Real Estate Development Business Model – Swiss Prime Site’s business model is based on the evolution of “space in living space”. Project development, construction and management, as well as the use of company and third-party properties, are key steps in this process. Swiss Prime Site develops and maintains sites and properties to the highest quality standards and in line with current and future market demands. The objective is to ensure long-term value creation and continuous growth of the real estate portfolio. In pursuit of this goal, the Company takes a holistic approach to corporate governance, which, along with economic performance, also takes into account social and environmental aspects and is therefore aimed at maintaining the long-term business success of the Company.
The flexibility of the business model is continuously assessed in light of social, political and regulatory developments and adjusted as necessary. Relevant trends, such as digitization, demographic changes or immigration, can lead to the expansion and adjustment of the value chain. Other influencing factors include market trends requiring the revitalization of properties that no longer meet current needs, or changes in the interest rate environment. Alongside these macro and market trends, the needs of key stakeholders also shape the environment in which Swiss Prime Site’s business model is embedded. The challenge is to continually address the concerns of customers, investors, the public sector, project partners and employees.
Real Estate Development Business Model
The different value creation stages of the business model are vertically integrated in the five group companies Swiss Prime Site Immobilien, Wincasa, Tertianum, Jelmoli and Swiss Prime Site Solutions. The real estate portfolio, which includes 11.8 billion CHF of properties, is being actively expanded and optimized by the Swiss Prime Site Immobilien through acquisitions, developments, conversions, construction, financing and, where necessary, divestitures. Wincasa plays an important role in the group structure, managing the properties of Swiss Prime Site Immobilien and third parties. The business model also allows you to use part of the real estate portfolio; As a service provider and premium department store in the assisted living sector respectively, Tertianum and Jelmoli leverage the properties of the portfolio and therefore also contribute to further strengthening the business model. Swiss Prime Site Solutions has been offering comprehensive services for third parties as an asset manager since 2017. These range from acquisition to development, conversion and construction, to financing and disposal.
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Therefore, the portfolio of services provided to support initial investment covers every stage of the real estate life cycle, broadening the income base while spreading the risk.
Swiss Prime Site’s group structure enables its group companies to benefit from each other in several ways, be it through the sharing of resources and expertise, or the fact that they can provide each other with access to different markets. At Swiss Prime Site Immobilien, Tertianum and Jelmoli can count on having an owner with significant investment power, while they in turn represent reliable tenants and help properties maintain their value. For Wincasa, Swiss Prime Site Immobilien is a key customer who can develop innovative services. In return, Wincasa provides Swiss Prime Site Immobilien with important local insights into current market trends and customer needs. Swiss Prime Site Solutions also benefits from the group structure in countless ways. For example, the financial services were developed in close cooperation with the Swiss Prime Site Immobilien. There is also a regular exchange of knowledge between asset managers in both group companies. Together with Wincasa, Swiss Prime Site Solutions can offer additional “one-stop” services.
All group companies also benefit from comprehensive processes. Swiss Prime Site uses an innovation management system that spans the entire group. Future scouts working in the group identify trends that are relevant for business development in all group companies. Furthermore, marketing and branding as well as modern information technology architecture and modern employee development are the basis for the further development of the business model concept of “space to living spaces”.
Swiss Prime Site values value creation as a comprehensive concept. Accordingly, business activities do not focus only on achieving financial goals; they also consider non-financial aspects to ensure long-term value creation. The company follows an integrated approach that focuses on innovative activities and added value for shareholders, customers, employees and suppliers, as well as responsible management of resources and the environment and positive relations with other stakeholders.
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Swiss Prime Site therefore strives to continuously optimize its value creation according to the following six capitals of the International Integrated Reporting Council (IIRC):
Relationship capital refers to the network value of all relationships with Swiss Prime Site customers and stakeholders. Sharing common goals and values and building trust are a strong foundation for sharing valuable information. These relationships ultimately enhance our reputation and add value to the company’s brand.
To strengthen stakeholder relations, the Company conducts regular dialogue with all stakeholder groups and coordinates communication activities in a timely and appropriate manner. All group companies stay in close contact with customers to ensure they are satisfied and respond quickly to any new requirements. Another stakeholder panel was held in 2019 where the topic of corporate responsibility was discussed with key stakeholder groups internally and externally. Regular communication with investors and analysts was also a priority during the reporting year. This led to an increase in the number of registered shareholders to 11,266. In 2019, all issues on the agenda of the annual general meeting were approved by the shareholders.
A stable and future-oriented company is based on financially sound management. Financial capital includes all financial resources that Swiss Prime Site uses to develop and deliver products and services. In addition to income from operating activities, financial capital includes funds from targeted investment and capital markets.
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In 2019, Swiss Prime Site generated a profit of CHF 628 million, 31% more than the previous year. 2019 was also a good year for shareholders thanks to skillful investments and responsible management of around CHF 521 million. Earnings per share were CHF 8.00.
One of the main tasks of Swiss Prime Site is to continue to develop its products and services within the group and to ensure that they meet the needs of its customers and markets. Infrastructure includes real estate that is developed, used, leased or sold, as well as all facilities used to provide our other real estate services.
The attractive premises held in the portfolio were further expanded in the reporting year with the completion of several construction projects, including the new YOND building in Albisrieden in Zurich and the redevelopment of Stücki Park in Basel. In addition, innovative products such as Flex Office co-working spaces have been developed. The portfolio currently includes 187 properties. The total area has increased to 1 604 451 m
Intellectual capital is based on the continuously developing expertise of the Swiss Prime Site Group and intangible assets developed together with partners, such as patents, trademarks, software, rights and licenses. The systems and processes that derive from these assets create specific competitive advantages in the marketplace and proactively help capture future potential.
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The positive results achieved by Swiss Prime Site also reflect its forward-looking innovation strategy. Before the accelerator workshops held in 2019, about 250 start-ups were evaluated for possible cooperation. The selection of topics considered by the Future Board was also further expanded in the reporting year and resulted in six innovative projects.
Natural capital refers to environmental resources from renewable and non-renewable sources that are needed now and in the future to provide services. Responsible management of land, energy and water resources is a key priority in our real estate business operations.
Swiss Prime Site works to protect the environment and conserve resources, whether in its daily operations or investments in real estate and its management. At the same time, the focus is clearly on the real estate portfolio, where invested capital makes the greatest impact. In 2019, Swiss Prime Site developed CO
Property portfolio reduction path based on ambitious energy consumption and emissions targets. The company also analyzed the portfolio with the aim of promoting increased use of solar energy. Who?
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The intensity of the real estate portfolio (including services in the properties of the Swiss Prime Site real estate portfolio) in 2019 was 22.27 kg CO
Swiss Prime Site’s human capital includes all the employee knowledge, skills and experience needed to bring the desired products and services to market. The motivation and innovative spirit of the people working at Swiss Prime Site are essential to the implementation of our strategy and the successful sale of our products and services.
The success of Swiss Prime Site depends on the extent to which it is able to retain and attract qualified employees, promote and expand their skills, give them the opportunity to take on greater responsibility and motivate them. In a competitive market for talent, Swiss Prime Site aims to always have the best professionals at its disposal. In the reporting year, it invested around 1.4% of its salary in the training and development of its 6,506 employees. The medium-term goal is to reduce employee turnover below 15%
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