23 September 2019, Europe, Germany | Corporate Finance, Investment Management | News
Today we want to inform you about a changing investor profile in the Austrian real estate market. In the past, Austria as an investment location was dominated by national and regional investors and reserved at most for specialists, but this has changed significantly.
The reason: Not only the persistently stagnant interest rate environment, but also the changed geographical allocation strategies and a strong regional economy are attracting investors' attention. And when the globally booming topic of "housing" also drives the markets, with a risk similar to that on the domestic market, the Alpine republic is obviously facing a golden future in real estate.
Some facts:
- As it can be seen from the chart, real residential property prices in Austria have risen relatively sharply since 2010. In addition, volatility is comparatively low. Prices also continued to rise strongly in 2018, with the growth rate for the entire country being 6.8% (after 3.8% in 2017). At 8.4%, price increases in the provinces excluding Vienna were much stronger than in Vienna, where prices rose by 5.2%.
- In the European comparison, Austria is in the mid-range in terms of both return and risk (expressed in volatility) and stands out with its moderate risk-return profile. Overall, a good risk-adjusted return can be quoted.
- The Austrian investment market is also characterised by rising transaction volumes and an increased concentration of international investors. Between 2009 and 2014, the residential investment market generated annual revenues of approximately € 350 million. Over the past three years (2015–2018), the value has risen to over € 1 billion, with the majority of properties located in Vienna.
- A similar turnover can be expected for 2019. Almost one third of all transactions were carried out by German investors in 2018, as the supply of attractive properties in Austria (especially in new-build properties) is still comparatively high.
- Vienna is one of the most popular student cities in Europe and the number of full-time students has increased in the last ten years by over a quarter to 185,000. This development is also reflected in the residential investment market. In 2017, the transaction volume amounted to EUR 325 million. There are currently 20,366 beds available in the 123 student residences in Vienna.
- Currently, the demand (especially from international students) for modern, high-quality dormitories still exceeds supply, but many new projects are already in the pipeline.
These are just a few of the aspects that have led us to focus intensively on the Austrian real estate markets between Bregenz and Vienna and between Linz and Klagenfurt. Anyone who speaks Latin ("Bella gerant alii, tu felix Austria nube.") knows the flattering description of the country - "Let others wage war: thou, happy Austria, marry." It doesn't always have to be a lifetime relationship, but the real estate markets definitely offer investment potential and opportunities.