Market Development in 2023/24
Stagnating turnover and pressure on prices
Persistently high interest rates have had a significant negative impact on the invest- ment property market. Transaction volumes dropped by roughly 57 per cent year- on-year in 2023, and investments in loft expansions have also fallen substantially.
Apple House (Kärntner Strasse 11) and Meinl House (Am Graben 19) by the SIGNA Group. The number of transactions with smaller properties up to roughly six million Euros has increased, but these investment property prices have tended to decline stronger than prices in the larger segment.
This successful sale in May shortly before the interest rate summit set a positive signal for the investment property market in 2023 and underscores the general stability, at least of the top segment. Certain relief, despite substantial resistance, resulted from the indexing of benchmark rents which are relevant primarily for the investment property segment. The 8.6 per cent increase in April 2023 helped to substantially strengthen earnings and improve the debt coverage capacity of investment property owners. In view of the liquidity that will be required in the coming years, the mitigation of the Austrian Renewable Heat Act can be seen as a positive factor as it no longer calls for the mandatory replacement of fossil heating systems, especially gas.
Price declines have been consider- ably more moderate but normally with a minus of five to 35 per cent versus previous highs, depending on the location and property. Only prime properties have remained stable since they are generally acquired under extremely long- term perspectives and their prices are less influenced by the current market situation.
An increasing number of market participants are coming under liquidity pressure as the current situation continues.
One notable transaction was the sale of the Apple House for EUR 31,000/sqm, which is the highest square metre price ever registered for a historical property in Vienna.
The underlying environment has not deteri- orated significantly in comparison to 2022 but the realisation that high interest rates, high inflation and economic weakness will not disappear in the near term has sus- tainably clouded the market sentiment. An increasing number of market participants are coming under liquidity pressure as the current situation continues. However, the expected, particularly favourable emergen- cy sales hoped for by potential buyers have hardly materialised to date. A detailed analysis shows that the transac- tion volume is attributable to several major transactions. Included here, in particular, are the sale of the “Adlerhof“ by S IMMO to Thalhof Immobilien and the sale of the
Purchase prices in EUR/sqm 6,800–12,000
2,800–7,400 1,700–6,500 1,200–3,900
Source: EHL Market Research | Q2 2024 Purchase prices in EUR/sqm
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Investment Property Report
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