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Spiegelfeld magazine

Property tables

03/15

09/14

04/14

10/13

Market report for the first half of 2014

Privately owned apartments in Vienna

Land for new housing is becoming increasingly scarce, especially in the top locations in Vienna’s central districts, which explains why the “good” locations are expanding within the various districts, for instance around the general hospital in the 9th district and in the 5th district. Locations outside the city’s ring road, such as the 12th district, are undergoing an explosion in popularity which is not yet reflected in prices. The degree to which the individual district blocks gain in value will however depend to a crucial extent on the extension of the transport system. Prominent projects such as the U1, U2 and U5 underground line extensions and the new central, northern and north-western stations are providing significant impetus to the development of the city and leading to rapid appreciation in the surrounding areas. The shortage of supply will in future be instrumental in the emergence of a trend which will see families increasingly looking for accommodation in lower Austria and Burgenland. The ongoing trend of buying retirement homes is resulting in a continuous rise in prices for privately owned apartments. This is however already leading in some cases to a diametrically opposite development: as rents are not increasing at the same speed as prices, resulting in reduced yields, the rapid increase in property prices is to some extent slowing down.

(Wiener Wohnungsmarkt 2014, EHL)

TRENDS AT A GLANCE

Residential real estate as an investment is still popular, prices are rising.

The supply shortage is leading to a dynamic surge in urban development.

Infrastructure and expansion of public transport as essential factors - for investors and owner-occupiers alike.

Currently the most important urban expansion areas: Seestadt Aspern, Central Station.

Investment real estate

The Austrian investment market underwent a significant boom in comparison with previous years. The transaction volume in the first half of 2014 was three times that of the same period in the previous year, thus falling just short of the total for 2013 in the first six months alone. Transaction volumes in Austria and the whole of Europe exceeded 2007 levels for the first time, where the Austrian market returned the strongest annual growth rate behind the Czech Republic and the other CEE countries. The lion’s share of the investments in Austria in the first half of 2014 was accounted for, at just under 55%, by commercial premises (2013: approx. 20%), followed by office space (approximately one third) and high-volume residential real estate. While transaction volumes rose dramatically, prime yields were slightly down on the year-on-year comparison. The unbroken increase in activity on the part of foreign investors shows that Vienna still enjoys an international reputation as a safe market for real estate investment. The impact of the Ukraine crisis on demand from Russian investors remains to be seen. The growing scarcity of core properties means that investors are increasingly willing to lower their sights at the point of purchase provided that the property offers long-term qualities. Modern and well-let properties, preferably sustainable Green Buildings offering stable rental income and good potential for appreciation, continue to be eagerly sought after by investors.

(CBRE investment market report Q2, 2014)

Trends at a glance

Real estate investment tripled in comparison to the previous year, retail.

Foreign investor interest continues to grow, largest group is from Germany.

Vienna continues to enjoy an international reputation as a safe market.

Core investors relying on long-term factors.

Shop premises

Austria's retail market is still being strongly influenced by international retailers, for whom Austria is ranked fourth in the list of expansion targets. Demand is however focused on exclusive locations, which is serving to continuously drive up peak rents for the limited supply of luxury premises. The opening of the “Golden Quarter” in Vienna in particular has provided an extraordinary boost to the city's luxury market. Average rents, however, are rising in line with inflation. Space in new shopping centres is for the most part already leased, whereas older and smaller centres in less attractive locations are increasingly coming under pressure.

CBRE retail market report, June 2014, EHL annual retail space report, autumn 2014, www.colliers.at

Trends at a glance

Austria ranks fourth on the list of global expansion targets for international companies.

Unbroken demand for exclusive luxury real estate is causing peak rents to soar uncontrollably.

Average rents, however, remain stable in line with inflation.

Average rents, however, remain stable in line with inflation.

Office real estate in Vienna

On the Viennese office market there is a noticeable trend in which quality, image, sustainability and transport connections are starting to eclipse mere rental income alone as significant factors. The reduced availability of core properties is particularly noticeable in the office market. The construction of new office space in the first half of 2014 was 50% down on the same period in the previous year. Rental performance in the first half of the year was only 60% of that of the comparable period in 2013. On the basis of the available data and the cumulative demand, it can however be assumed that rental performance will increase again in the coming quarters and that the previous year's level will once again be reached.
The city centre and the central districts are as before considered prime locations for offices with the highest rental revenues and rental prices. In the city’s historical buildings and old palaces, rents of up to € 25.50 Euro / m2 are being paid. Outside the city, the sub-markets Erdberg and North-East (Donau City, Prater, Wienerberg) and South (Central Station, Wienerberg) are increasingly gaining in importance. They are constantly attracting new investors, and peak rents have reached a level of € 23 / m².
As the market currently stands, a significant impact on the stable price structure for offices is unlikely. Nominal rents will remain stable.

(CBRE office space market report Q2 2014, EHL office market report for Vienna, autumn 2014)

Trends at a glance

High quality increasingly eclipsing cost optimisation

Principal office completions in 2014: Gate 2 (3rd district), EURO Plaza 5, Silo Liesing Offices (both in Wienerberg), “Schottenring 19”

Most of the space in the completed offices already let

Average and peak rents stable, effective rents rising slightly, however, due to a reduction in incentives

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