Introduction
In theory, long-term oriented investors appear to be following a reaso- nable approach: No market will generate constant growth, temporary price declines are perfectly normal, and good products will always reco- ver in the foreseeable future. Developers and investors, together with the investment property market as a whole, are witnessing the first time in ages when prices are not always rising. The normal market cycle has been overstressed by eco- nomic weakness, uncertainty over the possible negative effects of the energy transformation, significantly higher interest rates and endless political manoeuvring over the indexing of benchmark rents, and these factors have been responsible – to varying degrees – 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 pro- perty market. These properties are basically healthy, and all signs point to excellent value growth over the long term: Vienna is growing and cen- tral locations will not automatically represent an increasingly important condition for apartment seekers. High construction costs are driving the prices for new construction, and high inflation combined with negative real interest is, perhaps, the best argument for a substance-oriented asset class like investment property. It is, therefore, likely that the current market development is a temporary phenomenon and today’s declines will be more than offset during tomor- row’s real estate cycle.
Michael Ehlmaier FRICS Managing Partner EHL Immobilien GmbH
Yours,
Michael Ehlmaier
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