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According to the results of a survey conducted by Sal. Oppenheim Real Estate1 and 4IP Management Ltd., indirect real estate investments are already held by 89% of Swiss pension funds and 60% of Swiss insurance companies. Even though on average 93% of insurance company real estate assets and 72% of pension fund real estate assets are held directly, a clear trend toward indirect investments was confirmed. The current crisis in the financial markets has not made investment decisions easier; the allocation and investment behaviours revealed in the survey, however, demon-strate that Swiss institutional investors continue to believe in the real estate asset class.

SURVEY OF INVESTMENT DIRECTORS WITH CHF 63 BILLION IN REAL ESTATE ASSETS UNDER MANAGEMENT

Sal. Oppenheim’s study, based on a written survey among Swiss insurance companies and pension funds, examines asset managers’ views on real estate investment trends as well as asset allocation intentions. The survey was conducted in the first half of 2008 by Sal. Op-penheim Real Estate and 4IP Management Ltd. in collaboration with the Department of Financial Management at the University of Basle. The total assets under management of investors who participated in the survey amount to CHF 658 billion, representing a substan-tial proportion of institutional capital in Switzerland. The CHF 63 billion in real estate assets held by participating investors allowed for meaningful conclusions to be drawn about the real estate investment market.

INDIRECT REAL ESTATE INVESTMENTS AND INVESTMENTS ABROAD FURTHER GAIN FAVOUR

The real estate allocation of participating investors is on average 13% for insurance compa-nies and 18% for pension funds. 87% of the pension funds indicated that they intend to further increase their real estate allocation while insurance companies are less decided on this issue, with 50% wishing to do the same. The trend toward indirect real estate invest-ments, already observed in the Real Estate Investment Survey 2006, was confirmed. Par-ticularly the breadth of exposure to indirect real estate increased in the past two years for insurance companies and pension funds. 89% of participating pension funds now have indirect real estate investments.” For insurance companies, the breadth of exposure is somewhat lower at 60%, which is nevertheless 16 percentage points higher than in 2006.

SWISS INSTITUTIONAL INVESTORS PLACE THEIR TRUST IN THE REAL ESTATE ASSET CLASS

The results of the survey show that particularly indirect investments as well as foreign in-vestments are becoming increasingly favoured among Swiss institutional investors. The multiplicity of indirect investment opportunities has increased markedly in the past years, allowing investors with suited selection competencies to build individual portfolios through the selection of focussed investments. The broadening of the investment universe has, ho-wever, also led to an increased complexity of investment decisions. Specialised investment managers, such as, for example, fund-of-funds providers, have recognised the trend and can assist institutional investors to overcome this complexity.

The ongoing financial crisis, with related sharp stock market corrections and heightened economic uncertainty, has not made investment decisions easier. The allocation and in-vestment behaviours revealed in the survey, however, demonstrate that Swiss institutional investors continue to believe in the real estate asset class.

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