The Swiss bank Credit Suisse has decided not to go forward with its plans to launch a real estate fund scheduled to be listed in the fourth quarter of this year. The reason given for the decision was falling trading volumes for other listed Swiss real estate funds, which would likely make for a highly volatile IPO. European real estate has been negatively impacted by higher interest rates, but Switzerland seems to have fared better than most countries. “Unlike in other countries, however, the Swiss real estate market is only undergoing a process of normalization and is not being pushed into a full trend reversal. It would not be out of place to talk of a “soft landing”, as long as this is understood to include a few tolerable price corrections that we expect over the next few years,” explained a recent market report by Credit Suisse.
So if Credit Suisse thinks there might be a soft landing for the country’s real estate, why pull back from real estate investment? The answer might have less to do with the market and more to do with Credit Suisse itself. As you may recall, Credit Suisse was caught up in the bank run earlier this year, started by the closure of Silicon Valley Bank. It was granted an emergency line of credit by the Swiss National Bank (something that it declined to do in the aftermath of the 2008 subprime mortgage crisis), but even that was not enough to save it. The result was a merger with UBS, the other of Switzerland’s only two large banks, which is still underway. UBS has created a real estate unit within its UBS Asset Management division, but the complications of combining these two old financial institutions while offering a new product in a shaky market might have been too much to deal with.