Appraisal
Yield beats square metre price, but not always
Astrid Grantner-Fuchs MRICS
Managing Director EHL Immobilien Bewertung GmbH
In difficult market phases, the direct and secure earning power of a property is also a key factor for valuation. Prospects for value appreciation are, however, becoming increasingly important for investment properties, especially at above-average locations.
In theory, the valuation of a property, e.g. an investment property, appears to be rather simple: You look for a similar prop- erty that recently changed hands at a real market price, make a few adjustments for the different location and technical quality, and the value is calculated in no time.
depending on the market situation. That means the relevance of the indicators “yield“ and “square metre price” can be different – as an example – in 2025 com- pared to 2021 and also have a different meaning in Simmering and the Inner City.
Prices in weaker locations are still yield-driven, similar to the situation since the end of 2022. This is only logical because yields become dominant in difficult market phases when prices can also decline. The underlying reason here is the secured cash flow that makes financing possible and motivates buyers to take on risk and enter the market despite a challenging and uncertain environment. As seen from the valuation viewpoint, the yield dominance will continue in average and below-average locations for the foreseeable future. The defining factors currently also include a growing shift in bank policies in favour of a sale. More products will therefore enter the market in this segment and short-term price increases will be very unlikely (which makes it important to focus not only on the rental yield).
The current valuation of Investment properties in Vienna reflects the mar- ket’s uncertainty.
Comparative values, in other words market monitoring and analysis, form the basis of any valuation. However, apart from the complex methodology that makes different properties comparable, the basic question is what aspects to include
in the calculation. Is it the generated cash flow which is used to determine the yield and earning power of the property? Or is it the purchase price per square metre that reflects the substance value including expectations for future value development (key word: concrete gold)? This question must be answered differently
The current valuation of investment properties in Vienna reflects the market’s uncertainty – conditions are difficult at the present time but positive aspects point to a bottoming out in prices and the basis of a turnaround.
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Investment Property Report
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