BlackRock in the Swiss Real Estate Market
With a 6% share, BlackRock is the largest investor in Swiss real estate companies. Such a large share by one company influences site developments and rental prices, especially in the cities. What are the connections and consequences?
BlackRock's holdings in Swiss real estate companies are particularly high. The US asset manager holds on average around 6% of the Swiss real estate sector. Within single companies, these figures are even significantly higher. For example, BlackRock holds more than 12% of the industry leader Swiss Prime Site - one of its largest holdings within any single company in Switzerland.
Financial Institutions and the Real Estate Market
A distinction must be made between land/real estate holdings and their development as well as their development. The real estate sector, to which the above-mentioned 6% refer, mainly comprises of so-called real estate companies, i.e. companies such as Swiss Prime Site that buy land or real estate, develop it, and sell it for profit. Research into real estate ownership in Switzerland by the investigative research team Reflekt, shows that urban real estate in particular is increasingly owned by large financial institutions, such as Credit Suisse and SwissLife. Since BlackRock is also heavily invested in these companies - Credit Suisse 6.1%, SwissLife 7.1% - BlackRock's de facto stake in the Swiss real estate sector clearly exceeds the above figure.
Price Increase, Upgrading and Displacement
Real estate companies, like financial institutions, have a significant influence on land and rental prices (see p. 52). These have risen massively in Switzerland in recent years. For example, the land price for multi-family houses in Switzerland has tripled since 2008. As a result, buyers of such properties will hardly be able to cover the purchase price or make additional profit without upgrading.
This raises the following question, among others: What are the connections between BlackRock's high participation in the Swiss real estate industry and the dynamics of upgrading and displacement, especially in Swiss cities?