«The conversion and renovation market will show the strongest growth»
Jens Vollmar is Vice President of Development Switzerland and Head Division Buildings/Country President Switzerland at Implenia. In an interview, he explains how the members of the Swiss Development Industry Association act on important issues such as digitization and sustainability and what future the association predicts for ground floor uses.
To person
dr Jens Vollmar is Head Division Buildings/Country President Switzerland and a member of the Executive Committee at Implenia AG. He is also Vice-President of Swiss Development and a member of the board of the umbrella organization «Bauen Schweiz». The 37-year-old studied at the University of St. Gallen (HSG) and the University of California in Berkeley and has a doctorate in Accounting and Finance. He is also a lecturer in the areas of construction & real estate management and mergers & acquisitions (mergers and takeovers) at the HSG.
Which factors are important for the further successful development of the real estate market in our country from the point of view of Swiss Development?
From our point of view, the market parameters, i.e. the so-called fundamental data, continue to support the positive development of the Swiss real estate market in the short and medium term. We see important drivers such as population growth, low interest rates or the unemployment rate at a stable and good level. However, the real estate itself is also important for healthy development. In addition to the location of a property, the focus is on the quality of the investments. In doing so, we understand quality not only as the materialization, but rather the optimal balancing of the needs of all stakeholder groups. A property today must have the desired flexibility and adaptability for users and owners. But the deadline within which a property can be put on the market is also important. As an association, we are committed to greater planning security, faster approval processes and streamlining and standardization of planning legislation. In this context, we strive to sensitize the actors involved to these issues.
What influence does climate change and the associated overheating of cities have on construction projects?
The frequency and intensity of heat waves are increasing and are already a reality. In addition, spatial planning calls for more dense building towards the inside, which contributes to the additional warming of the cities. As a direct result, temperatures in the unair-conditioned or uncooled interior spaces of properties will rise in the summer. We have to face this challenge. Our members work accordingly on technical and structural solutions. This includes, for example, thermal simulations in the early development phase or the option of activating floor heating for cooling. We are also seeing increased demand for greening buildings.
Online trade is booming, which is likely to have an impact on commercial ground floor uses. How do you assess the future of these uses?
The uses of the ground floor actually pose major social and urban planning challenges for the municipality, urban planners, investors and project developers. Different uses are increasingly converging: Today, working, living and leisure time can no longer be separated from each other. The separation of uses provided for in zoning plans and in the building and zoning regulations is difficult to reconcile with this trend. From our point of view, new, flexible zoning based on alternative criteria is worth examining – this could make ground floor uses more attractive again.
Are there already changes?
Yes, we are registering the advancement of innovative ground floor formats such as showrooms or parcel pick-up points. In the future, the restrictions on motorized private transport that are being asked for more and more, the creation of pedestrian zones and the discussion about wider sidewalks are likely to change the outdoor spaces of properties and quarters in the long term and thus also influence the use of ground floors. However, in our opinion, the latter should be defined in a needs-based manner, taking into account use and the environment, and not have to follow rigid legal requirements. In the long term, flexibility should also be a decisive point for ground floor uses.
What factors influence the decision to convert/refurbish or build a new building?
In the past, replacement buildings were a big topic. However, we believe that the conversion and renovation market will show the strongest growth in the future. Especially with regard to the increasing sustainability considerations. Energy and space efficiency as well as regulatory requirements play an important role here. Various factors are relevant for a decision about new construction or conversions or a change of use: recording the condition of the building and where a property is in the life cycle, analyzes of location and local market development, financial/economic parameters or also the consideration of the property utilization reserves.
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What efforts is Swiss Development making in digitization?
The planning and realization of buildings and infrastructure still have a strong unique character today. Topics such as industrialization, productivity and digitization are essential for Switzerland's competitiveness in the field of development. Thanks to the use of BIM and 3D printers, digital construction progress control or the use of drone or robotic technology, planning security in terms of costs, quality and deadlines can be greatly optimized. In our opinion, unification and standardization as well as simplification in application are very important here. Development Switzerland, together with the member companies, examines possible contributions to the promotion and improvement of standards and their application. We anticipate a decade that will transform our industry in terms of digitization and productivity like never before.
Today, new buildings must be energy-efficient and preferably completely recyclable. How are these aspects taken into account in Development Switzerland?
Sustainability and ESG strategies are more relevant than ever in the real estate industry. Our members have long recognized these market needs and implemented them in their organization and range of services. For example, many companies already have sustainability departments. The greatest leverage is not in new buildings, but in spatial and energy-related renovations of existing properties. Development Switzerland always takes a holistic view of issues relating to energy sustainability, resource efficiency and the circular economy. This means that we try to take economic, social and ecological aspects into account in a balanced way. Our members work with start-ups, developers and research institutions to support and drive rapid market launch of innovative ideas.
Agricultural land is still being built over in Switzerland. Do you think this is necessary?
No, the focus is clearly on inward settlement development. Various legal advances, such as the revision of the Spatial Planning Act of 2013, restrict the development of cultivated land in favor of densification. In addition, the conversion of agricultural areas into building zones is usually only possible by means of area compensation or exchange. In general, it can be said that the utilization reserves in the cities and agglomerations are still very high. For the creation of living and working space, these usage reserves should be realized in advance.
What's the problem with this?
Less restrictive legal requirements would be desirable. The value-added tax, for example, makes it difficult or sometimes impossible to realize utilization reserves. But there are many other inflexible regulations that make building in existing buildings almost insurmountable challenges. Development Switzerland is working with the industry to sensitize decision-makers, authorities and politicians to this topic. We advocate more discretion so that good solutions can be developed taking into account the situation and user needs.
Do you think the repeatedly forecast real estate bubble in Switzerland is a serious scenario?
The ongoing low-interest policy of the central banks and the market development make investing in real estate attractive. There are few investment alternatives that have a similar risk/return profile. Switzerland has also learned from the mistakes of the past and is in a much better position today than it was at the beginning of the 2000s – for example against the background of more restrictive mortgage lending. However, the noticeably louder calls for a return to a normalized monetary policy show that this situation can also change in Switzerland. Rising interest rates too quickly and the associated refinancing hurdles could lead to a fall in market values, which in turn would have an impact on capital requirements. Accordingly, Switzerland would do well to continue its stable monetary and interest rate policy and to think in scenarios. The more robust the business models and financing, the less our economy is exposed to risks. As an association, we are very confident about the short and medium-term future.