Projects & Development division

Earnings from business activity achieved by the Projects & Development division in the period under review by means of project development, realisation and sale of development real estate amounted to CHF 102.8 million (2013: CHF 110.7 million). The result is characterised essentially by the successful sale of development real estate.

The division’s operating result (EBIT) amounted to CHF 46.2 million (2013: CHF 45.2 million). The sale of development real estate and a credit note affecting net income in connection with the IAS 19 accounting standard relating to a staff pension fund liability contributed to the Realisation division’s result. This result is reported above that of the previous year despite lower earnings.

In the year under review, the Projects & Development division reported an operating margin of a gratifying 44.9% (2013: 40.8%). Operating profit for the financial year amounted to CHF 30.9 million (2013: CHF 29.0 million), or a respectable return on equity of 17.7% (2012: 12.5%).

Project development

In the period under review, with own and third-party projects, the Project Development department reported continued good utilisation of its capacities, which were slightly above those of the previous year.

The Richti-Areal in Wallisellen, which was completed in 2014, represents a prominent example of the division’s productivity. The construction project was financed entirely by Allreal’s own means, and it guaranteed good capacity utilisation of the Realisation department for a period of some four years. The project furthermore generated a large number of ownership transfers of development real estate and contributed toward the growth of the portfolio of yield-producing properties.

In the period under review, an architectural competition was carried out for an office building on Schiffbauplatz in Zurich-West. The project that was unanimously recommended for further processing by the jury comprises about 13,000 square metres of usable space on six floors. Should all permits be available on time, construction will commence mid-2015.

Project Development in 2014 defined a neutral-usage, modular construction concept for the Bäuler-Areal (30,278 square metres) in Rümlang ZH, which was received with great interest by the market.

Planning of the mixed-usage Bülachguss site in Bülach ZH was continued in the period under review. On some 55,000 square metres, Allreal plans the realisation of over 450 rental apartments and condominiums, and commercial space for offices and trade. The investment volume of the project amounts to about CHF 300 million. The layout design required for implementation will be discussed in March 2015 by Bülach’s city council.

Further important development projects taken up, significantly proceeded with or completed in 2014 in addition to those mentioned above include:

[GE]Area development

[AE]Site development

[PE]Project development

[*]on behalf of third party

The potential order volume of the processed projects amounted to about CHF 1 billion.


Project volume concerning third-party and own projects processed by the Realisation department in 2014 amounted to CHF 870.6 million, or 19.9% below that of the previous year (2013: CHF 1 087.0 million). This clear reduction is due mainly to the completion end of 2013 of several large projects in Zurich-West and Richti-Areal in Wallisellen and during the period under review. Moreover, forsaking projects with lacking profit expectations has additionally accentuated the volume reduction.

Capacity adjustment to the lower project volume occurred gradually and mainly by means of natural fluctuation and the termination of contractual agreements with freelance collaborators.

Of the project volume completed in the period under review, 62.8% apply to third-party projects, 20.9% to own projects and 16.3% to development projects for sale (2013: 57.1%/19.6%/23.3%). The share of new construction projects amounted to 77.5% and that of conversions and refurbishment to 22.5% (2013: 85.8%/14.2%).

The Realisation department processed some 120 projects in the 2014 financial year. With few exceptions, the construction projects proceeded according to schedule and thus maintained deadline, cost and quality specifications. The order backlog of some CHF 820 million secured on the cut-off date represents capacity utilization of at least twelve months.

Pressure on costs and scheduling concerning the realisation of construction projects further intensified during the period under review. Moreover, significantly higher liability risks were generated by higher joint and several liability and stricter regulations concerning labour and social-insurance regulations. Accordingly, the Realisation department began mid-2014 to implement a series of measures.

Projects completed in 2014

Toni-Areal was transferred to the Canton of Zurich with effect from 1 May 2014. The building used mainly by the Zurich University of the Arts and the Zurich University of Applied Sciences is the largest and most complex individual project realised by Allreal to date. The building comprises 87 000 square metres of usable space, of which the two universities account for 71 000, Collections/Museum 6 000 and the 100 rental apartments 10 000 square metres. Duration of the rental agreement between Allreal and Canton of Zurich is at least 20 years.

A further large project brought to completion in 2014 is the mixed-use Richti-Areal site in Wallisellen. The project is considered Switzerland’s first complex to fulfil the requirements relating to the vision of 2 000-watt society which, in both professional circles and in the public, is considered an ecological and urban-development showcase project with a future orientation. The last three Richti-Areal buildings were completed in the period under review: an apartment building for Allreal’s own portfolio, a residential and commercial building sold to an institutional investor and an office building leased to UPC Cablecom. The investment volume of the entire project amounts to over CHF 800 million.

End of October, the Superblock office complex in Winterthur with usable space of some 50 000 square metres was transferred on-schedule to the owners, AXA Winterthur. The second stage of the project is reserved for Winterthur’s city council and ready for transfer in the first six months of 2015.

Further projects completed in the period under review and transferred to the owners include:

[*]On behalf of third parties

Ongoing projects

On the Freilager-Areal in Zurich Albisrieden, Allreal is constructing a residential complex comprising some 800 residential apartments, 200 rooms for student accommodation, and space for trade and retail usage. In the period under review, work on this currently largest client project is on schedule and running smoothly. Transfer to the owners is scheduled for 2016.

Further significant buildings pursued by the Realisation department in 2014 included residential complexes in Zurich Unterstrass, Bottmingen BL, Rümlang ZH and Herisau AR, the restoration of a commercial building in Basel, and the renovation of a residential complex in Wetzikon ZH.

Projects commenced in 2014

In view of the upcoming restoration and renovation of the UBS building on Paradeplatz in Zurich, Allreal was commissioned with providing an interim solution on Pelikanstrasse in close proximity in Zurich City.

In August, construction work on a residential and commercial building located on Schiffbaustrasse in Zurich-West was started. Upon completion scheduled for end 2017/beginning 2018, this building will be transferred to Allreal’s portfolio of yield-producing buildings.

At the beginning of December, restoration and extension work on Balgrist University Clinic in Zurich Riesbach was begun. Construction period of this major project is expected to last three years.

The most important projects commenced in 2014 in addition to those mentioned above include:

[*]On behalf of third parties

Sale of development real estate

The sale of 84 units in 2014 was clearly below that of the previous year (2013: 256 units). The main reasons for the decline refer to the lower number of units for sale in the lower to medium price range compared to the previous year, the over-supply of higher-priced units in the Zurich metropolitan area, and tighter conditions implemented by the lending banks.

The Brüggacher project in Mönchaltorf ZH was successfully completed in 2014 with the sale of the last of a total of 50 units. While all eight units in the Stockenstrasse project in Kilchberg ZH were sold on the cut-off date, the last transfers will take place only mid-2015.

On the cut-off date, 17 of the 35 terraced houses of the Pfruendmattstrasse project in Mettmenstetten ZH begun in 2014 were sold.

As a result, 143 residential units – of which the following 53 ready for occupation – were available for sale at 31 December 2014 (31.12.2013: 198):



Number of

Of which
sold by
end 2014

Of which
transferred by
end 2014

Ready for

Meilen ZH




Q4 2012

Wallisellen ZH




Q3 2013

Kilchberg ZH




Q4 2013

Erlenbach ZH




Q1 2014

Bülach ZH




Q2 2014

Zurich Unterstrass




Q1 2016

Mettmenstetten ZH




Q2 2016

When taking into consideration transfer of ownership of the Ringhof residential and commercial building in Wallisellen to an institutional investor on 17 June 2014, sales of development real estate in the period under review amounted to CHF 211.6 million. The resulting net earnings amounted to CHF 34.6 million.

In 2014, the Project & Development division’s contribution toward net profit excluding revaluation effect represents a share of 27.4%.

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