Round Table: Reconstruction
I wouldn’t be opposed to ad- vising someone to buy a rental property today.
Let’s stay with this portfolio which the banks, or a liquidator
in the event of an insolvency, have “inherited”. Can developers hope to acquire any of
– Markus Fellner
commitment to an investment vehicle that is active on the market represents a share not in a specific building but in a portfolio. That, in the end, is what ETFs offer on the stock market, and I see this as a very good opportunity for investors. More money is now available than nearly ever before, and I want to anderscore the professionalism of these investment communities: They don’t simply buy and hope for the best, they develop and generate value. In conclusion, let’s look to a future when we hopefully don’t need to deal this exten- sively with restructuring. Where do you see the Vienna investment property market in a few years, say starting in 2030? Gabriele Schiemer: In the past, we went through a crisis roughly every five years. The zero interest phase extended this last period to 2022/2023. Based on past experience, we can expect a downward cycle from 2023 to 2027 and the next upturn in roughly 2033. This argument can be countered by the many uncertainties at the global political and economic level. And even if one of the existing trouble spots can be pacified, we shouldn’t be too sure that a new conflict won’t break out at any time. I think my job in risk management is fairly secure for a long time. Markus Fellner: As a lawyer, I’m on the sidelines regarding economic develop- ments. But when I see the steadily increasing gap between the housing supply and rising demand, investment properties become an issue. You need to realise that the prices for newly built apartments have
these properties at a particularly favourable price? Gabriele Schiemer: Market prices have definitely changed in favour of potential
Investor communities have increased considerably during the past two years. They are not regulated and are among the most active buyers, but they need to demonstrate their strengths in restructu- ring processes that require both equity and expertise. Gabriele Schiemer: In principle, I see these communities as an interesting target group for the realisation of restructuring portfo- lios. But practice has shown that we can hardly reach a common conclusion. The expected prices are simply not workable for us. Franz Pöltl: From my viewpoint, this is certainly a relevant target group since we still have a great deal of capital looking for market opportunities. But these investors often don’t have the time or real estate know-how for their own investments. Bandling this capital with a professional manager is a future-oriented structure, also because there are more than enough first-class experts on the market who can professionally develop and manage these types of portfolios. This group of buyers also has the advantage that they can act counter-cyclically.
buyers, and that is what we concentrate on when we sell off restructuring portfolios. We, as a bank, are pressed for time by supervisory regulations (keywords: backstop and shortfall) which force us to realise the properties in the near term or rcognise further risk allowances. The days when assets could remain on the books for extended periods are long gone. Markus Fellner: The options for improve- ment during the restructuring process are limited because hardly any measures can dramatically increase the income from a property or reduce costs. Real estate is, in no way, rocket science. The decisions to be made are: expand or not, separate and sell, or long-term rental. No other operational refurtohment measures can bring a significant increase in value. The little bit of renovation that would be possible is, however, not com- parable with a corporate recovery, where numerous screws can be adjusted – in purchasing, sales, production, administ- ration etc. The bank only needs to decide whether to realise the property through a full sale or through the sell-off of individual units. And with a bit of bad luck, the bank could perhaps be forced to decide whether financing the completion of a half-finished property isn’t the more profitable course.
Markus Fellner: Most of all, these structures offer good diversification. A
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