Differences between Direct and Indirect Property Investment

A comparative summary of the individual criteria of direct and indirect property investment is presented below:

Comparison of Direct and Indirect Property Investment


Direct Property Investment

Indirect Property Investment

Property company limited by shares (stock market listed)

Property funds

(contractual investment funds)

Legal Entity Level



Buy and manage/sell strategy

Buy and hold strategy

Investment volume

> CHF 1bn

approx. CHF 500m

Investment threshold

low (1 share)

low (1 share)

Equity capital


No equity capital

Borrowed capital

According to the strategy

Limitation under the Collective Investments Act (KAG)

Market liquidity

Depends on securities volume and usual trading volume

Market maker entry?

Risk diversification

Possible, based on geography and property

Geographic: yes

Property based: possible to some extent (mainly residential property)

Participation Level

Liquidity of securities



Limited (repurchase)

Repurchase price

No repurchase

Conditional repurchase (Collective Investments Act)

Proprietary interests


Yes, contractual

Participation rights

Yes (limited, based on share votes)



Rights to participate in the administration and obtain information and right of verification under company law

Investor protection under the Collective Investments Act

Yield / risk

Higher yield with higher risk in relation to the direct investment and investment fund

Lower yield with lower risk in relation to the direct investment and property companies limited by shares (subject to exceptions)

Transaction costs




General meeting

Swiss Financial Market Supervisory Authority (FINMA)

Stock Market Supervisory Authority

Collective Investments Act / investor protection

Swiss Financial Market Supervisory Authority (FINMA)


“Double taxation”

Single taxation

Property Level

Investment policy

individual, called owner strategy by professional investors

Clear strategy

Clear strategy

Investment volume

Financial planning and owner strategy

As high as possible

As high as possible

Investment threshold

CHF 3 – 5m

min. 1 CHFbn

min. CHF 600m

Property uses / (risk)

All types


Chiefly commercial- + office properties

Residential properties


Borrowed capital (mortgage)

Cap: usually 80%

0 – 80%

Customary: 30 -70%

Interest rate sensitivity affects rates

Less than 50% of the market value of all real estate on average [Collective Investments Ordinance (KKV) 96 paragraph 1]

Transaction costs





Only taxation of income /profits and wealth/capital + property taxes

Property taxes (also see taxation of legal entity above

Only property taxes (see above)

Source: www.indirect-property.ch

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