opportunity to acquire prime properties that are rarely on the market. And that at clearly more favourable conditions than two or three years ago. Michael Schmidt, Managing Partner of the 3SI Real Estate Group: The decline in obvi- ous but there are buyers who still believe in investment properties as a product. Their objective is to build up excellent portfolios, and they don‘t really focus on initial yields. That’s a good sign and shows that we have passed the low point of the cycle. And it is also a good opportunity to acquire good real estate. Another point: We, as 3SI, can also still buy investment properties with 90 per cent debt. Most banks will continue to finance our investment properties, also
with high debt ratios, because the ratio of rental income to financing costs is definite- ly not the only criteria. You also need to look at the inherent value of the property which, given today’s purchase prices, is often lower than the construction cost. In the high-quality buildings we purchase, rental income was usually unable to cover the borrowing costs – even in the best low-interest times.
The market hasn’t turned “bad”, we just need a different business model. The quick and easy resale of investment property no longer works – you need to invest a lot of time and money and, as we do, recover the financing through the development of the building and sale of the individual apartments.
The market hasn’t turned “bad”, we just need a different business model. The quick and easy resale of investment property no longer works. - Michael Schmidt
Our approach normally involves refurbishing, the separation of individual units and ownership, and sale – and, in the end, what counts is that we actually paid a solid and very favourable price per square metre for the acquisition.
Vienna | 2024
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