10   Investment real estate

The changes in the first half of 2016 can be summarised as follows:

Within the commercial real estate portfolio, the value-enhancing investments relate to the Escher Wyss site, Zurich (CHF 2.9 million), Grüngasse 27–31 /‍ Badenerstrasse 119–133, Zurich (CHF 2.0 million) and four other properties (CHF 0.6 million).

The disposals of yield-producing properties relate to the sale of the commercial properties Lagerstrasse 41/45 (CHF 48.8 million) and Max Högger-Strasse 2 (CHF 19.6 million), Badenerstrasse 141 in Zurich (CHF 8.6 million) and Alte Dübendorferstrasse 17 in Dietlikon (CHF 16.7 million).

The reclassification from investment real estate under construction to yield-producing properties relates to the commercial property Schiffbaustrasse 7, Zurich (CHF 26.2 million) completed as at 1 June 2016. The Fangletenstrasse project in Bülach (CHF 1.8 million) was reclassified from development reserves to investment real estate under construction as a result of the start of building.

Largest tenants, commercial real estate

Share in total rental income from commercial real estate:

In the first half of 2016, the five largest tenants accounted for 44% of rental income from commercial real estate. The ten largest tenants generated 59% of rental income from commercial real estate.

The five largest tenants’ share of total rental income from all yield-producing properties (commercial and residential) declined to around 36% in the first half of 2016.

The weighted remaining term of fixed-term rental contracts is 7.6 years (31.12.2015: 7.8 years).

Investment real estate under construction as at 30 June 2016

[1]According to valuation as at 30.06.2016

[2]Building and land costs

Schiffbauplatz, Zurich

New-build five- to six-floor commercial building to Minergie standard with lettable floor space of 13 100 square metres. The project comprises 10 700 square metres of office space on the first to fifth floors, 1 800 square metres of space for catering and commercial businesses on the ground floor, 600 square metres of storage space and 36 parking spaces in the underground car park. Ten-year rental contracts have been concluded for the whole of the office space and part of the storage space. The project is being built by the Projects & Development division and, upon completion in the second half of 2017, will be reported under the portfolio of yield-producing properties. For the market valuation as at the balance sheet cut-off date, nominal discount and capitalisation rates of 4.8% and 4.3% were applied.

The property is 100% solely owned by Allreal.

Fangletenstrasse, Bülach

Four new-build apartment buildings with a total of 76 rental apartments to Minergie-Eco standard on the 11 250 square metre plot on Fangletenstrasse in Bülach-Nord. The rentable area is 7387 square metres. The project is being built by the Projects & Development division and, upon completion in 2018, will be reported under the portfolio of yield-producing properties. For the first-time market valuation as at the balance sheet cut-off date, nominal discount and capitalisation rates of 4.5% and 4.0% were applied.

Yield-producing properties (CHF 3418.6 million) and investment real estate under construction (CHF 45.8 million) are recognised as at 30 June 2016 at fair values according to category 3. No adjustments were made to valuation techniques or processes during the period under review.