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.
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