Austria Inside View – A focus on Vienna

Yielding Returns: Vienna is attracting a new type of buyer; investors targeting the city’s pied-a-terre market, where attractive yields are on offer in key up-and-coming districts. 

• Vienna’s property market boasts firm fundamentals, between 2015 and 2017, more than 44,000 new households are forecast to be created but only 32,000 apartments are expected to be completed in the same period. 
• In the last 10 years, the population of wealthy people living in the city has expanded by 67% - faster than in any of Vienna’s neighbouring northern European cities, including that of London. 
• The mainstream property prices across Austria have risen by 52% since 2008 and Vienna’s prices have edged even higher, up 72% in comparative terms. 
• The UK’s decision to leave the European Union may provoke a new wave of capital inflows particularly if Vienna continues to position itself as a viable investment alternative to Berlin, Munich and Frankfurt. 
• As capital growth in the prime areas has slowed, the pied-a-terre and development market have come under greater scrutiny from investors. Gross residential yields of 3 – 4% are being achieved in up-and-coming areas surrounding the inner city districts. 
• Alongside Germany, at 56% Austria has one of the lowest residential ownership rates in Europe; this figure drops to 20% in Vienna. Add this to the 6.6 million tourists that visit Vienna each year, resulting in 14.3 million overnight stays, the potential pool of demand for landlords is clear. 
• For some, Vienna represents a cheaper alternative to Switzerland. It too boasts no inheritance tax, has a plethora of good international schools but lacks the complex residency rules. 

Kate Everett-Allen, Partner, Knight Frank International Residential Research says, “Vienna consistently ranks highly for its quality of life and can compete with London and New York when it comes to museums, theatres and opera but where it excels is in terms of anonymity, few global cities allow wealthy residents to live with an unrivalled level of privacy and security.” 

Alex Koch de Gooreynd, Partner and Head of Knight Frank’s Austria network continues, “This is a city where residents including wealthy individuals from China, the Middle East, South America and Europe, feel at ease walking around alone in the daytime or at night. They want either a pied-a-terre they can use regularly – a classic city centre apartment with high ceilings where they can step out and immerse themselves in the cultural life or café society – or a full-time family home, perhaps in the surrounding green belt, where their children can attend one of the many international schools.” 

Courtesy: Knight Frank

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