Consolidation trends in a changing property market
Changes in the Swiss property market: what impact for companies in the sector?
The challenges facing the real estate industry are numerous. They are linked to environmental, societal, technological and legislative changes.
- The implementation of the 2050 energy strategy and the pressure to reduce CO2 emissions are making it necessary to renovate and refurbish buildings.
- Sustainability and ESG (Environment, Social, Governance) criteria are gaining in importance with investors.
- The type of housing sought by users is changing in line with urbanisation, new lifestyles and an ageing population.
- Digitalisation offers new opportunities, as do innovations in building technologies.
Against this backdrop, the real estate industry is changing. All players in the value chain are affected. The industry encompasses a wide range of professions, as illustrated in the diagram below. These companies construct, maintain and manage buildings. Through their activities, they are in contact with building owners and users, and are thus affected by the needs of both parties.
How are mergers and acquisitions helping to transform companies in the sector?
In this changing market, companies in the sector are under pressure to innovate and evolve their business models in order to adapt and seize these new opportunities.
Mergers & Acquisitions and other forms of business combinations are a key way of changing business models. As a result, new configurations of players are emerging. There are many examples of this:
- Synergy between players in different fields. Signa-Terre SA has become an integral part of the back-office tools used by property managers and funds, offering energy and CO2 monitoring solutions for buildings. Such solutions create common standards and enable better coordination between the various stakeholders to increase the rate of renovation of the building stock.
- Equity investments by major groups in start-ups. The areas of application offered by these innovative companies are vast (crowdfunding, property search, obtaining mortgage loans, BIM, etc.). An investment by a major group accelerates and secures their development, as in the case of Tayo SA, in which Romande Energie SA has invested. The company has created a platform to simplify interaction between property managers, residents and service companies working in buildings. Using technology and data, owners can identify measures to improve the energy efficiency of their buildings. For Romande Energie, this investment contributes to its mission of reducing energy consumption in buildings.
- Collaboration between players in the same profession. These initiatives enable investment to be pooled. One example is immobilier.ch SA, which has been taken over by real estate agencies in French-speaking Switzerland. The company brings together the real estate offerings of a large number of agencies. For the profession, the aim of this operation was to counterbalance the commercial portals and to have a common platform with a high profile. This type of initiative also enhances the value of the industry’s expertise in the face of purely digital players.
- Geographic expansion in strategic business lines. These operations enable us to generate new sources of growth and to support an increasingly global customer base, while maintaining a constant standard of quality and having the local bases that are essential for a detailed understanding of the property market and on-site intervention. Romande Energie Services SA recently announced, for example, that it had consolidated its expertise in heating, ventilation and air conditioning with the acquisition of a company in Neuchâtel.
- Diversification of activities. Some players are choosing to diversify their activities in order to stay close to their audience. The M3 group, which is particularly active in Geneva, is a case in point. In particular, it has bought restaurants and hotels. The stated aim is to be close to the people who live in the region, with a wide range of activities, including management services, restaurants, hotels and healthcare.
- Horizontal integration of related activities. In the construction sector, the Orllati Group is a case in point. The company has made several acquisitions to integrate and develop its skills in all preparatory works (demolition, earthworks, drainage and special works).
- Appetite of institutional investors. Insurance companies are particularly active: La Mobilière has bought the French-speaking start-up Buildigo, Bâloise has created a “Home” ecosystem grouping together several investments, and Vaudoise Assurances has taken part in raising funds for Foxstone, a specialist in property crowdfunding in Switzerland. The institutional players, which hold substantial property portfolios, are thus creating strategic alliances in the field of property services, and foresee significant synergies.
The role of mergers and acquisitions
In this fast-moving market, mergers and acquisitions play a strategic role. These operations are an important source of differentiation and development for players in the sector.
As Dr Olivier Ouzilou, Director and Commercial Director of Signa-Terre SA, points out, ” It is by creating ecosystems of skills and synergies between players that the objectives of energy and climate policies in the buildings sector can be achieved “.
The success of these operations requires reflection on a number of dimensions. Practice shows that the objectives initially pursued are not always achieved.
Preparing the transaction sufficiently in advance, and providing professional and confidential support, increases the chances of success and of achieving the objectives set.
What role can Dimension play?
Dimension SA has specialised in the sale, acquisition and valuation of companies since 1994. A recognised player in Swiss Mergers and Acquisitions, Dimension SA is the preferred partner of company directors and entrepreneurs for analysing the value potential of their companies and carrying out business transfer transactions.
Dimension SA has particular expertise in the property and energy sectors, acquired through numerous projects.