Why apartment blocks are so attractive as an investment.

When one thinks of the typical Ginesta property, one does not primarily think of an unspectacular apartment building with rental flats. Is that where you are 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. Therefore, these properties are merely less visible in our portfolio, but they are a relatively accurate reflection of the market as a whole. As a company with over 40 employees, we are of course predestined to achieve the best sales successes in this supreme discipline as well.

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 effort is also correspondingly higher. It starts with the valuation and the potential assessment, which is much more time-consuming. You also have to delve much deeper into the details: What do the tenancy 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 situation with regard to the renovations that have been carried out and those that are pending? What exactly is the market like in the region and at this location? Often several parties are 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 owner and an architect friend with them to the talks. Then there is the demanding search for interested parties, which, as mentioned, often has to be anonymous and discreet. In addition, the financing security of the prospective tenants must be clarified before the viewings, which are to be organised with sensitivity towards the current tenants in a way that is not disruptive and achieves the goal. These at least two-stage bidding procedures are also time-consuming and the contracts also pass through many more hands before they can be certified at the notary's office. To return to the question: Whether it is a single-family home or an investment property, in the end the income remains balanced in relation to the effort and we can only survive on the market in any case if we are worth every franc with our service in the eyes of the seller and buyer. 

There are quite a few providers. So how do you separate the wheat from the chaff?

In 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 75 years of experience, the resulting network of potential clients, banks, architects and many more, as well as the accumulated knowledge of our exclusively highly trained employees from the appraisal to the marketing - all marketers at Ginesta, for example, have a federal certificate - to the marketing service centre 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 cross their desk, have the greatest possible market overview, enabling us marketers to develop the right sales strategy. In other words, to create an offer that will be received by the market in the best possible way. We also do this, if necessary, by pointing out visions for the development of the tenants, the conversion of an income property into an investment property, for example, through expansion and the establishment of 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 those with institutional investors - especially in the current Corona times, which require even more tact. 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 recognisable to the market as properties for sale. Just a fortnight 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 begun.

What are the implications of the Corona situation?

It is particularly tricky with the viewings, especially with tenants who are already unsettled by the potential sale of their cherished property. These tenants must be taken by the hand with great empathy so that the viewings can proceed in a target-oriented 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 in two ways. The most important is the use of digitalisation with virtual tours, which provide a relatively good insight into the property and are an excellent filter. Then, before a viewing of an apartment building, we expect proof of financing from the prospective buyer. During the viewings 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 people also increased?

That's how it is. Even if initially there are always many interested parties who just want to check the market once, the number of serious enquiries with genuine interest in buying has increased significantly. This is also not surprising given the current development, which has received an additional boost with the recent decision of the Federal Supreme Court that the maximum net yield may now be 2% above the current reference rate. After all, where else can such gross yields be generated and where does the investment itself still have the potential for a further increase in value?

So will Ginesta also soon be acquiring one or two apartment buildings himself?

That is not our role and we would jeopardise our neutrality. We are valuers, marketers, mediators, development workers in projects and, what not everyone knows, also managers. We can do that, we are comfortable with that and this is where we continue to see our potential. Or in other words: cobbler, stick to your last.

Has it ever happened that a seller decided to keep his property himself?

That has also happened before. And even then we did our job right. Because every happy customer who got on with us is a customer who recommends us and comes back. It is not uncommon for follow-up orders to result from this. Some of them became customers of Ginesta Bewirtschaftungen and now benefit from the services of this professional team of eight people. If they later want to sell, we are often the first and only address for the sale. In another case, a seller decided to build a replacement building with the aim of selling the units in condominium ownership. We were again entrusted with this marketing. That's how it is: the longer you are in business, the more balanced the balance of give and take becomes. But of course only if you work transparently and competently, as we do.

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