5.1 Investment properties

In the 2022/23 financial year, the value of the investment properties increased by kCHF 1 980 or by 0.9%. The change in value resulted mainly from value-enhancing investments of kCHF 803 and positive changes in market value of kCHF 1 100. The change in market value was driven by asset management achievements such as sucessful new lettings, indexations and re-letting of vacant spaces at market level. 

The weighted average lease term (WALT) as of 31 March 2023 is 2.9 years (previous year: 3.5 years).

Investment properties are valued twice a year by Jones Lang La Salle AG (JLL). The discounted cash flow (DCF) method is used to determine fair value on the valuation date. Under this method the fair value of a property is determined by the sum of projected future net earnings discounted to the valuation date plus the discounted exit value. A detailed cash flow forecast is produced for the first ten years, with a residual value (exit value) being determined on basis of a perpetual annuity of the exit cash flow for the rest of the term. The projected gross rental income is determined on the basis of existing tenancies and assumptions on reletting at current market rents, with allowance made for the relevant marketing periods and the probability of current leases being renewed. The net rental income is defined as the gross rental income less property-specific costs that cannot be passed on to tenants plus maintenance and any renovation required for new rentals. The discount calculation is carried out separately for each property, taking account of its property-specific risks and opportunities, in line with market conditions and on a risk-adjusted basis.

Züblin is currently invested exclusively in the office asset class and primarily in the Zurich economic area. The average capital-weighted nominal discount rate is 4.04% as of 31 March 2023 (previous year: 3.61%), in the range of 3.55% to 5.50% (previous year: 3.10% to 5.10%). The average capital-weighted capitalization rate is 3.04% (previous year: 3.11%), in the range of 2.55% to 4.50% (previous year: 2.60% to 4.60%).

The following tables show a sensitivity analysis of the two parameters Discount Rate and Market Rent, which have a significant influence on the valuation of the investment properties.

Valuation effects in relation to changes in market rents (effects up to max. ±8% percent):

Valuation effects in relation to changes in discount rates (effects are shown in ±10 basis points):

The principles and assumptions applied in the valuation of the investment properties are set out in the valuation report.

The list of all investment properties along with all information in accordance with the Directive on Financial Reporting of the SIX Swiss Exchange can be found in the portfolio section of this annual report. This additional information is an integral part of the notes to the consolidated financial statements.