Market Commentary April 2025
The past month was also marked by market disruptions triggered by U.S. tariff antics, affecting real estate stocks. While Swiss real estate equities experienced only a short-term but sharp setback in the REAL Index, real estate funds suffered for a longer period. General uncertainty remains noticeable. On one hand, falling interest rates continue to support the sector, and dividends distributed in many cases are mostly reinvested. On the other hand, economic risks are dampening expectations in the commercial property sector. However, the Swiss franc as a safe haven is currently compensating well for these concerns. International investors continue to favor stable stocks such as Swiss Prime Site and PSP Swiss Property. But excesses carry risks with a dividend yield of 2.8% and a premium (agio) of up to 35%, conditions can shift quickly. Capital measures added pressure to the funds segment: a CHF 350 million capital increase by SIMA, along with other similar-sized issuances being announced. Demand for residential real estate remains high, additionally supported by low interest rates. In uncertain times, many asset managers are more likely to increase than reduce their allocations in indirect real estate investments. Fund and company results remain solid and have a stabilizing effect. However, the stock market is expected to remain jittery, with continued volatility. Precisely in such an environment, interesting opportunities and arbitrage situations regularly arise opportunities. Consolidation in the financial sector continues: insurance companies Helvetia and Baloise have announced a merger, and CHAM and INA have successfully combined into Cham Swiss Properties. In contrast, Switzerland’s largest real estate provider, UBS, made a last-minute decision not to merge UBS Direct Residential after all — a decision that leaves a bitter aftertaste. With a premium of 55%, caution is advised with this title, even though broader market indicators remain positive for the coming weeks...
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