Proven concept of a retirement home
For around four decades now, investing in apartments purchased for rental has been one of the most popular investments for Austrian private investors in the middle and upper income bracket. It offers value stability, continuously rising cash flows, a long-term perspective, good protection against inflationary tendencies, property secured by land register and, last but not least, a number of tax advantages. Investment apartments are purchased either at the planning or construction stage or from a developer after completion. The investor can reclaim the input tax included in the purchase price (20 percent on the construc- tion costs, but not on the land portion). To do this, the apartment must be rented out and
may not be used by the owner. A total surplus (rental income less depreciation, interest on borrowed capital and costs) must be achieved within 20 years. A higher debt ratio increases the return on equity but can jeopardize the achievement of the overall surplus. As a rule, therefore, a maximum of 50 percent debt capital is used.
Returns or tax benefits - in the end, the quality of the property is decisive for the long-term success of an investment property. The most important decision criteria should therefore always be the location of the pro- perty, market-appropriate floor plans, good fittings, and structural quality.
Average purchase prices in a city comparison (in euros/sqm)
5,810* 5,855
5,000
5,060*
4,498
3,000
3,473 3,520*
3,470* 3,334
1,000
Vienna
Graz
Linz
Klagenfurt
*Preliminary data
2022
2023
Source: EHL Market Research | Q4 2023
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