Appraisal
Valuation in an erratic market environment
Astrid Grantner-Fuchs MRICS
Managing Director EHL Immobilien Bewertung GmbH
Comparative values form the basis for every real estate appraisal. Starting with the price realised for A, including any common factors and differences, and then establishing the value of B is the work of expert appraisers. When, as is currently the case, there are neither rational nor hardly explainable price differences, this inevitably leads to uncertainty.
For countless years, and even decades, we lived in a market of steadily rising prices for investment properties. Many of the younger market participants, of course also including appraisers, had never
Ultimately, the central task for real estate appraisers is to give potential buyers and sellers the best possible information on the “true value”, meaning the market price, of an investment property.
on location, quality, current income and earnings potential, the prices paid are in part so different that they defy rational explanation. The purchase prices for comparable properties in the same street varied by up to 50 per cent between 2023 and 2024. The underlying reasons for the apparently erratic market situation are the completely different approaches followed by the various buyers on the investment property market. On the one hand, high-wealth investors like family offices still rely on the concept of “concrete gold” and square metre prices that are mostly lower than the square metre prices for the individual apartments in the building. Additionally, index-adjusted rents – as far there is no intervention from the political sphere – are seen as secure protection
experienced any other situation up to roughly two years ago. A self-igniting price development – ex- pectations that prices would, in any event, be higher tomorrow created an upward spiral, independent of indicators like the rental yield – and the low interest climate apparently made it unnecessary for many years to address the possibility of price and value corrections. These times have definitely passed. However, the turbulent phase of price increases was not followed by calm but rather general uncertainty that has also created major challenges for appraisal.
The reason this is currently so difficult can be explained by the transaction data for the Vienna investment property market: For properties that are comparable based For properties that are comparable based on loca- tion, quality, current income and earnings potential, the prices paid are in part so different that they defy rational explanation.
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Investment Property Report
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