1. Development as an attractive way to acquire prime real
estate assets –an emerging trend?
Market observations by Dr Peter Moertl, CEO Premier Suisse Group
Zurich November 22, 2016: As real estate investments have become an
attractive asset class for professional investors seeking higher yields and
potentialcapital gains, many are looking at the development of new or
existing properties as a way to further increase their returns. A recent
survey by a leading globalconsultancy firm identified the appetite
amongst investors to invest in development properties as a new emerging
trend throughout Europe: Over 52% of 550 surveyed leading European
professional realestate investors stated that they are or would consider
investing in development rather than existing fully operational real estate
properties.
Source:“EmergingTrendsinRealEstate, Europe2016”; PWC/ULI
Though developing real estate projects can provide better returns and
potentialcapital gains at resale, such an investment does not come
without risks.
The current economic environment has never been more appealing for
development investments: a low interest rate environment, a rekindled
fear of rising inflation, particularly after the recent US elections, and the
lack of attractive alternative investment opportunities in the market. On the
other hand, real estate developers are faced with more restrictive
financing possibilities (i.e. Basel III regulations for commercial banks), the

2. demographic developments in many European countries including
Switzerland and environmental restrictions both in terms of building sites
and the construction of the project itself. These are new challenges and
will require a new approach to the development in order to create
sustainable investments. Next to the classic developments on unbuilt
sites, the redevelopment of existing and somewhat outdated properties
will gain importance in the future (i.e. “value add “properties). The lack of
building sites, legal restrictions in many cities, but also economic realities
will make redevelopments respectively revitalization projects one of the
future trends in real estate development.
Some of the big stroke components developers will have to consider
thereby are:
 Economic Feasibility of the project:
o A solid evaluation of the project development
o Proper evaluation of the risks and installation of tested risk
management tools
o Sourcing of both classic and alternative financing of the
development will require a rating and a thorough feasibility
testing of the development (private debt and equity providers
have gained in importance in that field recently)
 Basics of the property development:
o Concept of the development
o Professionalresearch for the appropriate property
o Thorough markets and location analysis
 Legal ramifications for a development
o Local building laws and regulations
o Project organization and management (e.g. architect, general
developer contracts)
o In Switzerland national laws such as Lex Koller or Lex Weber
With these parameters in mind and without throwing caution to the wind,
investments in developments of either new site or value add

3. developments, can make total returns quite attractive. That way investors
not only can create a new “shiny” asset for themselves, but it also gives
them controlover the process.
Premier Suisse Group is an independent real estate company in Zurich
and Geneva. We operate through our two companies, Premier Suisse
Estates and Premier Suisse Investments. We focus on transactions that
require innovative client centric solutions, discretion and in depth
professionalismacross and within all sectors of commercial and luxury
real estate. Our Clients include Family Offices, Private and Institutional
Investors in Switzerland and abroad.