Inexpensive apartments: Investors accept Zurich’s one-third target

Anyone who builds rental apartments in Zurich would do well to take into account the will of the population for more affordable living space. Real estate companies are increasingly realizing this – and breaking new ground.

The 268 rental apartments in the “Obere Allmend” development in Manegg will soon be on the market.

PD

In the city of Zurich, at the northern end of Manegg, 268 new rental apartments will soon come onto the market. That alone is almost something special, as despite the lack of housing in Zurich it is hardly possible to build larger residential buildings due to all the objections.

It is even more remarkable that the Obere Allmend development did not make any negative headlines during the entire planning and construction process – even though an investor who wants to earn money with her apartments is behind the project. Yield-oriented builders have encountered a great deal of resistance in Zurich since the city set itself the goal of increasing the proportion of affordable apartments in all rental apartments to one third.

Skeptical cooperatives

However, the smooth course is not a coincidence. Rather, it is based on a forward-looking approach. The real estate company Mobimo, which had secured the purchase right for the sub-area, voluntarily refrained from building over the entire property with investment properties from the outset. Instead, cooperation with a non-profit housing developer was sought in order to jointly create a development that is in line with the city’s third-party goal.

Mobimo’s approach was a novelty. The search for partners was correspondingly difficult. They knocked on 30 cooperatives and were rebuffed everywhere, explains Mobimo CEO Daniel Ducrey on request. The company finally struck gold with the Logis Suissea non-profit stock corporation that rents out its apartments like cooperatives on the basis of cost rent, but according to the Chairman of the Board of Directors, Peter Schmid, “has no reservations about market partners”.

It took six years before construction could begin in 2021. The four buildings, two of which belong to Mobimo and two to Logis Suisse, were designed by the same architect and implemented by the same general contractor – according to the specifications of the respective client. The result is an ensemble from a single source, with 157 rental apartments, which are rented at market prices, and 111 apartments (44 percent) where the cost of rent is applicable.

Cheap apartments for families, more expensive ones for couples and singles

As a look at the almost finished buildings shows, you have to look closely to guess where you will probably live cheaper and where more expensive. The four houses look practically the same, except that two of them have plaster facades and two have clinker facades and the Mobimo apartments have a somewhat more valuable interior design and probably more expensive kitchen appliances.

The two elongated buildings on the left belong to Mobimo, the two next to them, which form a courtyard, belong to Logis Suisse.

The two elongated buildings on the left belong to Mobimo, the two next to them, which form a courtyard, belong to Logis Suisse.

PD

What clearly differs, however, are the apartment types of the two providers. Because the idea is of course not that Logis Suisse and Mobimo compete too directly with their offer, especially since the rents at Logis Suisse are around a third cheaper. For example, Logis Suisse mainly rents family apartments with four or five rooms (for which minimum occupancy regulations also apply initially), while Mobimo focuses on 2.5 and 3.5 room apartments for couples and singles. This different focus should also ensure a better mix of the quarter.

Given the 0.07 percent vacancy rate in the city, there is unlikely to be a risk that Mobimo’s apartments will be less easy to rent because of the Logis Suisse offer, which will be launched first. But Mobimo is giving up part of its profits by owning fewer apartments itself. However, the partnership was not entered into out of altruism, but to increase the social and political acceptance of the project and thus minimize the risk of being confronted with potentially expensive objections.

In the city of Zurich, practically no apartments are empty

Share of vacant apartments,* in %

Further joint projects planned

As it turns out, the calculation paid off. The apartments, which will be on the market from the end of September, will be completed on time and can be occupied next spring. And the experience of working together was so good on both sides that the next joint project was already being tackled in Niederwangen near Bern.

The question remains as to why the proportion of inexpensive apartments in the Obere Allmend Nord is not just one third, but even 44 percent. Did Mobimo deliberately want to exceed the city’s target? Ducrey denies: “It has to do with the property. Buildings can rarely be planned completely freely. There are sizes to consider or escapes.” But the distribution that came out is right for Mobimo.

source site-111