Round table
The times are tough, but there are growing signs of an upturn in the near future The crisis is undoubtedly not over, but is apparently near- ing the low point of the cycle – that is the undivided opinion of the experts at the EHL roundtable on Vienna’s investment property market. Progress is, however, in sight and the first signs of recovery should consolidate into a modest upturn beginning in 2025. Here, the European Central Bank is responsible for firing the starting shot, which should be heard loud and clear.
© Roland Rudolph
Any discussions over the investment prop- erty market in spring 2024, must – whether we like it or not – first address financing, interest rates and equity ratios. My question to the bankers in the round – does anyone want money from you to finance investment properties? Gerhard Humer, Head of Real Estate Project Financing at Raiffeisenlandes- bank Oberösterreich: Financing is still in demand. But requests have declined because borrowing has become much more expensive, and we must also require higher equity ratios. A project where we previously needed 20 per cent equity, for example, must now provide at least 40 per cent. That is also logical because the same
Franz Pöltl, Managing Partner of EHL Investment Consulting: Without a doubt, we have reached a turning point. Investors who operated with very low equity only a few years ago have completely disappeared in the current market situation. Trading in investment properties to exploit the steady rise in prices – in other words, acquire, immediately start looking for a new buyer and then exit at a profit several months later – came to a complete standstill as a business model with the increase in interest rates. We are, however, seeing a growing number of high-wealth, long-term oriented investors for properties in good and very good locations. As potential buyers, they don’t need to worry about financing but see the transaction as an
rental income must now only finance a smaller debt component.
Gerhard Tüchler, Managing Director of the Tecto Real Estate Group: That sounds harmless at first but, in practice, the calcu- lation shows that operating costs of up to 1.90 Euros per square metre must first be deducted from annual rental income – and then, we are looking at an equity ratio of 60 to 70 per cent. Honestly speaking, a real estate company often loses any interest in a new investment under circumstances like these.
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Investment Property Report
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