20. June 2018

Real estate investment – a safe investment opportunity for insurers

The persistent low-interest rates are forcing many fund managers and insurers to look for secure investment opportunities with high returns. Life insurers with many old policies, in particular, are desperately looking for alternative investment opportunities to traditional forms of investment. That is why they are increasingly investing in real estate.

Insurers have a current investment volume of around EUR 90 billion in real estate. Comparing this figure with the total investment volume of (German) insurers amounting to approx. EUR 1.3 trillion, the real estate investment corresponds to just under 7 percent. This is clearly below the maximum 25 percent set by the legislator as the upper limit for real estate investments – there is still a lot of room for growth here.

Life insurers groan under the weight of the many old treaties. In these, a higher guaranteed interest rate was often agreed with customers. In order to be able to service the guaranteed interest rate, insurers are looking for secure investment opportunities with yield opportunities that at least correspond to the (old) guaranteed interest rates. However, such yields are very difficult to achieve in the current low-interest rates with government bonds or federal treasury bills.

As a result, 70 percent of insurers consider real estate investments important in order to meet their obligations under the guaranteed interest rate.

Real estate investment – but secure!

In addition to returns, it is important for insurers to invest safely and in a sustained manner. If the location is first-class, the property is well equipped and the price is reasonable, real estate investments offer a stable and high long-term capital security. The location, in particular, determines sustainable value growth.

Alexander Hübner; Immobilien Investment - Le Bijou - The Hotel Reinvented

Alexander Hübner, CEO Le Bijou HRM AG

“Luxuriously furnished properties in first-class locations of popular cities increase the value”, says Alexander Hübner CEO of Le Bijou HRM AG.

Strong demand for serviced hotel apartments

Serviced hotel apartments are particularly of interest to investors. These are operator models in which the apartments are offered including a comprehensive service package. Starting with weekly cleaning, through the use of common areas such as a swimming pool with a bar on the roof or a lounge on the top floor, services can be flexibly arranged, variably used and dynamically billed.

This chart proves that an exclusive equipment is also financially worthwhile for investors:

Differences in achievable prices compared to regular rental apartments (in percent)

With service (high service level) 48%
With service (average service level) 42%
With service (low service level)
Furnished 18%

Source: Wüest Partner (Inserate Plattformen)

On the other hand, especially because top properties are also interesting for conservative investors, both minimum investments and prices have risen sharply in recent years. Especially the often very high minimum investments were a barrier for investors in the past.

Le Bijou offers investments in top properties from as little as CHF 10,000

Le Bijou Bonds can be acquired with an initial investment of only CHF 10,000. All Le Bijou properties are professionally managed (“serviced apartments”), which benefits both value retention and occupancy and higher returns.

Real estate is becoming smart

Few topics have touched us as much in recent years as digitization. This technology has been used in our private living area for a longer time: We control the lighting in our apartments according to the mood as a matter of course; the music follows us every step of the way and of course we can also control roller shutters, blinds etc. from on the road using a smart device.

Le Bijou digitizes the classic concierge service

Each Le Bijou apartment is equipped with a 24/7 virtual concierge service called “James”. With this and the in-house app, guests can tailor their Le Bijou stay to their personal needs. Supported by Augmented Intelligence, James can make anything possible for any guest at any time. From a 24-hour concierge and shuttle service to private dining, spa and security services: Just ask and James will take care of the rest.

This concierge technology available in each apartment is able to learn through interaction with guests. It works invisibly in the background and makes every Le Bijou stay a perfectly personalized, lasting experience.

As soon as a guest makes an enquiry, it is transmitted to our carefully maintained service provider directory. The first service provider to accept the request has the job. In this way, the needs of our guests are quickly and efficiently met by a partner we trust. Just like a traditional concierge – only better and more cost-efficient.

Photos of selected Le Bijou Apartments:

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