Local Submarkets in Vienna
From Penzing to the Donaustadt The investment apartment market in Vienna is highly differentiated and gives investors the opportunity to choose between different asset profiles. The market was previously dominated by traditional inner city residential areas through construction in selected available sites, but today’s offering is char- acterised by a growing number of options in urban development areas on the periphery. The size and price class of the projects are currently more diverse than ever – as is illustrated by the following overview of Austria’s most import- ant investment apartment markets.
The location of an investment apartment prop- erty plays a decisive role in the success of the investment. The analysis and comparison of the advantages and disadvantages of various locations are, therefore, essential for evaluating the long- term development of value. Rare inner city locations A location within the beltway was predestined for investment apartments well into the 1990s and early years of the 21st Century. Strong demand combined with a rapidly declining and more owner-oriented offering has, however, led to a situation where investment apartments in central locations have become genuine rarities. Low yields which generally range from 1.7 to 2.6 per cent make taxable profit impossible in some cases, but excellent prospects for value appreciation can make an acquisition interesting for investors. Beltway district classics The growing shortage of suitable properties in city centre locations has made the western and southern districts outside the beltway the new investment apartment classics. Construction with 35 to 50 units at available sites between ex- isting buildings and individual larger, good quality projects are in great demand by tenants, above all due to the usually excellent district infrastructure, and, consequently, represent solid investments. The limited possibilities for new housing de- velopment in heavily built districts like Meidling,
Ottakring, Rudolfsheim-Fünfhaus and Hernals as well as the progressive improvement in the image of these districts create good prospects for an increase in value. Rental yields normally range from 2.7 to 3.4 per cent and, with solid financing, can easily generate the necessary taxable profit. Urban development investments Extensive construction activity in the urban development areas to the north (Donaustadt, Floridsdorf) and south (Liesing, in part Favoriten) of the city has also led to interesting investment opportunities for private investors. Investment apartments at these locations are built less as pure investment properties and more as part of larger residential complexes where the units are both owner-occupied and used for investment. The average yields at these locations range from 2.8 to 3.3 per cent and are slightly higher than in established residential areas. The prospects for value growth lie in the longer-term upgrading of these new urban quarters through the continuous improvement of transportation links and an attrac- tive infrastructure. This potential is currently limited, however, by extensive land reserves that lead to expectations of an increase in the apartment supply in the foreseeable future.
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