10 Investment real estate
CHF million | 30.06.2019 | 31.12.2018 | ||
Residential real estate | 924.4 | 910.8 | ||
Commercial real estate | 3 205.1 | 3 191.0 | ||
Right-of-use asset classified as investment real estate | 34.3 | 0.0 | ||
Yield-producing properties | 4 163.8 | 4 101.8 | ||
Investment real estate under construction | 73.7 | 58.1 | ||
Investment real estate | 4 237.5 | 4 159.9 |
The changes in the first half of 2019 can be summarised as follows:
CHF million | Residen- | Commer- | Right of | Total | Investment | Total investment | ||||||
As at 31.12.2018 | 910.8 | 3 191.0 | – | 4101.8 | 58.1 | 4159.9 | ||||||
First adoption IFRS 16 | 34.8 | 34.8 | 34.8 | |||||||||
As at 01.01.2019 | 910.8 | 3 191.0 | 34.8 | 4 136.6 | 58.1 | 4 194.7 | ||||||
Purchases | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | ||||||
Value-enhancing investments | 0.7 | 3.5 | 0.0 | 4.2 | 9.6 | 13.8 | ||||||
Capitalised building loan interest | 0.0 | 0.0 | 0.0 | 0.0 | 0.1 | 0.1 | ||||||
Disposals | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | ||||||
Reclassifications | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | ||||||
Market value adjustments | 12.9 | 11.4 | –0.5 | 23.8 | 5.9 | 29.7 | ||||||
Rent-free periods | 0.0 | –0.8 | 0.0 | –0.8 | 0.0 | –0.8 | ||||||
As at 30.06.2019 | 924.4 | 3 205.1 | 34.3 | 4 163.8 | 73.7 | 4 237.5 | ||||||
of which pledged or subject to transfer restrictions | | 825.6 89.3% | | 2 713.7 84.7% | | 0.0 0.0% | | 3 539.3 85.0% | | 0.0 0.0% | | 3 539.3 83.5% |
The value-enhancing investments relate to the yield-producing properties Grüngasse 27–31 / Badenerstrasse 119–133, Zurich (CHF 3.1 million), Fangletenstrasse 4, Bülach ZH (CHF 0.4 million), Engstringermatte, Schlieren ZH (CHF 0.2 million), and seven other properties (CHF 0.5 million).
Largest tenants, commercial real estate
Share in total rental income from commercial real estate:
30.06.2019 | 31.12.2018 | |||
Canton Zurich | 15% | 16% | ||
Generali Switzerland | 7% | 8% | ||
Allianz Suisse Insurance Company Ltd | 7% | 7% | ||
MAN Energy Solutions Switzerland Ltd | 6% | 6% | ||
Swiss Confederation | 6% | – | ||
UPC Switzerland GmbH | – | 5% | ||
Total | 41% | 42% |
In the first half of 2019, the five largest tenants accounted for a lower share of around 33% of total rental income from all yield-producing properties (commercial and residential).
The weighted remaining term of fixed-term rental contracts for commercial real estate is 6.1 years (31.12.2018: 6.4 years).
Investment real estate under construction as at 30 June 2019
Location | Property | Acquisition/ | Area of | Register of | Minergie | Market | Estimated | Target rental | Expected | |||||||||
Zurich | Grünhof-Areal | 2002/2018 | 7 088 | yes | yes | 47.7 | 80.2 | 4.3 | 2020 | |||||||||
Zurich | Hardstrasse 301 | 2002/2018 | 1 988 | yes | yes | 26.0 | 37.3 | 2.3 | 2020 | |||||||||
Total investment real estate under construction | 73.7 | 117.5 | 6.6 | |||||||||||||||
1 As per 30.06.2019 valuation
2 Building and land costs
Grünhof site, Zurich
New-build six-floor apartment building with 80 rental apartments in the inner courtyard (previously used for commercial purposes) plus realisation of a replacement new-build containing eight rental apartments in addition to office and commercial space on Badenerstrasse. The rentable residential, office and commercial area in the new-builds on the 7,870 square metre plot in Zurich Aussersihl is 8,022 square metres in total. The project is being built by the Projects & Development division and, upon completion in 2020/2021, will be reported in the portfolio of yield-producing properties. For the market valuation as at the balance sheet cut-off date, nominal discount and capitalisation rates of 3.80/4.00% and 3.30/3.50% were applied (31.12.2018: 3.90/4.10% and 3.40/3.60%).
Hardstrasse 301, Zurich
New-build six-floor commercial building with lettable floor space of 5,800 square metres, comprising 4,900 square metres of office space on the upper floors, 580 square metres of commercial space on the ground floor, 320 square metres of storage area in the basement as well as an underground garage with 21 parking spaces. The project is being built by the Projects & Development division and, upon completion in 2020, will be reported in the portfolio of yield-producing properties. For the market valuation as at the balance sheet cut-off date, nominal discount and capitalisation rates of 4.30% and 3.80%, respectively, were applied (31.12.2018: 4.40% and 3.90%).
The two investment real estate properties under construction are 100% solely owned by Allreal.
Recognised at fair value as at 30 June 2019, yield-producing properties (CHF 4,163.8 million) and investment real estate under construction (CHF 73.7 million) qualify as category 3 fair values. No adjustments were made to valuation techniques or processes during the period under review.