In the office sector 2016 very few new projects are completed, the marketing of the new office projects in 2017 at the central station, the Europlaza or in the 19th district puts the rents for existing older properties under pressure. At the same time the rents for office spaces in the 1st district increase due to the low availability of land through reallocations to apartments. In the retail sector, there is a clear focus on prime locations. Through the upheaval at the bank branches new spaces are coming onto the market at the same time.
The hotel landscape is changing, the classical marketing and classification becomes less important, large new projects absorb the growth and put small local operators under pressure. Smaller apartment buildings outside of the “Gürtel” were bought as yield investments. Luxury apartments need to be built and marketed in every detail for target groups. The industrial and logistics sector is moving again, existing projects enter the market and the South is enhanced by the terminal Inzersdorf.
Excerpt of the market report:
Retail Market is on an upward trend
The retail market in Austria is on a slight upward trend with 2015 seeing a slight increase of 1.4% in turnover in comparison to 2014. However, looking at this figure in more detail, you can see that this increase mainly comes from online retail trade and not from over-the-counter trade. Online retail grew by 7% in Austria and over-the-counter retail only by around 1.1% indicating a real terms increase of only around 0.6%. The mid-year figures for 2016 confirm this positive trend with a nominal increase of 1.2% achieved indicating an absolute increase of around 0.7%.
Scarcer Supply of available Office-Spaces
The expected completion of 60,000 to 80,000 square metres of office space goes to show the lowest level of completion in previous years. Contrary to expectations, concerns over a development once again towards a renter’s market have not materialized. Landlords are trying, partially with a lot of commitment and partially with very lucrative offers, to retain tenants over the 2018 and 2019 period.
Higher Need for affordable Housing
As before the demand in the rental and ownership sector is high. Alongside the general state of the property, location and price are the most important factors in determining whether the property can be successfully sold or rented. The interested parties are normally well up to speed with the state of the market and should the aforementioned parameters not correlate, the time that the property will spend on the market will increase accordingly.
After the significant hike in prices in recent years, there is currently a high level of supply especially in the luxury segment. Buyer search behavior is generally unchanged i.e. they clearly prefer a classical old build property to a standardized new build property and compromises are being accepted less and less.
Another Record Year for Apartment Complexes
2015 remained a successful year for the Vienna apartment complex market. There was a significant increase in comparison to 2014 with some 441 registered transactions (asset deals) and a volume of around 1.46 billion Euros. Amidst this backdrop 2016 began impressively. With some 266 asset deals by the end of April and a volume of € 773 million, this by far superseded the figures for the comparable timeframe in 2015. The high number of asset deals in the 10th, 12th and 15th districts was once again noteworthy.
Even without taking into account the increasing number of share deals in this asset class, we expect 2016 to be another record year.
Industrial & Logistics sector moving again
In general, the basic parameters of the industrial property market can be explained as follows:
- Large logistics hubs with an international impact are scarcely set up in Austria.
- The logistics market is restricted to consumer logistics for the large urban conglomerations and logistical services for the manufacturing industry.
- New spaces are only set up when old warehouse spaces are no longer economically viable.
- Storage and transport companies have rationalized and optimized existing areas in previous years. There is still a need for warehouse spaces with reasonable transport connections that can operate a 24-hour service and are available 7 days a week without any restrictions. Alongside modern amenities, the availability of outdoor space to allow for the incoming and outgoing of goods on lorries and articulated haulers is essential.
- Industrial companies are increasingly concentrating their activities on their main plants and are internationalizing their production activities into new markets.
Large Demand for Hotels
Vienna is one of the most important conference venues; the seat of important international organizations and in terms of quality of life, Vienna once again stands at the top of the list in 2016 according to the Mercer study. In terms of bed occupancy in Austria, Vienna takes the lead both in summer and in winter, which explains the large demand for hotels in the capital city.