build apartment buildings with a total of 76 rental apartments to Minergie-Eco standard on the 11,250 square metre plot on Fangletenstrasse in Bülach-Nord. The rentable area is 7,387 square metres. The project is being built by the Projects & Development division and, upon completion in 2018, will be reported under the portfolio of yield-producing properties. For the market valuation as at the balance sheet cut-off date, nominal discount and capitalisation rates of 4.40% and 3.90% were applied (31.12.2016: 4.40% and 3.90%).
The two investment real estate properties under construction are 100% solely owned by Allreal.
Yield-producing properties (CHF 3,499.5 million) and investment real estate under construction (CHF 94.4 million) are recognised as at 30 June 2017 at category 3 fair values. No adjustments were made to valuation techniques or processes during the period under review.