Regulations make economic property investments more difficult
A new study by Lucerne University of Applied Sciences and Arts shows that increasing regulation is hampering investments in sustainability. Although many investors are prepared to forego returns in the short term, increasing bureaucracy in the property sector is making refurbishments and new builds more difficult, particularly in urban areas.
According to the study, complex regulations, long processing times and tenant protection are increasingly burdensome for institutional investors. 92 per cent of the investors surveyed criticised the lengthy processes with authorities and objections. The increasing requirements mean that investments are increasingly being relocated to urban centres and rural areas, where the bureaucratic burden is lower.
Refurbishment backlog and declining living comfort
The stricter regulations are not only leading to a decline in new builds in cities, but also to delays in urgently needed refurbishments. This exacerbates the already existing housing shortage in urban regions and impairs the quality of life of residents by postponing renovation measures.
Focus on sustainability, but social aspects take a back seat
Despite the regulatory hurdles, around half of investors are prepared to forego returns in the short term in favour of sustainability. In the long term, however, they expect these investments to be amortised through higher returns and increases in value. However, the study shows that social sustainability lags behind ecological and economic aspects in the list of priorities.
Outsourcing on the rise
Another interesting development is the increase in the outsourcing of administrative tasks. The outsourcing of data sovereignty is particularly surprising, as this creates a high level of dependency on service providers. Portfolio and asset management functions are also increasingly being outsourced to external partners.