60 | VIENNA WORDS | Sean Lightbown


SNAPSHOT ,


www.opp.org.uk | JANUARY 2012


Austria’s capital Vienna has been the centre of attention in real estate circles in recent months after it was named as the world’s best place to live. It has suddenly become a residential property price hotspot ... but for how long?


B


y the fi rst quarter of 2011, prices in Vienna had risen 9.52% year- on-year, according to the National


Bank of Austria. And, according to a Global Property Guide report, prices in Vienna jumped 5.44% in the third quarter…the second biggest leap recorded in the research guide’s survey. The city is on a roll. Publisher Matthew Montagu-Pollock


said that these high-performance stats could be put down to “Middle-Eastern investors looking for a safe-haven for their assets”. Unusually, institutional investors,


banks and companies own roughly 70% of residential property in the city. According to Horst Schwarzenberg


Vienna


Apartments 50 sq. m 85 sq. m 120 sq. m 175 sq. m Salburg


Apartments 50 sq. m 85 sq. m 120 sq. m 200 sq. m Graz


Apartments 50 sq. m 85 sq. m 120 sq. m


of the agency group Colliers International: “There is still a strong demand for residential real estate as an investment alternative to traditional forms of investment.” “The decisive factors in buying


residential real estate are not so much yield expectations, but rather stability and/or increases in value in the light of a subsequent sale.” “This has resulted in a price increase


of 5% in good (and up to 10% in very good) locations within the last year.” There is also a high percentage of


renter households, with over three- quarters (77.2%) of dwellings being lets…though rental yields do remain


To buy (€)


211,300 407,745 613,080


1,325,100 To buy (€)


150,350 302,,430 510,840 923,200


To buy (€)


129,600 194,395 284,880


Monthly rent (€)


839


1,204 1,873 2,861


Monthly rent (€)


722


1,145 1,748 2,670


Monthly rent (€)


570 887


1,228


modest compared to the rest of the country. For example, 50 square metre apartments produce a 4.76% yield, while similar-sized properties in Salzburg can provide a 5.76% return. As Global Property Guide says:


“Austria’s rental market is segmented via tenure, regulation and market forces into a hierarchy of low rents for municipal, other social tenants and long- term incumbents in the private sector, but free market rents for recent entrants into the private sector.” Yields are similarly low for Viennese


apartment buildings. “The yield trend has levelled off at about 3% for houses within the Gurtel (Vienna’s ring-road),”


Comparison of Austrian city property costs and rents (Source: Global Property Guide) Yield (p.a)


4.76% 3.54% 3.67% 2.59%


Yield (p.a)


5.76% 4.54% 4.11% 3.47%


Yield (p.a)


5.28% 5.48% 5.17%


To buy (€ per sq.m)


4,226 4,797 5,109 7,572


To buy (€ per sq.m)


3,007 3,558 4,257 4,616


To buy (€ per sq.m)


2,592 2,287 2,374


Monthly


rent (€ per sq.m) 16.78 14.17 15.61 16.35


Monthly


rent (€ per sq.m) 14.43 13.47 14.57 13.35


Monthly


rent (€ per sq.m) 11.40 10.44 10.23


according to Colliers’ Gerhard Hudej. “This doesn’t apply automatically to every apartment buildin, (but) it can be assumed that in the future yields of 5% will be achieved within the Gurtel, possibly even 6% for buildings built after 1930.” Hudej also thinks that resale is becoming more popular. “Approximately €250 million of the city’s €1 billion transaction volume was achieved by resale,” he says. “Many apartment buildings


were resold within a few months, sometimes even weeks, at a 30 to 70% higher price.” Consulting fi rm Mercers’ 2011


Quality of Living report, which Vienna has topped for the last three years running, gave the Austrian capital fi rst place based on categories including in the political and social environment, economics, socio-cultural environment, health and sanitation, education, public services, recreation, consumer goods, housing and the natural environment. Helfried Mück, Managing Partner of


Engel & Völkers Vienna, believes that “we are standing at the beginning of a long-lasting trend and we are convinced that these price rises will continue.” Vienna’s tourism market had a bumper


year last year also, according to data from the Vienna City Administration. Over 8.5 million foreign tourists


stayed overnight in the capital last year ... and the total number of overnight stays of 10.9 million beat 2008’s record by 6.1%. “The increase proves how attractive


Vienna remains for tourists,” said deputy mayor Renate Brauner.


Market Snapshot Vienna


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