Switzerland — the Alpine European country of luxury watches and hefty offshore bank accounts — has a lofty reputation when it comes to its engagement in international finance. Indeed, where there’s smoke, there’s fire. Swiss-based companies have historically been active in exporting funds in the form of overseas direct investment. The famously neutral nation is, according to the Swiss National Bank, the world’s 10th-largest exporter of capital, with direct foreign investment levels of $1.56 trillion in 2022.
Much of this direct investment goes into commercial real estate, especially in the U.S. Per figures from MSCI Real Assets, companies with Swiss connections invested $1.84 billion into American commercial properties last year. While that was down 13% compared to 2021, it was still good for fifth place among all countries for cross-border investments into the U.S. That’s familiar territory for the Swiss, who were No. 6 in 2020 and No. 7 in 2021 on MSCI’s rankings.
Two Swiss companies were among the top 20 cross-border buyers of U.S. commercial assets in 2022, according to MSCI. Stoneweg SA ranked No. 12, while UBS, which has real estate investment operations but is more prominently known as the largest private bank in the world, was 13th.
Stoneweg, in particular, has been active in the U.S. apartment sector and has its stateside multifamily operations headquartered in St. Petersburg, Florida. Its current portfolio includes more than 40 properties, many of them in large U.S. cities and their suburbs. Stoneweg’s acquisitions since October 2022 alone include 161 units in Dallas, 178 units in Cincinnati, and 348 units in Kansas City, Missouri. Prior to that, the company also deployed funds last year to secure multifamily assets in cities such as Houston, Jacksonville and Charlotte.
With commercial real estate trending downward as the calendar turned to 2023, Stoneweg has been relatively quiet so far this year. Rafael Cerezo, the company’s chief investment officer, acknowledged this past March that the environment is “very much wait and see” while adding that the market is due for a repricing. When that happens, the company will be ready, he said.
“We look to invest or anticipate market trends to offer our investors compelling returns at a period of time in products that are likely to become of significant interest to institutional buyers over the course of the next three, four, five years,” Cerezo said. “That means that we need to be at the forefront, really, of investing in new typology of assets, or assets that are going to come on trend. In the U.S., that for us means primarily focusing on the multifamily industry.”
UBS, meanwhile, recently made headlines for entirely different reasons. In March 2023, the company stepped in to buy fellow Swiss banking giant Credit Suisse, preventing its collapse after a long downward spiral. The transaction is gigantic in terms of its international finance impact, but it also has huge implications for commercial real estate as well. The new company will have more than $100 billion in combined real estate assets under management, as well as a commercial property loan portfolio of $80 billion.
Take it all together and you’ve got a major overseas player in U.S. property investment finding itself in interesting waters of late. Clearly, there remains plenty of money to be deployed via Swiss investors, who have traditionally been a shrewd and active bunch. How Switzerland’s biggest investment companies handle the navigation of these aforementioned waters will go a long way toward deciding Switzerland’s outlay into U.S. assets in 2023 and beyond. ●
