Preface
Continuity and the committed pursuit of goals are the key words for the long-term investment strategy of successful real estate investors, even when the market briefly deviates from the desired direction. No market can always trend upward, and temporary price declines are normal as seen from the long-term perspective. The decisive factor is the development over several property cycles. Not only the investment property market but developers and investors are currently experiencing the first time in ages without a continuous increase in prices. The normal market cycle has been intensified by a weak economy, uncertainty concerning the possible negative effects of the energy transformation, a substantial rise in interest rates and the endless manoeuvring of political parties over the indexing of benchmark rents, and these factors have been responsible – depending on location and quality – for a decline in square metre prices.
This situation is undoubtedly challenging for many market participants, but is no reason for a fundamental re-evaluation of the investment property market. Rising interest rates have had a negative effect on all real estate investments but, with a view across cycles, the same arguments in favour of investment properties are still valid: demography – because Vienna is growing, quality – because these properties offer exceptionally high living conditions, and centrality – because the locations of historical buildings are seen as particularly urban given Vienna’s continuing expansion. As seen over the long run, there is reason to believe that the current market develop- ment is only a “temporary dip”. There are signs that the current price declines can be recovered in the next property cycle, even when it will take some time to overcome the current challenging situation.
Yours,
Michael Ehlmaier
Vienna | 2024
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