ZAST Real Estate Europe Direct: The Zurich investment foundation has been investing in Europe's booming cities together with Schroders for over ten years.
In the European economy, the signals are set to green. Historically low unemployment, easing inflationary pressure and the economic stimulus packages announced give cause for optimism despite geopolitical tensions. So it's a good time to invest in the European real estate market.
However, two things are crucial for investment success: cooperation with local experts and networking in the market. Local experts play a key role in real estate projects. As this example shows, this applies regardless of the market situation.
Recognizing potential
In 2015, the Zurich investment foundation acquired the existing property at 55 Bishopsgate in the City of London with Schroders. In the underwriting process, the local acquisition team demonstrated its profound understanding of the market by identifying major untapped potential in the location. Various property strategies were modeled during the acquisition phase. A subsequent, detailed business plan showed ways of maximizing rental income until the departure of the main tenants. At the same time, Schroders' local project development team began planning work for a new construction project with subsequent sale. The long, complex and elaborate planning phase ended in 2024 with planning permission granted. The team's excellent market networking played a key role in removing all obstacles via negotiations with local authorities and neighboring property owners. The "London Bishopsgate" construction project was finally approved.
Developing locations
The approved project is a 285-meter-high tower that will add a striking building to the London skyline. Flexible, diverse and prestigious office space will be created over 63 floors and around 80,000 square meters. As B-locations, such as Canary Wharf, are in less high demand, the project will offer much-needed prime office space in an optimal location once completed.
The concept meets the latest sustainability requirements (BREEAM "New Construction Outstanding") and impresses with attractive cultural offerings on the lower floors. This not only integrates the property into the neighborhood; it also increases the attractiveness of the micro-location by creating additional offerings that set positive urban accents.
Managing risks
The project is part of a broadly diversified income-oriented core investment strategy that covers 36 properties in 11 countries. A research team implements the strategies based on an integrated top-down investment approach, identifying the most promising markets and sectors from a long-term macroeconomic perspective. As with Bishopsgate 55, these measures are complemented by the careful bottom-up approach of the local asset managers. The focus is always on stable, growing income and the use of low leverage.
On this extremely solid basis, value-adding projects can be realized that contribute to optimizing the sustainability profile of the portfolio and enable long-term letting with attractive rents. At the same time, the floorspace on offer can develop in line with demand trends. In this way, vacancy risks can also be reduced.
