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Property Sector Financialization: The Case of Swiss Pension Funds (1992–2005)

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Abstract

Financialization is a major trend in Western economies. This paper shows, on the one hand, how it changes the management criteria and, on the other hand, the limits to financialization in the property sector. Between 1992 and 2004, about 15% of Swiss pension funds’ wealth was invested in property. As far as their investment policy is concerned, pension funds have two choices. First, they can directly own, and have management responsibility for, the properties in their portfolios. Alternatively, they can buy shares in mainly Zurich-based investment vehicles. In the first case, pension funds require staff with the relevant expertise along with the knowledge of property markets. Investments have a regional focus and are assessed internally by the funds. In the second case, pension funds are merely investors and investment appraisals and comparisons are made on the basis of market criteria such as yield, diversification in relation to risk and liquidity. In this case, property investments focus solely on the country’s main urban areas.

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  • Thierry Theurillat & José Corpataux & Olivier Crevoisier, 2010. "Property Sector Financialization: The Case of Swiss Pension Funds (1992–2005)," GRET Publications and Working Papers 01-10, GRET Group of Research in Territorial Economy, University of Neuchâtel.
    • Handle: RePEc:nct:wpaper:01-10
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    7. Thierry Theurillat & José Corpataux & Olivier Crevoisier, 2008. "The Impact of Institutional Investors on Corporate Governance: A View of Swiss Pension Funds in a Changing Financial Environment," GRET Publications and Working Papers 12-08, GRET Group of Research in Territorial Economy, University of Neuchâtel.
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    More about this item

    Keywords

    Finance Industry; Territorial Economy; Swiss Pension Funds;
    All these keywords.

    JEL classification:

    • G0 - Financial Economics - - General
    • G3 - Financial Economics - - Corporate Finance and Governance
    • L0 - Industrial Organization - - General
    • E0 - Macroeconomics and Monetary Economics - - General
    • A1 - General Economics and Teaching - - General Economics
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • R1 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics

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