Market Development
Market Development - The surprising revival of the investment property market?
Franz Pöltl FRICS Managing Partner, EHL Investment Counsulting
framework of standstill agreements which involve sales in line with bank guidelines, in part also from numerous bankruptcy sell-offs. Solvent investors are, however, also more willing to sell, whereby a psychological effect is involved here: After more than 10 years of continuous price increases, it took some time after 2022 for many market participants to accept the declines caused by the Ukraine crisis as the new price level. The prevailing opinion indicates that the short and medium term will not bring a return to the old price level, and the market is seeing more transactions based on the new yields Rising liquidity also helped to ease the si- tuation on the price front: In 2025 and the first two months of 2026, yields and square metre prices stabilised at a new level. First signs of a recovery also materialised and, in combination, created an entry signal for investors. These factors could drive a new upward spiral – unless there is a further deterioration in the operating environment.
decade. Up to the escalation of the crisis in the Near East, the forecasts for renewed economic growth and inflation near the two per cent threshold sent a signal for new commitments by numerous market participants who were still in a await-and- see mode despite the substantial decline in purchase prices. The more attractive price level – as seen from the buyer’s perspective – led inversely to a substantial increase in rental yields and sustainably improved the economic outlook for new commitments. The initial yields for investment properties in selected submarkets, above all in less prestigious locations outside the beltway, have recently reached a level that again creates a positive leverage effect through the use of a realistic component of mortgage loans. The revival of market activity has not only fuelled the interest among buyers, but also supports an increase in the supply of properties. It results, in part, from restructuring measures with significant involvement by the financing banks. This takes place in certain cases within the
2022 marked the end of the last real estate cycle. The rapid increase in energy prices and inflation triggered by the Ukraine crisis combined with the subsequent strong upward shift in interest rates plunged the previously booming real estate market into severe turmoil. The result was a sharp drop of over 50 per cent in the transaction volume on the Vienna investment property market to roughly 950 million Euros. The turnaroand initially began in 2024 and gained momentum during summer 2025. The volume of the investment properties and investment property shares traded in 2025 rose by 200 million Euros to 1.3 billion Euros and slowly approached the level recorded in the years prior to 2022. Andoubtedly the most important factor for the recovery in transaction volumes was the easing on the “interest front”. The inte- rest rate hikes in 2022 brought transaction activity to a complete standstill, but the decline in prime rates combined with long- term interest curves marked the start of a turnaroand even though the “new” price level was unable to connect with the past
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