Why apartment buildings will continue to boom
The original purpose of the savings account: The accumulation of savings … a lesson in ancient history. The European Central Bank has kept its key interest rate at 0% for years. Uncertain future scenarios like effects of the “Brexit” – The UK’s withdrawal from the EU – add to the insecurity. That is why everyone who wants security for the next generation or secure investments is flocking towards real estate. And that is very unlikely to change in the next five years.
2016 was a very good year for the real estate branch and 2017 seems to be going equally well. Like in the previous years, around 320 apartment buildings in Vienna changed hands with a total volume of around one billion Euros. There is no shortage, but the number of real “gems” is declining. Sales often take place in connection with inheritances or to fulfil a very specific wish. The second biggest city in Austria, Graz, is also very popular because it is stable in value, where Arnold Immobilien also acted as intermediary for four apartment buildings.
The micro-location is more important than the district
Investors are paying less attention to the returns and more attention to the substance. The top priority is good quality. Less consideration is paid to the district. Because of the substantial population growth, there is now a demand in every district in Vienna. What really counts is the micro-location, which refers to direct surroundings. There is a demand for buildings with a lot of small apartments that can be rented out quickly, good local services and a good connection to public transport. The increase in prices and the limitations of rental income set by the Tenancy Law (MRG) have led to a continuing trend of utilising apartment buildings by selling single apartments.
This practice began in the districts within the Gürtel and is now growing more popular in good areas of Meidling, Rudolfsheim-Fünfhaus or Ottakring. This is especially true for properties that are close to metro stations. There is a striking increase in transactions on parts of apartment buildings.
“This specific type of real estate purchase has become much more commonplace than it has been was five years ago. However, since a share deal does not appear in the land registry, the booming Viennese market for apartment buildings is bigger than some might suggest. The reasons for the increase of share deals are varied; tax benefits are just one of these reasons that perpetuate this trend.”