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 is simply in the nature of things that there are fewer properties on the market or being sold anonymously in this area. As a result, these properties are merely less visible in our portfolio, but proportionally form a relatively accurate reflection of the overall market. As a company with over 40 employees, we are naturally predestined to achieve the best sales success in this supreme discipline.

The supreme discipline, because the fees here are princely?

Of course, the final amount on our fee invoice is higher than for the sale of a condominium, but the expense is also correspondingly higher. This begins with the estimation and assessment of potential, which is significantly more complex. You also have to delve much deeper into the details: What do the rental agreements look like and are they in line with the market? What easements exist and what do they mean for an investor? In which building zone is the property located? What exactly is the status of the completed and pending renovations? What exactly is the market like in the region and in this location? There are often several parties involved and the coordination is more complicated, for example when we negotiate with communities of heirs, who always take at least one lawyer and perhaps the landlord and an architect friend with them to the talks. Then there is the demanding search for interested parties, which, as mentioned above, should often be anonymous and discreet. In addition, the financing security of the prospective tenants must be clarified before the viewings, which should be organized with sensitivity towards the current tenants in a less disruptive and more targeted manner. These at least two-stage bidding procedures are also time-consuming and the contracts also pass through many more hands before they can be notarized at the notary’s office. To come back to the question: Whether it’s a single-family home or an investment property, in the end the income remains balanced in relation to the expenditure and we can only survive on the market if our service is worth every franc in the eyes of the seller and buyer. 

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

At every single step. And above all in the interaction of all steps from the sales strategy to the conclusion of the contract. This is where the company’s more than 75 years of experience, the resulting network of potential customers, banks, architects and many more, as well as the accumulated knowledge of our highly trained employees from valuation to marketing – all marketers at Ginesta have a federal specialist certificate, for example – to the marketing service point play into our hands.

Are there any examples of this? 

Our valuation desk is made up of bank and court accredited valuers who, due to their expertise and the sheer volume of properties that come across their desk, have the greatest possible overview of the market, enabling us marketers to develop the right sales strategy. In other words, to create an offer that is best received by the market. If necessary, we also do this by presenting visions for the development of the tenant base, the conversion of an investment property into an investment property, for example by extending and establishing condominium ownership or a new replacement building with a new positioning. Then we are used to a demanding clientele in marketing, which benefits us in the complex processes with all tenants as well as with institutional investors – especially in the current corona times, which require even more sensitivity. Finally, for all sales, not just the anonymous ones, we use our lovingly maintained database with thousands of search profiles and thus sell properties that were never even recognizable to the market as objects for sale. Just two weeks ago, we were able to send another property to almost 400 interested parties who matched the search profile and for whom the first bidding process has already started.

What are the effects of the coronavirus situation?

This is particularly tricky with viewings, especially for tenants who are already unsettled by the potential sale of their cherished property. These must be taken by the hand with great empathy so that the inspections can be carried out in a targeted manner. We do this with two measures: Keeping visits to a minimum and making those that do take place as safe as possible. Specifically, we reduce visits to two types. The most important is the use of digitization with virtual tours, which provide a relatively good insight into the property and are an excellent filter. In this case, we expect interested parties to provide proof of financing before viewing an apartment building. During the tours themselves, we insist on a maximum number of 5 people, even with large groups of interested parties, distribute FFP2 masks, wear gloves and shoe covers and ensure that there is continuous ventilation before, after and when 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?

That has already happened. And even then, we did our job properly. Because every happy customer who has made progress with us is a customer who will recommend us to others and come back. Because it is not uncommon for follow-up orders to result. Some of them then became customers of Ginesta Bewirtschaftungen and now benefit from the services of this now eight-strong team of professionals. If they want to sell later, we are often the first and only address for the sale. In another case, a seller decided to build a new replacement building with the aim of selling the units as condominiums. We were then responsible for this marketing again. The longer you are in business, the more balanced the give and take becomes. Of course, this is only possible if you work transparently and competently, as we do.

* Dieter Mader is a Swiss Federal dipl. Sales coordinator, part of the Ginesta management team, head of marketing in the Zurich region and, together with Claude Ginesta, first point of contact for the acquisition of new properties.