Vienna, 20 April 2021 – The investors’ demand for real estate remains unbroken: The pandemic is fueling the desire for stable investments.
A particular area of focus are residential properties, which have shown good increases in value for years. The yields in residential properties in Vienna are now correspondingly low - already between one and two percent. This is why investors more and more seek to diversify their portfolio with higher-yielding alternatives and are turning to e.g. retail properties in good locations. Similar to residential properties, they generate sustainable rental income. "Since the outbreak of the pandemic, the micro-location has become even more important," explains Sewada Howsepian, head of the commercial department, which specializes in private investors, foundations and family offices with local and international real estate portfolios.
Retail properties do not necessarily have to be situated in a city center location because retail markets in a grown agglomeration also offer attractive opportunities and sustainable-cluster effects. Especially since COVID, retail properties with system- relevant retailers such as drugstores, grocery stores, pet food retailers are in great demand. This type of asset class appeals to investors with long-term rental agreements and longer waivers of termination. In recent years, zonings and permissions for new retail parks especially suited for food retailers have been severely restricted. Due to a resulting shortage of supply, a healthy increase in value and decrease in yields can currently be predicted. In general, retail parks that are located in the immediate vicinity of supermarkets or high footfall areas are also valuable.
Investors who are currently sourcing for investments that require little or no management effort often look towards operator-run properties such as e.g. serviced apartments, parking garages, senior living / nursing homes. These types of properties are becoming increasingly popular in portfolio diversification as they are professionally managed on a long-term contractual basis. Operators in this field act on the basis of years of experience.
The capital requirement for commercial properties has been developing very differently for some time and depends on factors such as asset class, quality of location, creditworthiness and the tenants’ lease terms. Top retail properties currently require an equity ratio of at least 15 percent or more. In the case of riskier asset classes such as hotels, this can increase up to 40 percent.
Sewada Howsepian, head of the commercial department: „Commercial properties are an attractive and necessary addition to diversification of real estate portfolios. The entry sums currently start with just a few hundred thousand euros upwards. For the best possible returns, our clear recommendation is to seek professional advice for all commercial investments, as it can be inadequate to simply follow market trends.“
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