Real estate in Austria: stability and comfort

Over the past few years, the real estate market in Austria has shown a steady increase in prices, adding, on average, 3-5% per year. At the same time, in 2019, the increase in the cost of square meters significantly exceeded the inflation rates in the country. At the moment, in Vienna, as well as in other popular regions - such as Tyrol, Salzburg and Styria with their famous ski resorts - as a rule, demand exceeds supply.

Vienna is the most comfortable capital in the world

For real estate in the Austrian capital, which accounts for the maximum number of buyer requests, demand is recorded annually twice the volume of supply - 22,000 versus 12,000. Vienna is a city that needs more and more housing. Redevelopment of buildings, as well as new buildings, is in great demand in the city. There is not much land in this market, which is due to the size of the city itself. For this reason, there are strict rules for building - there are practically no high-rise residential complexes, there are only single projects. So there can be no mass construction there. Therefore, it is not surprising that the cost of housing in popular areas of the country continues to increase. For the last ten years prices in Vienna have almost doubled, but at the same time the growth was smooth, without sharp jumps and falls. Thus, the Vienna real estate market is very stable today, steadily growing without speculative spikes, which, in turn, becomes a signal of a healthy economy for investors.

Foreign buyers of real estate

As in most countries of the world, the real estate market in Austria is significantly affected by high demand from the local population, but foreigners can compete well here. Citizens of nearby European countries who come to the country to live, work or study represent the vast majority of foreigners. Austria is also popular among Germans and Dutch, who most often buy apartments or chalets, and there is also an increase in interest in buying real estate in the country among Swedes, Irish and English. There is also demand from buyers from the Middle East (mainly from oil-producing countries) and China.

Due to the fact that in Austria there is a restriction on the purchase of real estate by non-residents, the situation here is not as simple as it may be in other European countries. Client without citizenship or residence permit can't just come and buy a property in Vienna. To obtain a residence permit, it is necessary to create a company (additional expenses will be required accordingly) or, if a foreigner seriously wants to link his life with Austria, then you can become the owner of a residence permit under quotas. Every year about 300 people from all over the world can get it (but it is not a fact that quotas must be fully implemented, for example, in 2019 only 38 residence permits were issued - 10% of the quota) by providing certain documents, including confirmation of their own financial viability. The selection criteria are quite strict, the choice is made regardless of the size of the quota. A residence permit does not give the right to work for hire, but gives the right to visit the country, live and create a business on its territory.

Thus, Austria does not issue passports for purchase of real estate , but a residence permit can be obtained by those foreigners who invest in the real economy of the country or are recognized as in-demand specialists. In the latter case, you will need to confirm your education and work experience. There is a certain list of specialties that are in demand in the country. If a person has such a unique experience and confirmation, then he can get a residence permit with the right to work. Austria has a very reasonable and balanced approach to the choice of those who will be residents of the state, which also indicates a very correct approach to the economy - there is stimulation, but there is no speculation on pricing.As for Russian-speaking foreigners, residents of Moscow and St. Petersburg most often buy real estate in Austria. In addition, Russians are also showing more interest in commercial real estate in the country, which brings a stable income.

Profitability of Austrian real estate

If we are talking about apartments for rent, the average rate of return will be about 3% per annum, but commercial projects such as hotels, supermarkets or development projects can bring an investor from 5-7% per annum and above. When choosing investment projects, it is important to contact a professional broker who will help arrange a company in Austria, bank financing on favorable terms, as well as calculate all risks and help with tax optimization.

The purchase of housing for their own use is also in great demand, especially since most buyers can count on obtaining a mortgage in Austria at attractive rates. Today, most foreigners prefer residential properties in Vienna: first of all, these are apartments in the central districts or private houses in the 18-19 districts of Vienna. According to the Mercier rating, Vienna has been recognized as the most comfortable city in the world for many years in a row. In addition, it is the only capital on our planet in whose borders the industrial production of wine has been established.

Russian-speaking buyers are also attracted by the fact that Vienna is one of the greenest cities, about 50% of its territory is covered with greenery. This city is also famous for its rich architecture, among which there are many UNESCO World Heritage Sites). The Austrian capital is also popular among young people – it is one of the largest student cities in the German-speaking space, where there are 11 international schools for every taste - from the French Lyceum to the American school. Therefore, the question of moving to Vienna is often motivated not only by a comfortable standard of living, but also by high standards of education for the younger generation.

Real estate prices in Austria

The average cost per square meter of an apartment in an Austrian new building is 5087 euros, the purchase of secondary housing will cost less – 4016 per sq.m. The cost of an apartment in Vienna directly depends on the area: in the 1st, the average price per square meter is 17,559 euros per sq.m, in other popular parts of the city ( 4, 5, 6, 7, 8, 9 districts) real estate will be more than twice as affordable – the average cost will be from 5892 up to 7923 euros per sq.m. Rent in the Austrian capital will cost 12-18 euros per square meter, depending on the quality of the property and its location.

Changes in the legislative framework

Austria's legislative framework is quite conservative and stable, and changes occur very rarely. Among the few innovations, we can note the introduction of a fee of 3% of the cost of buying a house in a new building, which the developer transfers to the trust account of an Austrian lawyer. This amount is used in the future to eliminate possible shortcomings, if any, within 3 years after the house is put into operation (this includes minor repairs, problems with electricity, etc.).

Experts expect changes in lending in the case of real estate and investment projects in the future. There is also a possibility that banks will consider borrowers more strictly, because in a crisis situation people sometimes cannot cope with the credit load. At some point, objects may appear on the market that will be put up for sale due to the fact that people cannot service a loan. It is possible to reduce the amount of lending, for example, 70-75% instead of 80%, and it is also possible to increase rates.

Forecast of the development of the Austrian real estate market

Experts, in view of the indicators of stable price growth over the past few years, as well as stability and reliability in the Austrian economic sector, see the further development of the Austrian real estate market as quite positive. In addition, Austria showed a pretty good result during the pandemic (the mortality rate was relatively low), the population was organized and responsible, everyone observed quarantine. Therefore, construction in the country resumed quite quickly. In May 2020, Lisbon, Monaco, Vienna and Shanghai were recognized as the only capitals in the luxury residential real estate market, where prices are expected to increase by up to 5% in the second half of this year.

Thank you for your help in preparing the material:

Zhanna Ovchinnikova, Project Manager of the Department of Foreign Real Estate Knight Frank

Elena Marinichev, vice-President Moscow Sotheby's;s InternationalRealty

Elena Garanina, Deputy head of the companyImmotrading GmbH