Investment market
Prime yields on office properties in European comparison (in %)
Source: EHL Market Research | BNP Paribas Real Estate | Q2 2021
Investment market The real estate investment market in Austria and here, above all, the office segment again demons- trated their attractiveness and crisis resistance in 2020. Although the year created major challen- ges for private as well as institutional investors, properties with a combined value of approximately EUR 3.5 billion changed hands. A comparison with the years from 2017 to 2019 shows a decline, but the overall results for 2020 are positive. Only a very limited number of investors reduced their real estate activities as a result of the corona crisis, but there have been substantial delays in transactions. Travel warnings and lockdowns have prevented the closing for many deals which should have been completed, and these transactions will now shift into the first half of 2021.
attractive prime office properties with long-term rentals to quality tenants have continued to rise, while the gap to average yields has increased. Risks are currently “penalised“ with high price discounts, among others because financing for properties outside the top segment has become more difficult and more expensive. Activities by investors from more distant markets have declined significantly due to the corona pandemic. Non-European buyers now represent a share of only two per cent. In contrast, German investors strengthened their dominant position with an increase in their market share to a record 51%. Austrian investors were responsible for about 42% and Swiss investors for 5%. The most active investors are currently found in the institutional segment, above all in special and mutual funds as well as pension funds. They were responsible for nearly 60% of the total transaction volume in 2020. Family offices and private investors as well as project developers tended to be more guarded due to the current situation, which was reflected in a share of roughly 17%, respectively approx. 11% of the transactions during the past year.
Prime segment supply remains limited, low interest rates drive demand Prime office properties currently represent the main point of interest for institutional investors. These properties are very rare, as is demonstrated by the strong demand and year-on-year decline in prime yields to a record low of 3%.
The development of prime yields is, however, only part of the picture. The prices for particularly
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