Investment
Investment market
The Austrian real estate investment market started the first quarter of the year with lively interest, particularly from institutional investors. However, the situation on the investment market will certainly remain challenging in the coming months.
A comparatively large number of properties and transactions are currently under review, with due diligence, approvals and financing taking considerably longer than before the interest rate hikes began. The transaction volume actually completed in the first three months of the year to date was neverthe- less manageable at just under EUR 500 million due to longer review periods and the comparatively small individual property volumes.
Project developers are still struggling to overcome challenges on several levels. As financing remains expensive, construction prices are high and exit prices have fallen, new projects cannot effectively be started and, in some cases, ongoing construction sites have to be discontinued. The consequences are obvious: Over the coming months and years, it will become clear in many areas that there is a massive
shortage of urgently needed apartments, for example, and that high-quality offices in subway locations are in short supply. We are seeing particularly strong price adjustments in the office sector for older, non-ESG-compliant existing properties that no longer meet the requirements of investors or the specified EU directives with regard to sustainability and decarboniza- tion.
Prime yields on office properties in European comparison (in %)
8 %
8.0
6 %
6.5
6.0
5.3
4.95
4 %
4.5
4.5
4.5
4.25
4.25
4.2
4.15
4.0
2 %
0 %
Source: EHL Market Research | BNP Paribas Real Estate | Q1 2024
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Office Market Report
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