Why apartment buildings are so attractive as an investment.

When you think of the typical Ginesta property, you don’t primarily think of an unspectacular apartment building with rental apartments. Are you wrong?  

Yes and no. It’s simply in the nature of things that there are fewer properties on the market in this sector, or that they are sold anonymously. As a result, these properties are simply less visible in our Portfolio, but proportionally they provide a relatively accurate picture of the overall market. As a company with over 40 employees, we are naturally well-positioned to achieve outstanding results in Sales even in this most challenging of disciplines.

The supreme discipline, because the fees here are princely?

Of course, the final amount on our fee invoice is higher than when conducting Sales for a condominium, but the amount of work involved is also correspondingly greater. This starts with the appraisal and assessment of the property’s potential, which is significantly more time-consuming. You also have to delve much deeper into the details: What do the lease agreements look like, and are they in line with market conditions? What easements exist, and what do they mean for an investor? In which zoning district is the property located? What is the exact status of past and upcoming renovations? What exactly is the market like in the region and at this specific location? Often, multiple parties are involved, and coordinating with them is more complicated—for example, when we negotiate with communities of heirs who still bring at least one lawyer, and perhaps also the property manager and a friend who is an architect, to the discussions. Then there’s the challenging search for interested parties, which, as mentioned, often needs to be conducted anonymously and discreetly. Furthermore, before the property viewings—which should be organized with sensitivity toward the current tenants so as to cause minimal disruption and achieve the desired results—the financial stability of the interested parties must be clarified. These bidding processes, which involve at least two stages, are also time-consuming, and the contracts pass through many more hands before they can be notarized. To return to the question: Whether it’s a single-family home or an investment property, the return ultimately balances out in relation to the effort, and in any case, we can only survive in the market if, in the eyes of both sellers and buyers, our services are worth every franc.  

There are several providers. So how do you separate the wheat from the chaff?

At every single step. And above all, in the interplay of all steps combined—from the sales strategy to the closing of the contract. This is where the company’s more than 75 years of experience—and the resulting network of potential clients, banks, architects, and many others, as well as the collective expertise of our highly trained staff—from appraisal through brokerage (for example, all Ginesta brokerage specialists hold the Swiss Federal Certificate) to the marketing service center—all play to our strengths.

Are there any examples of this? 

Our appraisal desk consists of appraisers accredited by banks and courts who, thanks to their expertise and the sheer volume of properties that cross their desks, have the broadest possible overview of the market, thereby enabling us as brokers to develop the right sales strategy. In other words, we create an offer that is received as positively as possible by the market. We may also do this by presenting visions for the development of the tenant base, such as converting an income-generating property into an investment property—for example, through expansion and the establishment of condominium ownership—or by constructing a replacement building with a new market positioning. We’re also accustomed to dealing with a discerning clientele in our Brokerage efforts, which benefits us in complex processes involving all tenants as well as those with institutional investors—especially during the current COVID-19 pandemic, which demands even greater tact and sensitivity. Finally, for all sales—not just anonymous ones—we utilize our carefully maintained database containing thousands of search profiles, enabling us to sell properties that the market would never have recognized as being for sale. Just two weeks ago, we were able to send a property to nearly 400 interested parties whose search profiles matched the listing, and the initial bidding process has already begun for them.

What are the effects of the coronavirus situation?

This is particularly sensitive when it comes to showings, especially for tenants who are already anxious about the potential Sales of the property they’ve grown to love. We must guide them with great empathy so that the showings can proceed effectively. We do this through two measures: limiting viewings to a minimum and making those that do take place as safe as possible. Specifically, we reduce viewings in two ways. The most important is leveraging digital technology with virtual tours, which provide a relatively good view of the property and serve as an excellent screening tool. We also require prospective buyers to provide proof of financing before scheduling a viewing of a multi-family home. During the viewings themselves, even with large groups of interested parties, we insist on a maximum of 5 people, distribute FFP2 masks, wear gloves and shoe covers, and ensure that the space is ventilated before, after, and continuously if the weather permits.

In other words, demand is high. Has the number of genuinely interested parties also increased?

It’s like this. Even if there are initially always many interested parties who only want to check the market once, the number of serious inquiries with genuine buying interest has increased significantly. This is hardly surprising given the current trend, which has been given an additional boost by the Federal Supreme Court’s recent ruling that the maximum net yield may now be 2% above the current reference interest rate. After all, where else can such gross returns be generated and where else does the investment itself have the potential for further value appreciation?
 

So will Ginesta soon be acquiring one or two apartment buildings itself?

That is not our role and would jeopardize our neutrality. We are valuers, marketers, intermediaries, project development assistants and, what not everyone knows, also farmers. We can do that, we are comfortable with it and this is where we continue to see our potential. Or in other words: stick to your last.

Has it ever happened that a seller decided to keep his property himself after all?

We’ve seen that happen before, too. And even then, we did our job right. Because every satisfied customer who made progress with us is a customer who recommends us to others and comes back. It’s not uncommon for this to lead to follow-up business. As a result, some of them became clients of Ginesta Bewirtschaftungen and now benefit from the services of this professional team, which has since grown to eight people. If they do decide to sell later on, we’re often the first—and only—choice for Sales. In another case, a seller decided to build a replacement property with the goal of selling the units as condominiums. We were then entrusted with the brokerage for this project as well. That’s how it works: the longer you’re in business, the more balanced the give-and-take becomes. But of course, that’s only true if you work transparently and competently—just as we do.

* Dieter Mader is a federally certified sales coordinator, a member of Ginesta’s executive management team, head of Brokerage for the Zurich region, and—along with Claude Ginesta—the primary point of contact for acquiring new properties.