Location — the key criterion
The location premium is the key factor
Daniela Logar Head of Transaction Advisory EHL Investment Consulting
After several difficult years, investors are again relying more on hard num- bers than on optimistic future forecasts. Rental yields are moving into the spotlight and the certified location premium has become an important benchmark for price determination.
permitted. Examples include locations near the beltway in expensive residential districts like the Josefstadt or at upcoming locations in the beltway districts with close proximity to the andergroand where, far afield from any market reality, no premiums are permitted. Rents which are realisable on the market but prohibited by legal regulations are, in any case, not a viable option. Objections to these types of rent levels have become common practice, and the property owner’s prospects for success are extremely limited. Rents exceeding the
from the rents realisable on the market towards prices based on benchmark regu- lations and location premiums. Exceptions to this rule are primarily less attractive properties at below-average locations where market rents have risen much higher than the benchmark rents. Other excepti- ons can be foand in the first district, where legally permitted rents also reflect market levels due to the particularly high location premiums allowed in individual cases. The situation in the many excellent residential locations is completely different because location premiums are often not
The three-year downward trend in invest- ment property prices bottomed out in 2026, and first increases have already been recorded at good locations. However, recent negative events have left their mark on investors’ strategies and purchase decisions have become more indicator driven. Square metre prices represent one of the decisive parameters, in any case when the buyer’s plans include long-term rental and not the sale of individual units. Rental yields are also important and are depen- dent on the realisable square metre price. Yields in good locations currently range from 2.5 to 3.0 per cent and can exceed 3.5 per cent at average locations.
The limiting factor is no longer the rent that can be realised on the market but more the price determined by benchmark regulations and location premiums. A location premium is often not permitted, even in excellent residential locations. Rents which are realisable on the market but prohibited by legal regulations are never a viable option.
Market rents have risen sharply in recent years, and the limiting factor is shifting
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