Newsletter for Institutional Investors
Foreign Real Estate as an Interesting Asset Class
Swiss pension funds still have a strong tendency to favor the home market when it comes to real estate. At the end of 2017, according to the Credit Suisse Swiss Pension Fund Index, only 1.1% of all investments were made in foreign real estate, even though the regulator has allowed investments in properties outside Switzerland to go as high as 10% for eight years now. In fact, foreign real estate is an extremely attractive, strategic asset class. It provides the opportunity to profit specifically from economic growth and mitigate risk thanks to a low correlation between foreign properties themselves and between foreign and Swiss real estate. In addition, the significantly higher volume of transactions compared to Switzerland increase an investor's flexibility. Other promising opportunities are opened up through indirect investments in funds or multi-manager products. To take advantage of these opportunities, however, it is essential to have not only in-depth know-how but also a good network in the appropriate markets. Right now, the time to diversify into foreign real estate appears favorable because economic growth is playing a considerably stronger role than impending interest rate increases. Two in-depth research articles from Credit Suisse provide more information on this topic.