Investment market
Prime yields on office properties in European comparison (in %)
Source: EHL Market Research | BNP Paribas Real Estate | Q2 2023
Investment market The Austrian real estate investment market recover- ed slightly in the third quarter of the year, achieving a thoroughly satisfactory result with a transaction
quality requirements. Institutional investors are also showing significantly more interest in these properties in the current market environment. It is worth noting that despite general reluctance from investors, there were some notable large transactions in excess of EUR 100 million. These include, for example, the sales of the Vienna Twin Towers to S IMMO, space2move to Raiffeisen Im- mobilien Treuhand and Saturn Tower to Amisola. EHL is cautiously optimistic for 2023 as a whole. We are already seeing significantly more investor interest than in previous months. However, the gap between potential buyers and sellers’ price expec- tations is currently still too wide in many cases, which means that fewer transactions are currently being concluded. It will probably take some time for the market to rebalance, but we do not expect the ECB to continue raising interest rates in 2024. However, the general conditions are currently chal- lenging in all areas of the investment market. In any case, the office asset class will continue to form a significant part of institutional investors’ portfolios in the future and will enjoy corresponding demand.
volume of just over EUR 1 billion. However, the total investment volume recorded up to the end of September is almost 30 % below the correspon- ding figure for the same period last year due to the challenging environment. The main reasons for this are high inflation and the sharp rise in interest rates to combat inflation, which have fundamen- tally changed the capital market environment and the investment market. In addition, the economic outlook has become more pessimistic. The result is a rise in yields and a sharp decline in transactions. The Austrian market is thus in line with the overall European trend. Office lettings have been very strong in the first three quarters of the year and rents are rising. However, this can only partially compensate for investors’ rapidly increasing return requirements, which is ultimately leading to falling price levels. Older existing properties not compliant with the ESG criteria in weaker locations that do not meet investors’ sustainability requirements have been particularly hard hit, with prices falling significantly in some cases. The price adjustment is much more modest for new-build office properties that comply with the EU taxonomy and meet sustainability and
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