Investment Apartments | Market Report Spring 2025

Market Report Spring 2025

We stand for real estate.

Stoffellagasse 7 1020 Vienna

Gudrunstraße 120 1100 Vienna

Introduction

For Austria’s real estate market, 2024 was both an exciting and a challenging year. A series of interest rate cuts by the ECB im- proved the investment climate and created an attractive environment, especially for investors. Tax-related developments like accelerated depreciation and the higher yields which resulted from rising rents sent positive signals to the investment property market. The combination of stable income, long-term value and tax benefits has been very favourable for investment property owners – and the outlook for 2025 is positive. However, 2024 also brought a substantial decline in the number of

investment apartments sales. This in no way reflected buyers’ interest in the product but was based on decisions to purchase at owner-occupier prices. This report is designed to provide a comprehensive view of the central develop- ments which influenced the past year. We not only analyse rental and purchase price dynamics, but also examine the factors that have again made investment apartments a stable and future-oriented investment alternative. Our goal is to give you clear and well-founded insight into the market and, in doing so, create a solid basis for decisions that help you to optimally utilise the opportunities in this segment.

Karina Schunker, MA MRICS

Andrea Pöchhacker, MSc MRICS

Managing Director EHL Wohnen GmbH

Authorized signatory Head of Residential Investments EHL Wohnen GmbH

Kobelgasse 9 1110 Vienna

Facts & Figures

The market for investment apartments was shaped by contrasting developments in 2024. The number of sales fell from 839 units in 2023 to 452, but the average net purchase price rose by 5.6 % from 4,903 Euros/sqm to 5,174 Euros/sqm. The downward trend in new, completed rental apartments in 2024 will intensify in 2025, and the low number of new projects

leads to expectations that the supply shortage will continue beyond the current year. This will reinforce the excellent rental situation and set a clear “buy” signal for investors.

Now is the best time to turn your focus to invest- ment apartments.

Average purchase prices of transactions (in Euros/sqm)

5,000

5,174

4,910

4,903

4,000

4,340

3,000

2,000

1,000

2021

2022

2023

2024

Source: EHL Market Research | Q1 2025

These facts and figures were prepared in cooperation with the Austrian land registry experts at IMMOunited GmbH. Data collection criteria: Net prices in the purchase contract | Apartments up to 100 sqm | Apartments up to € 1,000,000 net Data per sqm of living space | Price information net | As per registration date. Data as of: 31.12.2024.

Erdbrustgasse 31 1160 Vienna

Bahnhofstraße 58+60 2232 Deutsch-Wagram

The first half of 2024 was, in fact, a seamless continuation of the second half of 2023. Interest rate cuts by the ECB in autumn 2024 fuelled this trend and led to a strong increase in demand and sales. The improvement in the general operating environment has again created significantly more attractive opportunities on the investment property market. Sustainable building concepts and rising rents make investment apartments in growth regions a stable investment with a long-term potential for higher yields. Investment apartments: Stability in spite of the market

Generally speaking, investment properties in Austria remain an exciting investment alternative and offer a range of opportu- nities. Growing urbanisation has led to a steady high demand for housing, above all in population centres like Vienna, Graz, Linz and Innsbruck. At the same time, the shortage of rental apartments has become more and more visible – a development that is underscored by the upward nationwide trend in rents. An increase of 5 % on average is projected for 2025 and is a factor that makes investment apartments reliable yield generators.

option to deduct input VAT. Additionally, a growing number of buyers are rejecting the VAT option and can therefore implement a more flexible investment strategy. Interest rates are currently driving demand, not only due to the decline in financing costs but also to the interesting opportu-

More and more projects are relying on sustainable technologies with renewable energy systems, self-sufficiency and thermal refurbishment. In addition to the ecological benefits, these measures also make properties more attractive and create long-term value stability.

nities offered by the market. Excellent new construction projects can be found, above all, in rapidly expanding and popular cities like Vienna and Graz as well as growth regions like the Vienna suburbs. A decisive success factor for investment apartments is a future-oriented design.

In uncertain times, investors are looking for stable invest- ments with lasting value. But what makes properties an ideal investment? EHL wants to point out the most important success factors.

There has been a sharp drop in the percent- age of apartment investors who utilise the

Roseggergasse 2-8 1160 Vienna

Popular protection against inflation

Sustainable investments

Indexed rental contracts protect the real value of invested assets and, consequently, offer optimal protection against inflation.

Energy-efficient properties save running costs and protect market values over the long term – all in all, a future-oriented choice. In addition, sustainable construction methods create greater interest among tenants and lead to stronger demand.

Stable assets

Real estate offers stability and security, also in crisis times. Even in economically unstable phases, real estate remains a reliable and stable capital investment with real value.

Lower vacancy risk, higher yields

New residential construction has declined substantial- ly since the peak of the boom in 2022. In cities with growing populations like Vienna and the surrounding areas, this has led to a shortage of rental apartments, an upward shift in rents and a clear decline in vacancy rates. All these factors increase yields and provide greater security for investors.

The Housing Market in a Changing World

Rental prices in Austria trended signifi- cantly upward in 2024, not only due to the strong demand but also as a result of the low level of new construction. The market has also come under added pressure from population growth. These dynamics are particularly visible in the country’s urban centres. Vienna remains the primary motor for this trend. The average net rent for investment apartments in this city rose from 13.90 Euros net/sqm in 2023 to 14.87 Euros net/sqm in 2024. The limited supply has been reflected in a declining number of lease cancellations and, in

turn, to longer average rental periods and substantially lower vacancy costs. Graz, with an increase from 11.40 to 12.00 Euros net/sqm, and Linz, with an increase from 11.50 to 12.65 Euros net/sqm, show similarly dynamic movements. In Klagenfurt, rents remained at a moderate level but rose from 11.00 to 11.50 Euro net/sqm. One decisive factor for this development is the decline in new construction projects and the resulting supply shortage on the rental market. In this situation, investors can benefit from strong demand and prospects for higher yields.

All aspects considered, this combination of high demand, low supply and higher rents are the determining factors for the Austrian rental market.

Seeböckgasse 39-41 1160 Vienna

Average net purchase prices for sold investment apartments in comparison (in Euros/sqm)

7,000

6,303

6,069

5,000

5,258

5,069

4,568

3,000

3,657

3,476

3,426

1,000

Graz

Linz

Klagenfurt

Vienna

2023

2024

Source: EHL Market Research | Q1 2025

Franz Josef-Straße 17-19 2344 Maria Enzersdorf

Focus on tax updates

Events in 2024 brought important changes in tax regulations for investors that make their investments even more attractive. The measures to boost investments include, for example, improved depreciation rules and longer forecast periods for rentals. The depreciation rate for new buildings was raised and energy-efficient buildings, in particular, profit from 4.5 % in the first three years. That not only supports new construc- tion but also creates an opportunity to enjoy tax benefits on future-oriented properties. Another amendment improves planning security for renters: The forecast periods decisive for the estimation of input tax on rental income were extended. In addition, the monitoring period was extended to 25 years for “small-scale rentals” and to 30 years for “large-scale rentals”.

That means longer term stability and less uncertainty for yield forecasts.

Improved depreciation rules and the expanded small business rule make it easier to invest in real estate and utilise the related tax benefits. Given the high demand for rental apartments, especially in major cities, the market will remain promising. Investors who take advantage of the attractive market opportunities now available in the real

One highlight for the years beginning in 2025 is the small business rule, which is directed primarily to private investors with lower rental income. Renters with a principal residence in another country who earn rental income in Austria can now benefit from this rule for the first time. However, their income from rental and leasing must be lower than 55,000 Euros in Austria and lower than

estate sector can benefit from rising rents and, at the same time, accumulate wealth with stability and security. The recent legal amendments which include accelerated depreciation and an extended forecast period create new opportunities for real estate investors to optimise their tax burden and design their invest- ments with greater efficiency.

100,000 Euros worldwide. This rule opens additional opportunities for individual capital investments by foreign investors. The tax amendments in 2024 and 2025 create numerous opportuni- ties for investors.

“Small-scale and large-scale rentals“

The small-scale and large-scale rental of investment apartments ensures that investors who purchase an apartment with VAT can benefit from input tax deductions. According to the rules for small-scale rentals (25 years) and large-scale rentals (30 years), the investor must accumulate an overall surplus with rental income. Any other results lead to classification of the investment as a hobby and, subsequently, to the repayment of input VAT.

Franz-Liszt-Gasse 8 7100 Neusiedl am See

Draschestraße 74-76 1230 Vienna

Sustainability and its Relevance for your Real Estate Investment

Sustainability is becoming increasingly important, also as a factor for real estate investments. Investors recognise that environmentally friendly and re- source-conserving buildings not only help to reduce the ecological footprint but are also profitable over the long term.

Sustainability is more than just a slogan – it has become a central criterion for the future viability of properties. But what factors make a property sustainable, and why should these factors be important for renters? A sustainable property is characterised by energy-efficient construction, the use of resource-conserving materials, and modern technologies for energy supplies and ongo- ing operations. Certificates like ÖGNI, DGNB and klimaaktiv, among others, provide orientation and guarantee that a building meets the requirements for environmental friendliness and efficiency.

This factor is important for renters from both an ecological and economic perspec- tive. Energy-efficient properties reduce operating costs, which make them more attractive for tenants. In a market with steadily rising energy costs, that can mean

In other words, a sustainable property is not only an ecological statement but a real competitive advantage. Investors who rely on sustainability today create properties that are also in demand tomorrow – and produce attractive yields over the long term.

the difference between vacancies and stable demand. Sustainable buildings also protect their value over the long-term because they are less affected by future regulatory changes that can lead to substantial costs.

Sustainability in real estate safeguards long- term values, supports environmental protection and forms the basis for stable income.

Heiligenstädter Straße 103 1190 Vienna

The most important national sustainability certificates in the construction branch

klimaaktiv Federal programme for climate protec- tion in buildings. Focus on CO 2 reduc- tion, renewable energy and ecological materials. Supports energy-efficient refurbishment and new construction.

Austrian Sustainable Building Council (ÖGNI)

German Sustainable Building Council (DGNB) Focus on sustainability, energy effi- ciency and lifecycle costs. Supports climate-friendly construction. Goal: resource conservation and high user satisfaction.

Austrian certification based on German Sustainable Building Council standards. Appraises buildings on an integrated basis with regard to ecological, economic and social factors across the entire lifecycle.

The most important international sustainability certificates in the construction branch

LEED Certificate for environmentally friendly buildings. Evaluates energy efficiency, water consumption, materials and location quality. Internationally widespread, supports sustainable construction.

BREEAM Oldest sustainability certificate. Evaluates energy, materials, health and environmental impacts. Worldwide recognition, above all in Europe.

Kurbadstraße 8 1100 Vienna

Laxenburger Straße 2D 1100 Vienna

Peter Engert, Managing Director of the Austrian Sustainable Building Council (ÖGNI), on the opportunities and advantages of sustainable properties from the investor’s point of view, on the reasons why sustainability and affordability belong together, and why energy efficiency alone is by no means everything. Sustainability is the Foundation for Long-term Success

Resource conservation, greening and land use

Sustainability had a much better image in previous years. How can you focus on environmental protection when the affordability of housing appears to be the dominant issue?

For ÖGNI, sustainability not only means ecological optimisation. Social sustainability is just as important and, especially in this area, we are exactly in touch with today’s trends. Sustainability has many different, massive positive cost effects – which means it doesn’t contradict affordability but, in fact, is a basic requirement. And that makes it an enormously important success factor for investors, including institutional investors who acquire entire properties as well as private persons who rent individual investment apartments. This connection is immediately visible in many areas, for example through energy-efficient buildings that minimise heating costs or the use of sustainable energy sources. Here, the direct cost reduction through sustainability is clear, while the connection in other sustainability areas is more complex and needs our attention to create a greater awareness.

What exactly do you mean?

One of the most important issues, for example, is location sustainability, independent of the sustainability of particular buildings in the area. When we take a broader view of housing costs than the basis used to calculate conventional operating expenses, we also see a substantial influence. A location where the connections to public transportation are so sporadic that every household needs one or two cars makes it expensive for tenants and, consequently, less socially sustainable than a location where these costs are lower. A greenfield property that needs new traffic routes, sewage and electricity connections, and an urban infrastructure like day- care centres and schools has disadvantages not only from an ecological standpoint but is also expensive for the municipality – which makes it ecologically less sustainable than an increase in urban density.

The sustainability of a property is certainly not easy to identify for investors or tenants – what role do sustainability certificates play here?

A wide range of factors must be examined and evaluated to determine the sustainability of a building. Sustainability is not only a func- tion of ecological measures, social and economic criteria are also important. When an investor or tenant wants to learn more about the sustainability of a property before the contract closing, they need to see a certificate that covers all aspects of sustainability. A building that is confirmed to be sustainable has lasting value and will also make people happy for years to come – which is another important point for investors.

Your certification system includes various sustainability standards. Does it pay to always target the top level or, in the end, is a silver certificate, for example, also acceptable for investors in view of the economic optimisation?

A silver-certified building meets all legal requirements defined by the current building code and, in addition, is well planned and refur- bished or built in agreement with individual sustainability aspects. A look at the details in the certificate shows where the property’s strengths are located. Generally speaking, it is not necessary to limit the search to platinum- or gold-certified properties – here we shouldn’t forget that these two certification levels require additional investments that are reflected in the purchase price or rent. Sus- tainability can easily be compared with a triangle: The three “corners“ – ecology – economy – society – must be synchronised. And that is what you can learn from a certificate issued by the Austrian Sustainable Building Council.

Peter Engert

CEO, Austrian Sustainable Building Council ÖGNI (Österreichische Gesellschaft für Nachhaltige Immobilienwirtschaft)

Rents in Vienna are trending upward, while new residential construction is steadily declining. Population growth and high demand are driving the market and support substantially higher yields than during the con- struction boom in the years up to 2023. That creates new opportunities for investors and opens a good window to benefit from the attractive medium- and long-term perspectives on the market. Vienna‘s Rental Market puts Investors in the Pole Position

The market for investment properties in Vienna is currently characterised by strong demand for rental apartments and a parallel decline in the volume of new construction. These factors have combined to halt the downward trend in prices and led to a further increase in average square metre rents. Average rents for investment apartments on first-time occupancy equalled 13.90 Euros net/sqm in 2023, but rose to 14.87 Euros net/sqm in 2024 and are projected to rise to nearly 16.00 Euros net/sqm in 2025. The underlying factors for this development are continuing strong population growth, the rising demand for rental properties and the sharp drop in new residential construction. Another element is a result of the strict lending requirements created by the Financial Institution Real Estate Financing Directive, which have made home ownership more difficult and increased the number of – above all young – people who are dependent on rental apartments.

Real purchase prices for investment apart- ments have basically remained unchanged for comparable properties and location quality. The increase of nearly 3.9 % in from 6,069 Euros/sqm to 6,303 Euros/sqm is attributable to higher construction costs and the low number of project completions. Accordingly, the offering is again concentrat- ed on high-quality residential space. For investors, this market situation has enormous inherent potential. Yields of more than 3 % were frequently difficult to obtain in recent years, but results like this are now also possible in prime locations – and at average locations, yields have even risen up to 4 %. That places initial yields at nearly the same level as the cost of debt. The current historically low vacancy rates also facilitate rentals and provide for stable income.

Average rental prices and net purchase prices on first-time occupancy in Vienna (in Euros/sqm)

7,000

14.87

6,000

6,303

6,069

13.90

5,855

5,000

12.87

4,829

4,000

12.42

3,000

2,000

2021

2022

2023

2024

Rental prices

Purchase prices

Source: EHL Market Research | Q1 2025

Inner City Districts A central location combined with perfect traffic connections and an extremely short supply have triggered a sharp rise in rental prices, above all in recent years. However, yields are normally slightly lower than in the outlying districts due to the higher selling prices. Yields above 3 %, which were rarely seen in recent years, are now moving within reach because average rents now range from an impressive 18.80 to 22.50 Euros net/sqm for first-time occupancy. This situation has been reinforced by the decline in available housing in the districts within the beltway, whereby the demand for suitable rental properties remains high and can be expected to lead to a further increase in rents.

The Outlying Districts A larger selection of residential construction opportunities can be found in the outlying districts, chiefly across the Danube River and in the south of Vienna. Of special notice is the trend toward properties with 35 to 60 units, generally with three- and four-room apartments, which are basically interesting for investments. Yields over 3.5 % are con- ceivable and make these peripheral districts high-profit, interesting areas. In Floridsdorf, the dynamic growth trend continues with an increase in the demand for investment apartments and solid yields across the Danube. The 10th and 16th districts are two of the recently emerging residential districts, where demand is strong near the main railway station and in Oberlaa due to the construction of modern new buildings with excellent infrastructure. Ottakring has also become more attractive for investors due to the Grätzl and market neighbourhoods.

Mauerbachstraße 17 1140 Vienna

All investment projects at ehl.at/vorsorge

Selected investment projects in Vienna

Josephine

Park Flats

MAJA

Stoffellagasse 7, 1020 Vienna Number of flats: 64 Completion: Q4 2026

Ljuba-Welitsch-Promenade 22, 1030 Vienna Number of flats: 138 Completion: Q3 2026

Gudrunstraße 120, 1100 Vienna Number of flats: 102 Completion: Q1 2025

TABA Apartments Kurbadstraße 6B 1100 Vienna

DECK ZEHN

Kobelgasse Kobelgasse 9, 1110 Vienna

Laxenburger Straße 2D, 1100 Vienna Number of flats: 229 Ready for occupation

Number of flats: 48 Completion: 2027

Number of flats: 46 Completion: Q4 2025

Erdbrustg. 31, 1160 Vienna Number of flats: 126 Completion: Q4 2026 Stadtvillen Wilhelminenberg

Zuhause in Hawei Mauerbachstraße 17, 1140 Vienna Number of flats: 14 Completion: Q1 2026

Ottakringer Str. Ottakringer Straße 26, 1170 Vienna Number of flats: 60 Completion: Q4 2025

16er Melange

Seeböckgasse 39-41, 1160 Vienna Number of flats: 23 Completion: Q4 2026

A22

21.

19.

14 13

20.

18.

17.

U5 8

16.

22.

14.

U2 U5

3. 2

15.

13.

11.

12.

10.

23.

A23

A21 A2 S1

1190 Vienna Number of flats: 43 Completion: Q4 2026 Heiligenstädter Straße 103

Am Bienefeld

12 Wagramer Str.

13 Tokiostraße Tokiostraße 5a, 1220 Vienna

Groß-Enzersdorfer Str. 7-11, 1220 Vienna Number of flats: 83 Ready for occupation

Wagramer Straße 113a, 1220 Vienna Number of flats: 43 Ready for occupation

Number of flats: 178 Ready for occupation

The Vienna Suburbs

Vienna’s suburbs are booming: Excellent traffic connections and attractive real es- tate prices make these regions sought-after locations. Conditions are ideal for investors who want to benefit from stable growth and sound demand.

Vienna’s steady growth and the continu- ous expansion of the infrastructure are gradually blurring the borders between the capital city and surrounding area. A home in Vienna‘s suburbs no longer means a lengthy commute. In contrast, the travelling time from the suburbs to the city centre is now comparable to commuting within the Vienna city limits due to the excellent traffic connections. This development has led to steadily grow- ing demand for housing in the surrounding regions. Developers have recognised this potential and have turned their focus to the creation of new housing along the city limits. The advantage: Low land prices also make the selling prices more attractive.

Newly built apartments can still be pur- chased for only slightly over 4,000 Euros/ sqm, which make yields of up to 4 % possi- ble, and rents range from 11.00 to 13.50 Euros net/sqm. Despite the moderate rise in purchase prices compared with the cap- ital city, stronger value appreciation can be expected in the future – and that makes the market very attractive for investors. The trends in Vienna’s suburbs underscore one point: Anyone who invests now can se- cure attractive entry prices as well as sustain- able value appreciation and solid yields. In view of the positive market momentum and steady growth in demand, one thing is clear: The Vienna suburbs are no longer an insider tip but a wise strategic choice for investors.

Lower Austria

Austria’s easternmost province, Burgen- land, is enjoying growing popularity. The northern region benefits, above all, from numerous hotspots along Lake Neusiedl. The large catchment area, specifically with the dynamic business hub in Parndorf, has become an innovation engine for the real estate sector. Sustainable, future-oriented building projects are gaining in importance and raising housing to a new level. Square metre prices range from 3,750 to 4,115 Euros, depending on the micro-location. Es- pecially for investors with vision, this is an ideal investment environment: An average rent of 11.50 Euros net/sqm can produce a yield of roughly 3.5 %. Burgenland

The apartment market in the province of Lower Austria remains a hotspot for investors due to its strategically favourable location before the gates of the Vienna. De- mand is high for well-connected cities and communities, specifically in the northern regions from Deutsch-Wagram to Korneu- burg and up to Stockerau and Krems. These locations benefit from excellent infrastruc- ture and traffic connections. The southern part of Lower Austria includes exclusive residential areas like Mödling and Baden as well as increasingly attractive rental locations along the railway line and motor- way to Wiener Neustadt. Lower Austria is a booming location, above all for families, because the cost of living is lower and rents remain affordable.

Steindlstraße 6 3500 Krems

Kollonitschgasse 5 2700 Wiener Neustadt

Ackergasse 14 2700 Wiener Neustadt

Yield opportuni- ties beyond Vienna: Market trends in Linz, Graz & Co

The real estate markets in Austria’s provincial capitals continue to hold exciting opportunities for investors, despite the limited number of available investment apartment projects. Above all in the western regions of the country, in cities like Innsbruck and Salzburg, square metre prices are constantly high as rents continue to rise. These two cities remain the leaders but the search for lucrative investment opportunities has become more difficult due to the limited number of new construction projects and the shortage of available properties. Even when an individual “insider bargain” materialises, high-yield properties are difficult to find due to the strong demand and short supply of available projects.

In contrast, cities like Linz and Graz offer clearly more attractive conditions for investors. Solid new construction projects that promise attractive yields with low purchase prices and stable rental income can still be found here. These cities have a good supply of construction projects that offer interesting options for investment apartments as well as builder-owner models. Favourable entry prices and stable demand combine to produce secure and profitable investment opportunities that are rare in markets like Innsbruck and Salzburg due to the lower yields.

Innsbruck and Salzburg remain in the high-price segment, while Linz and Graz offer attractive entry prices.

Graz

Graz, the second largest city in Austria and the economic heart of Styria, has an extremely attractive investment environment for the real estate sector. The city benefits from a steadily growing population, a strong economic base with numerous resident com- panies, and large universities. These factors support the growing demand for housing, above all for age-appropriate and future-proof apartments. Migration to Graz from regions in the provinces of Styria, Burgenland and Carinthia remains unbroken. Current market data show an average price of 3,650 Euros/

sqm for an investment apartment in Graz during 2024, whereby the bestsellers still include apartments with 45 to 50 square metres. Rents have increased only mod- erately in recent years due to the dynamic new construction, but are now rising at a higher rate due to the approaching supply shortage. Average rents of 12.00 Euros net/ sqm can be realised in new construction and up to 13.75 Euros net/sqm at prime locations. This development underscores the solid potential for value appreciation and the attractiveness of Graz. range from 11.50 Euros up to 14.20 Euros net/sqm at particularly attractive locations. Well developed residential areas like the Neue Heimat are slightly lower than the city centre, historical old city and the popular Urfahr district but still offer great potential. Yields between 3.5 % and slightly over 4.5 % are possible, especially when individual bargains are involved. Linz is an attractive market for smaller investment apartments, which are very popular with students and commuters. nections and charming surroundings, the city has immense potential for both long-term and short-term investments. These benefits are attracting greater attention from apart- ment seekers and driving both purchase prices and rents, whereby the higher prices are primarily evident in the inner city or at lake locations. Klagenfurt will benefit over the medium-term from a massive improvement in connections to the high-speed railway network (opening of the Koralm railway at the end of 2025, completion of the Semmering tunnel in 2030).

Linz

Linz, the third largest city in Austria, has recorded continuous population growth for years. This market is highly interesting as an investment location because only few resi- dential projects have been realised and the supply for prospective tenants is extremely limited – even though Linz is one of the most important university cities and strong- est industrial locations in Austria. This sit- uation has led to an increase in both rents and selling prices in recent years. The rents realisable on new construction projects can

Kasernstraße 30 8010 Graz

Klagenfurt

Klagenfurt, the capital city of Carinthia, offers high-quality living due to its location on the Wörthersee (lake) and the border triangle between Austria, Italy and Slovenia as well as interesting investment opportunities. The city continues to draw international buyers who are looking for capital investments, invest- ment apartments or vacation apartments. Close proximity to the lake makes Klagenfurt attractive for vacation apartments and sec- ondary residences, and good yields can be realised on first-time occupancy with rents starting at 11.50 Euros. With its good con-

Brauquartier 8055 Graz

All investment projects at ehl.at/vorsorge

Selected investment projects in Austria

Bahnhofstraße

The Vineyard

Bella Vita

Bahnhofstraße 58+60, 2232 Deutsch-Wagram Number of flats: 47 Ready for occupation

Franz Josef-Straße 17-19, 2344 Maria Enzersdorf Number of flats: 87 Ready for occupation

Ackergasse 14, 2700 Wiener Neustadt Number of flats: 49 Completion: Q4 2025

Koll.Home

4 Steindlstraße Steindlstraße 6, 3500 Krems

Auberg+

Kollonitschgasse 5, 2700 Wiener Neustadt Number of flats: 67 Ready for occupation

Parzhofstraße 25, 4040 Linz Number of flats: 41 Completion: Q2 2025

Number of flats: 62 Ready for occupation

Brauquartier Brauquartier, 8055 Graz

Jakomini Verde Kasernstraße 30, 8010 Graz

Franz-Liszt-Gasse Franz-Liszt-Gasse 8, 7100 Neusiedl am See Number of flats: 26 Completion: Q4 2025

Seenah Wohnen Kohldorfer Straße 96, 9020 Klagenfurt Number of flats: 168 Completion: Q4 2026

Number of flats: 73 Completion: Q2 2025

Number of flats: 150 Ready for occupation

Kasernstraße 24 8010 Graz

Währinger Gürtel 134 1090 Vienna

Accelerated depreciation

The property can be depreciated over only 15 years instead of 67 years, which creates additional tax-relevant losses.

Attractive subsidies

Investors benefit from government subsidies, depending on the prov- ince, normally in the form of very low interest loans. For example, the fixed interest rate in Vienna equals only one per cent over 20 years.

Advantages of the builder- owner model:

Low equity requirements

Entry in a builder-owner model is possible with a lower equity ratio – investments can be realised starting at roughly 50,000 Euros.

Reduced tax burden

Free market conditions

Investors can claim a proportional share of start- up losses during the construction phase and thereby reduce their income tax burden.

After repayment of the subsidised loan, the apartments can be rented at free market conditions.

Builder-owner models – Investing with a Special Tax Effect

The builder-owner model makes it possible for private investors to enter subsidised residential construction – with tax benefits, low-cost financing and stable income. Capped rents minimise the remarketing risk, while attractive after-tax yields can be realised.

The builder-owner model gives private inves- tors an opportunity to invest in subsidised residential construction – through the purchase of a co-ownership share with land register security or participation in the limited partnership that owns the prop- erty. This form of real estate investment combines tax benefits with long-term value appreciation and is an attractive alternative for capital investment. Favourable financing conditions and tax benefits make interesting after-tax yields possible in spite of rents that are capped by legal benchmark regulations. Below-market rents minimise the remarketing risk and make the builder-owner model particularly stable. A frequently underestimated but decisive factor for the overall success of the investment is the exit: Investors have the option to hold their shares over the long term and generate rental income or can

sell their shares on the secondary market. For private investors, this creates additional investment alternatives with attractive opportunities and stable income. The main reason behind this comeback is the growing demand for affordable housing because builder-owner models are specially designed for this segment. Rents are subject to strict requirements during the first 20 years: The apartments may only be rented at the benchmark price (without a location premium) or, as a maximum, at a cost-covering price. In spite of these restrictions, investors can realise an attractive after-tax yield of roughly three to four per cent. This is made possible by the combination of regulated but low-risk rental income and government subsidies. A significant part of the financing comes from low-cost public loans – here, conditions vary depending on the province and in

Vienna, for example, the fixed interest rate is only one per cent.

Investors also profit from tax benefits: Instead of standard depreciation over 67 years, the property can be depreciated for tax purposes over only 15 years. This results in tax losses which investors can utilise directly in their tax assessments and further increases the profitability of the investment.

New impulses for a timeless investment classic

Today’s macroeconomic climate and the demand for affordable housing are a good match for the builder-owner model and offer private investors an interesting alter- native with attractive options..

Builder-owner models

The builder-owner model has disappeared from public and media attention in recent years. Why is this the case?

The builder-owner model is a classical niche product that has always been an interesting alternative for the right target group. This real estate asset class has never lost its importance, even in volatile economic times. In contrast, real estate provides security, protection against inflation and plays an important role in portfolio diversification. IFA AG (Institut für Anlageberatung) transferred 774 subsidised apartments with 59,200 sqm of usable space from 2022 to 2024 and, in doing so, made a valuable contribution to affordable housing. The builder-owner model is becoming an increasingly important element, particularly for personal pension planning.

What are the main target groups for builder-owner models?

Builder-owner models are a good investment alternative for people in higher tax brackets because they can optimally utilise the initial tax losses. For example: The main target groups are freelance professionals like doctors, tax advisors and attorneys or even professional athletes.

What are the advantages and disadvantages of a builder- owner model compared with investment apartments?

The most important advantage of the builder-owner model is the 1/15 accelerated depreciation and the higher immediate write- offs at the beginning. Rents under the builder-owner model are capped during the subsidy period (20 years in Vienna, and

15 years in Styria), but that also means very high occupancy. Most of the projects are fully let. In addition, the renter pool reduc- es the risk of vacancy and safeguards secure, regular rent. Builder-owner models with private capital create social and affordable housing, investors benefit from attractive subsidies, and the general public profits from more affordable housing.

What after-tax yields can investors expect?

After-tax yields can exceed 3 % during the first 15 rental years in spite of the subsidised rental income, while the individual tax burden is reduced at the same time. After the end of the subsidy phase, rental yields will rise due to the conversion to conven- tional market rents. “Baumstadt Floridsdorf“, IFA’s current builder-owner model in Vienna, produces a yield of roughly 5.5 % on capital employed when the loan is signed.

What types of properties are suitable for builder-owner models?

Our golden rule for the builder-owner model is densification instead of ground sealing. That means the realisation of builder-owner models, above all, at locations with existing structures – a deteriorated apartment building or an old repair shop in an urban area. Listed buildings are also appropriate properties for builder-owner models.

Builder-owner models are focused on the long term. What happens when an investor wants to, or needs to, exit prematurely?

Builder-owner models are not intended for short-term investment. Premature exit before the total taxable profit is reached can have negative tax effects. This model is designed to support the long-term accumulation of real estate assets – often over several generations. However, there is a functioning secondary market if early sale is necessary and IFA can help with the sale process.

IFA, which is part of your group, seems to have been the main player in builder-owner models for years. Why is there so little competition in this market segment?

The development of a builder-owner model requires extensive know-how – from the selection of the right property to the design of the investment and legal and conceptual realisation up to construction, rental and asset management or ongoing support for investors during all phases. These activities involve experts with great diligence who have compiled market knowledge over many decades. IFA has already implemented nearly 500 models and enjoys the confidence of roughly 8,000 investors – and, in that way, has successfully positioned itself as the market leader.

Hans-Peter Weiss

COO Soravia Group AG

Tiergartenweg 32C 8055 Graz

Werndlgasse 5 1210 Vienna

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