The Apartment Market
Rental units: Growing interest in existing flats
New apartment construction will be substantially lower than demand, at least into 2026. The interest in existing apartments available for rent is therefore high and will create added benefits, above all, for average locations.
The construction boom in previous years led to record numbers of new apartments entering the market in 2021 and 2022 and largely offset the structural backlog in Vienna. Completions will be relatively high at 15,900 units in 2023, but the supply of new space will then drop significantly. Estimates for project starts and issued building permits indicate that this trend will continue at least into 2026. The number of apartments ente- ring the market will be limited to roughly 12,000 in 2024 and decline further to only 7,500 in 2025. This is primarily attributable to the postponement of new construction projects in urban develop- ment areas, but also reflects a substantial reducti- on in vacant site projects and loft extensions. Although this development appears to be pro- blematic for the apartment market as a whole, it brings good news for existing stocks. The oversupply of units still expected by many market players in 2022 will definitely not materialise and, consequently, the timespan required for rentals will also decline.
subsequent sale in properties that already meet future ESG obligations represent a very promising exit strategy. In summary: Investors in this asset category have a number of challenges to master in the coming years – key words: energy transition and ESG – but sale or rental should not pose a real problem. Full rental – or a tenancy conversion strategy and the sale of units in older properties – will be easy in this market environment.
„The shortage of rental apartments is already visible “
The shortage of rental apartments is slowly becoming visible. In contrast, the effects on condominiums will be delayed because of the sharp drop in demand caused by the difficult financing situation. The decline in new constructi- on will, however, improve the outlook for the sale of separately marketed condominiums in invest- ment properties. The conversion of tenancies and
Karina Schunker MRICS Managing Director EHL Wohnen GmbH
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