2024-04-20 15:32:55
Prices for Viennese-Wilhelminian style houses have fallen significantly – with a few exceptions. Meanwhile, the behavior of market participants is changing.
Price of substance, return not a problem, money costs nothing. These are the key words Hubert Fröschl, head of the housing estate and investment department at S Real, uses to describe the last few years: “Now we are talking regarding returns, additional costs and financial costs once more. This means that recalculations are required on all sides.
“The rush in apartment buildings is turning at half speed”, is how Eugen Otto, managing director of Otto Immobilien, describes today’s events on the market: “We are experiencing a massive change in the behavior of the market players. And this can be seen in many forms.
“Surprising” development in transaction volume
It is noticeable, for example, that the number of “share trades” has increased. – It is not the building itself that is being sold, but the company that owns it, explains Florian Schmidl. “Share deals make up around 40 per cent of the transaction volume. The volume surprised us.” The managing director of Mazars Austria (audit and tax advisory) attributes this development to the fact that more and more apartment buildings are being bought by companies – this increases the number of stock options available in the event of a sale. On the other hand, it was found that the number of intra-group or intra-family transfers within share trading has increased significantly. – This may be due, among other things, to the favorable environment and thus reduced transaction costs, says Schmidl.
In general, there has been a little more activity on the housing market in Vienna since the beginning of the year, reports Herwig M. Peham, investment manager at EHL: still at a low level, “but there are more views and more offers to buy”. Phillip Maisel, team leader for apartment buildings at Otto Immobilien, shares this impression: “Market conditions invite investors with strong capital to buy apartment buildings once more. Due to the reduced demand, Wilhelminian-style houses have also taken a step down in price.” . This means that average prices will return to the 2020 level.
Investors are looking for fully renovated properties
However, the decline does not affect all locations equally, this leads to more attractive entry prices, especially in the districts outside the belt. Still, “everyone is concentrating on the best and most interesting locations,” Peham emphasizes: “If you have the money at the moment, you choose what fits into your portfolio. The focus is on fully renovated and developed properties, while sustainability and apartment building management are once more in the foreground. Apartment building owners concentrate on their inventory and try to make it more valuable. Peham: “House was quickly ‘beaten’ a while ago – that doesn’t happen anymore.”
Stable value scarce goods
Although the prices of apartment buildings are falling in some places, this does not affect the high-quality renovated old building apartments. “These have always been in short supply on the housing market in Vienna,” says Michael Schmidt, CEO of 3SI Immogroup. “As a result, they were and remained very stable in value. Demand has never significantly decreased in recent months – at least for us “In 2023, the company sold over 100 condominiums. Schmidt does not see any price drop in the old building segment: “On the contrary .”
But what should be done with the unrenovated blocks of flats in the portfolio? “If you bought at the top, the past caught up with you,” says Maisel. “Some are trying to renovate, but a brush renovation will not be enough.” not experienced. Monarchy, inflation, war, democracy. And now also ESG.” But this may not be clear to everyone, Fröschl notes that “buyers have hardly thought regarding ESG and taxonomy. When they apply to the bank for financing and receive a questionnaire regarding ESG and taxonomy, they are amazed.”
Long term plan
Noack therefore advises the owners: “A long-term renovation plan makes short-term decisions easier or even anticipate them. District heating connection, heat replacement, insulation, the general condition of the home, financing programs are points that should be taken into account.” . “From greening to heat pumps to adding balconies – anyone who knows the potential of their property can act at the best time,” says Noack. New circumstances are emerging in the housing market, although one thing has not changed, as Peham states: “The housing market is an Austrian market, and domestic investors are still active.”
Prices and returns
Die Prices for Viennese apartment buildings has fallen significantly once more since autumn 2023, with an average of almost 14 per cent. The lowest entry prices are still to be found in the districts outside the belt. Wilhelminian-style apartment buildings in Vienna are currently selling for around 1,540 euros per m² of usable space, which means that average prices are at 2020 levels. According to Otto Immobilien, there is currently one Return of over three percent can be obtained in all districts except the inner city.
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