Article
Klybeck – unique opportunity
Global Real Estate of Credit Suisse Asset Management – together with its partnering companies – is developing the Klybeck site in Basel into a multifaceted and trendsetting city district.
June 4, 2020
Given their entrepreneurial approach and expertise, the real estate specialists are an ideal partner for financing and implementing processes for urban development transformation.
The Klybeck site in the north of Basel covers an area of 300,000 m². Over the past 150 years, it had been used by Basler Chemie primarily as a production site. As is usually the case with industrial areas, the Klybeck site was not publicly accessible and was unavailable for a broad range of urban uses. In recent years, however, there have been signs that this might change. Novartis and BASF, the property owners of the Klybeck site, saw demand for their premises decline and in 2016 signed the “Klybeckplus” planning agreement with the canton of Basel-City for the urban development of the industrial area. There are plans to develop the site in the coming years into a well-connected and mixed-use district for living and working space with a wide range of leisure and cultural activities on offer. An important priority both for the previous property owners and for the city of Basel is that the transformation of the Klybeck site will be completed with professional partners.
Transformation
The Klybeck site bordering on the Rhine in the north of Basel has a great industrial past. Over the coming years, it is to be developed into a mixed-use residential and commercial district.
Entrepreneurship as a success factor and a common denominator
BASF sold its 120,000 m² share of the Klybeck site to Swiss Life, and Novartis sold its roughly 160,000 m² premises to Central Real Estate Basel AG, a subsidiary of Central Real Estate Holding AG. Together with partner companies Mettler2Invest and Nova Property Fund Management, Global Real Estate founded the Central Real Estate Group as a “first address for investments in visionary and sustainable development projects” and will support the group in transforming the former industrial site into a new urban district.
Central Real Estate Holding’s focus is on inner-city locations in Swiss business centers. The holding company’s shareholders comprise six Swiss pension funds, investment foundations and insurers: Baloise, Zuger Pensionskasse, one investment group each of J. Safra Sarasin Investment Foundation and of Credit Suisse Investment Foundation, and two additional Swiss pension funds.
"We are confident in our ability to optimally implement the goals set out in the planning agreement. Conditions are ideal thanks not only to the competence of the companies involved in the district and site development but also to the Swiss investors’ long-term commitment, "
points out Raymond Rüttimann, Head of Real Estate Switzerland, Credit Suisse Asset Management.
The entrepreneurship of Global Real Estate is underscored by the strategy of bringing together multiple institutional investors under a single holding umbrella, coupled with the establishment of Central Real Estate Basel for the sustainable development of the Novartis site in the Klybeck district. It is possible that additional projects in other Swiss economic centers such as Zurich, Berne, or Geneva will follow given that the “Basel model” has already led to a number of inquiries and exploratory meetings.
Global Real Estate not only has the necessary expertise in the property and capital market but also boasts a network for orchestrating and supporting similar large-scale projects in international markets.
Entrepreneurial initiative
Living diversity
The key points of the development project are laid out in the “Klybeckplus final test plan report” dated November 20, 2018, which was published by former property owners Novartis and BASF and by the canton of Basel-City. According to the report, different residential and commercial options will be created for a wide range of uses and purposes. The official slogan is “Living diversity.” The next step that has already been initiated is the creation of an urban development model, to include both usage and in-depth studies.
Far-sighted division of labor
The plots of land and buildings acquired by Central Real Estate Basel consist of the former factory site of Novartis’ predecessor company Ciba-Geigy, with only part of these premises still being used for industrial purposes. The six adjacent plots of land are spread over the entire Klybeck district, including plots bordering directly on the Rhine and on green space that create additional development potential for new and diversified living space.
Nova Property Fund Management is responsible for operational management, while Mettler2Invest is in charge of developing the site. Global Real Estate’s core tasks include the development and implementation of property strategies, the coordination of site management including property management and marketing contracts, and budgeting.
The development of the Klybeck site opens up attractive earnings potential for investors. The short-term initial return is guaranteed by the leaseback agreements with Novartis. In the medium to long term, investors will benefit from the lease and possible sale of the residential and commercial properties.
"We are confident in our ability to optimally implement the goals set out in the planning agreement. Conditions are ideal thanks not only to the competence of the companies involved in the district and site development but also to the Swiss investors’ long-term commitment."
Raymond Rüttimann, Head of Real Estate Switzerland, Credit Suisse Asset Management
In new Scope
Driven by disruptive innovation, the far-reaching changes taking place in asset management would have continued even without the COVID-19 crisis. The impact of the pandemic will nevertheless speed up this process of change, because the challenges have grown again at a global level.
