Vienna, 10 September 2020 – the coronavirus crisis has increased demand for real estate investments. Private and institutional investors in a search for security are increasingly investing in apartment buildings.
The coronavirus crisis has increased the desire for safety. Institutional investors have adjusted their strategy and lowered their risk. In addition, private buyers are bringing in more equity as finances are withdrawn from other forms of investment. These factors have caused demand in the apartment building market to increase strongly. “We are expecting a very good year for apartment buildings. But it’s still too early to predict a record year”, says the leading investment broker Markus Arnold of Arnold Immobilien.
Vienna is seeing exceptional demand. Since March, the price of well rented buildings with quality renovations has increased by 10%. “Investors don’t want to have to bother about anything”, says Arnold. This is reflected in the entry prices: if all conditions are met, buildings in very good condition and a top location are currently changing hands for record prices. This is true for districts one to nine, and especially for buildings in trendy neighbourhoods. Beyond the belt road (“Gürtel”) prices drop sharply.
In recent years average prices per square metre have risen by 140 per cent. It is therefore not surprising that the yield has become an almost secondary issue in apartment building investments. The main objective, according to Markus Arnold, is to find a safe haven for the money.
Outside Vienna, the strongest demand is in Upper Austria and Styria and is mainly focused on the state capitals. But local investors are also active beyond Linz and Graz. These “country apartment buildings” generate a higher yield due to their much lower prices.
The Berlin branch of Arnold Immobilien is seeing a similar situation to that in Austria: Berlin and other state capitals are booming. Secondary cities are becoming attractive with their good yields and prices.
At the moment, the local apartment building is also very appealing to international investors. Due to the strict tenant protection laws, the focus is largely on new constructions, according to the Arnold Immobilien offices in Berlin, Bratislava, Prague and Budapest. The branches in Milan and Madrid – where the coronavirus pandemic had the most disruptive effects – are currently reporting the strongest interest. Arnold summarises the reasoning: “In uncertain times, Austria is a very good place for real estate investments”.