Investment market
Transaction volumes for investments in Austrian property amounted to around €1.7 bn in 2013; a 6% decrease on 2012. In contrast to the previous year, office properties were the most popular asset class, accounting for a share of 32%. These were followed by retail properties and residential real estate, with a share of 23% and 15% respectively. More
than 70% of the total volume came from Austrian investors, who played a more dominant role on the market than in 2012. Non-German-speaking investors had almost no impact on the Austrian market in 2013.
(Source: CBRE Austria Investment Market Report Q4 2013)
Vienna housing market
Demand for residential property in Vienna remained high in 2013, leading to another increase in the price of freehold flats. Older properties cost between €2,000 and €4,000/sqm depending on the location and condition. Prime locations in the first district commanded prices of up to €16,000/sqm. New apartments were sold for between €3,000 and €5,000/sqm. In the year under review apartments for rent in Vienna went for an average of €8 to €10/sqm/m, newly built flats were rented for between €10 and €12/sqm/m.
(Source: ÖVI: Austrian Property Market – Outlook 2014)
Vienna apartment building market
Vienna apartment buildings remained Austria’s most sought-after property investment. The ever decreasing supply could not, however, keep pace with the strong demand. The reasons for this include buildings being split into freehold apartments and existing buildings being torn down. This led to a 25% fall in transaction volumes on the Viennese apartment building market to around €1.1 bn. The number of transactions also decreased. Top returns declined once again and stood at 2.5% to 2.9%.
(Source: EHL Latest Report on the Vienna Apartment Building Market 2014)
Commercial property market
Demand for space in prime locations on Vienna’s high streets continues to be unwaveringly strong, leading top retail rents to reach a new record value of €310/sqm/m in the second half of 2013, compared to the €300/sqm/m at the end of 2012. Prices of up to €350/sqm/m were paid in smaller spaces in prime locations in the first district.
Top rents in shopping centres rose slightly from €101 to €105/sqm/m. Top rents for space in specialist retail centres increased from €12.5 to €13.5/sqm/m. The high level of market saturation means that only a few new projects are planned or under construction in these two segments and numerous older centres are being refurbished or modernised to meet demand.
(Source: CBRE Austria Retail Market Autumn 2013)
Operating Environment
Office property market
In 2013 take-up for rented office space in Vienna was around 295,000 sqm, representing a 14.5% decrease on the previous year. A total of 153,000 sqm of new office space came onto the market, significantly less than in 2012. Combined with stable demand, this led to vacancy rates at year end of 6.6%, a similar level to the year before. In contrast, top rents at the end of 2013 were around 2% higher than the previous year, amounting to €25.25/sqm/m, although rents in good and medium office sites were unchanged.
(Source: CBRE Vienna Office Market Q4 2013)
Operating environment Germany
Housing market
Around €13.8 bn was invested in German residential property portfolios in the year under review. This marks an increase of almost 23% on the previous year and is the highest volume since 2006. Over 216,000 residential units were traded in total. However, supply in major cities could not keep pace with investor demand, with interest increasingly turning towards alternative locations such as the Ruhr region or Saxony. The purchase factors for packages for institutional core products in the investment centres rose to 16 to 18 times the actual rent. Once again, listed property companies were the most important players on the market.
(Source: CBRE Run on German residential packages continues unabated, press release dated 6 January 2014)
Regional housing markets
Berlin and Potsdam
Approximately €6.8 bn was invested in residential property portfolios in Berlin and the neighbouring area in 2013, making it Germany’s most important regional market by some margin.
Freehold flats in good locations in Berlin and Potsdam were on the market for €1,900 to €3,200/sqm, while rents for older buildings in good locations in Berlin fluctuated between €8.0 and €13.0/sqm/m in the year under review. Apartments in Potsdam were somewhat cheaper at €7.5 to €10.0/sqm/m.
Dresden and Leipzig
In 2013 people paid between €1,200 and €1,600/sqm for freehold flats in older buildings in Leipzig, with prices in Dresden of up to €2,000/sqm. Rents for older apartments in comparable locations were €5.5 to €8.0/sqm/m in Leipzig and €6.5 to €8.5/sqm/m in Dresden, still relatively cheap compared to Germany as a whole.
North Rhine-Westphalia
In Essen prices for freehold flats in good locations were between €2,500 and €3,500/sqm; Wuppertal was significantly cheaper at €1,200 to €1,800/sqm. This was partially reflected in rents: while tenants paid between €7.0 and €10.0/sqm/m in Essen, rents in Wuppertal were between €7.5 and €9.0/sqm/m.
(Sources: JLL The German Investment Market Q4 2013; Capital Property Compass)
Investment market – commercial property
The highest revenues since the onset of the financial crisis were achieved on the German investment market for commercial property, with transaction volumes exceeding €30.4 bn. This represents a plus of 21% on 2012. Office properties were once again the most popular asset class, with €15 bn or 50% of total invested capital going here. Retail property accounted for 28.5% of total volumes, while logistics and industrial property were responsible for around 7%. In the period under review, investor interest focused on Germany’s top five locations Berlin, Düsseldorf, Frankfurt, Hamburg and Munich. These cities accounted for around 55% of the total transaction volumes with €16.8 bn. Broken down by city, Munich took first place with €4.7 bn (+33% against 2012), followed by Frankfurt (€3.6 bn or +19%) and Berlin (€3.3 bn or -22%).
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