The Austrian real estate investment market for commercial properties recorded a total volume of 2.7 billion EUR in 2016, both a strong performance figure though a decrease of roughly 20 % compared to record volume of the preceding year 2015, where a figure of 3.5 billion EUR was reported.
The decline is not the result of a lack of interest in the Austrian real estate market, but is rather attributable to the low availability of investment grade properties as well as the postponement of some large-scale transaction.
As in the last few years, the city of Vienna, accounting for three-quarters of total invested capital remains particularly attractive to international investors. In respect of usage office (36%) and hotels (29%) were the first respectively second categories.
German-speaking investors continue to dominate the Austrian real estate property scene. On the one hand, German investment funds and insurance companies particularly appreciate the low volatility of the domestic market. On the other hand, new investors are playing a more and more important role, above all, in large scale transactions, as witnessed for example in the acquisitions of the IZD Tower by CBRE Global Investors or the acquisition of the Acqua Portfolio by the French Asset Management giant Amundi.
The office investment market promises to be particularly exciting, as large-scale developments in ambitious clusters such as the Hauptbahnhof, Euro Plaza, or Viertel Zwei, all scheduled for completion in 2017 and 2018 will, therefore, attract international investors interest. After several years of reduced production of new office spaces resulting in very few properties that were available for sale, these new projects should meet the needs of institutional investors.
Similarly in the retail sector (retail parks and shopping centres) investors will have to focus on existing properties, because there have been only a few newly developed projects in the past year. Because the demand in the retail branch is very high especially from international investors, not all of them will be able to secure desired properties.
Due to the product shortage in established sectors, some investors are shifting their focus to new types of properties such as student housing, senior residences or logistics, which are gradually becoming more sought-after because of either the demographical changes or altering shopping habits.
Apart from the commercial real estate sector, the residential markets are steadily propelled by migration to metropolitan/urban areas. Since Vienna is forecasted to reach the 2 million mark by 2023, it is a particularly attractive destination for both private and institutional residential investors. There is a large demand for suitable products especially in the area of affordable housing, because neither the number of approvals for new development nor the building of new projects can keep pace with the dynamic population growth.
Already during the first few weeks of 2017 there has been much interest on the part of the investors as well as increased activity from potential sellers. As a result, we can predict that the current year will bring substantial investments provided that the EZB keeps the interest rates low and continues the quantitative easing.