The real estate market is not only recovering noticeably from the effects of the pandemic, but some segments are even experiencing a real boom.
The stability of the Austrian real estate market is still highly valued by local and international investors. Apart from stable economic conditions, the decisive factor is a high quality of life and a positive demo-graphic development in urban areas. The focus is primarily on crisis-proof asset classes, with an enormous demand for logistics properties – but newly built residential buildings are also very popular.
Due to the great economic importance of tourism, the attention of many investors is naturally drawn to the Austrian hotel market. This market is also recovering noticeably, even if the record year of 2019 will remain a benchmark for some time to come. Year-round destinations and leisure hotels are en vogue, and forward deals, which used to be an exception, are becoming more and more common.
The apartment building market (“Zinshausmarkt”) is becoming more regional. Due to the shortage of available products in Vienna, investors are increasingly switching to the mostly cheaper federal states, of which Lower Austria is the second most important. In the office market, home office and desk sharing have become ubiquitous – but the overall effects of the pandemic are limited, at least in absolute terms, which is a cause for celebration.
A positive development is clearly noticeable on the retail market as well, in particular as a result of vacant spaces in very good locations and innovative concepts. Especially international customers are taking advantage of the opportunities that are now emerging on the market.
Winner of the crisis: warehouse and logistics properties
There is also a clear “winner of the crisis”: the demand for warehouse and logistics properties is increasing rapidly, and this asset class is currently experiencing a real boom. Private living concepts must become more flexible, as home office and the retreat into one's own four walls are forced into a complex symbiosis by the pandemic. Flexible floor plans that allow for separate work and retreat areas are gaining in importance.
To sum up, the pandemic has fueled some positive developments on the real estate market. For instance, Corona has turned conversion of use into this year’s hot topic, which has a positive effect on the sustainability of the entire industry.
Thomas Belina, Managing Partners of Colliers Austria: “In our last market report we pointed out that every crisis also brings new opportunities – and 2021 proved us right: Innovative retail concepts and various types of conversions of existing spaces are a sure sign that the pandemic is not slowing down the development of the real estate market, but partially even accelerates it. We are convinced that this is only the beginning of a process that will have a lasting impact – which is why we have made it the central theme of this year’s market report.”
