Real Estate in Vienna

[Syt]

NYT has a decent article about the current situation in Vienna for prospective home buyers:

http://www.nytimes.com/2014/12/19/greathomesanddestinations/vienna-has-its-own-take-on-luxury.html?_r=0

Vienna Has Its Own Take on Luxury

Vienna's property market has seen price rises of around 80 percent over the past 10 years, a combination of a strong local market and increased international interest. But with the market slowing as a result of changing political and economic circumstances in some areas of Eastern Europe and the city's lack of ultra-prime properties, local real estate agents now expect slower, but steady, growth.

"There is still also a strong local demand, though Vienna is not an investors' market like London," said Alex Koch de Gooreynd, sales agent for the Austrian region with Knight Frank, the global real estate agency.

Most property purchases in Vienna are made by residents for their own use. The population has been steadily increasing, and is estimated to rise from 1.8 million now to 2.04 million by 2034.

As there is not a lot of housing available, residents do tend to hold on to properties once they have them.

"A lot of Viennese families are more likely to keep their homes than sell at the moment," said Christian Sommer, managing partner at the local office of the property agency Engel & Völkers. "They can't see a better investment."

The city is not known for speculation, partly because the local authorities set rents based on a building's age, services and location. Though newer buildings with better facilities may have better rental prospects, the yields are often less than 3 percent, even in the best areas.

In contrast, capital appreciation on home sales from 2011 to 2013 was 8 to 9 percent. As a result, prime properties began to head toward a record breaking 30,000 euros per square meter, or about $3,500 per square foot, causing market observers to voice concerns that the market might be entering a bubble. Agents say that 2014 figures show that clearly will not happen, as capital increases have dropped to an average of 2 to 3 percent.

Recent political upheavals in Ukraine and subsequent economic sanctions, plus the drop in the value of the rouble, coincided with a decline in interest from investors in Russia and Ukraine, which has always been a key element of the Viennese market.

Wealthy international buyers also cannot find the same kind of ultra-prime property available in other cities such as London or New York, Mr. Sommer said.

"Clients looking for properties priced at €4 million to €10 million are reluctant to take anything but the best, and are not prepared to compromise," he said. "In Vienna, the term luxury doesn't always mean what it might elsewhere. The location of a property might be good, but there may not be the views, number of rooms or amenities that an ultra-high net worth buyer may expect."

Agents also say a lack of speculators means that though the market has slowed in recent months, it can maintain sustainable growth.

"There was a feeling that new development might be released too quickly but it now seems developers are being sensible, watching the market and releasing their stock in way that means supply can stay at a healthy level," Mr. Koch de Gooreynd said.

About 30 percent of the city's buyers are foreigners, according to a 2014 report by Knight Frank. Along with Russians and Eastern Europeans, Vienna traditionally has attracted investors from Germany, Britain and the Middle East.

There have been visits by Chinese investment groups in the past year, but agents said they were interested in commercial rather than residential projects.

(Anyone from a country outside the European Union must obtain a government permit to reside in Austria, a process that takes two to six months.)

Vienna is divided into 23 numbered districts, with District One, the city center, home to historic buildings such as the Hofburg Palace, St. Stephen's cathedral and the opera house, as well as the Parliament, luxury shops and businesses. Most prime buyers want to be in this district, where residences usually are apartments. Peter Marschall, owner of local estate agency Marschall Immobilien, said the Museum Quarter, in District Seven, southwest of the city center, and the area around the Naschmarkt, a popular market in District Four, south of the center, are now the more fashionable places to buy, with prices around 50 percent less than in the city center.

The Second District, east of the center, is also becoming increasingly popular with younger buyers who want an area that is still affordable and improving but within walking distance to the center.

"It used to be a bad area, but now it has a new university, new homes and shops and will continue to become better for residents. Prices are around €6,000 to €7,000 per square meter," Mr. Marschall said.

In terms of luxury homes, apartments in the Golden Quarter, a luxury commercial and residential development in Tuchlauben, in District One, came onto the market last year. Its 14 units were priced at more than €20,000 per square meter, the upper end of the prime property range. (Four still are available.)

A 300-square-meter penthouse in the development was sold through Mr. Marschall's agency for €30,000 per square meter, a record for Vienna property. "The Golden Quarter is the best you can find in Vienna," he said.

Another high-end address is the 600-square-meter penthouse in the building that houses the new Park Hyatt Hotel on Am Hof square. It is for sale leasehold, at a figure estimated to be €15 million.

There are indications that the city's luxury sector is likely to expand. The Knight Frank report notes that by 2023 Vienna is expected to see a 26 percent increase in its number of ultra-high net worth residents, people with assets of over €24 million. It is one of the largest such expansions predicted in the report, which examined key European cities.

The number of prime sales are now limited, Mr. Sommer said, so they are not the reason the city's prices have risen so sharply. "The biggest movement in terms of sales is within the mass market, so sub-€400,000," he said. "Property agents have achieved sales of €25,000 to €30,000 per square meter but these are very few and it doesn't mean that prices are reaching that level regularly."

[CountDeMoney]

About 30 percent of the city's buyers are foreigners, according to a 2014 report by Knight Frank. Along with Russians and Eastern Europeans, Vienna traditionally has attracted investors from Germany, Britain and the Middle East.

Barf.  Shame such a lovely city smells like body odor.

[Valmy]

Most property purchases in Vienna are made by residents for their own use. The population has been steadily increasing, and is estimated to rise from 1.8 million now to 2.04 million by 2034.

So it will only take Vienna 120 years to recover from Word War I and get back to its 1914 population.

[Syt]

About 30 percent of the city's buyers are foreigners, according to a 2014 report by Knight Frank. Along with Russians and Eastern Europeans, Vienna traditionally has attracted investors from Germany, Britain and the Middle East.

Barf.  Shame such a lovely city smells like body odor.

Considering that 40% of the people here born outside Austria ...

Most of them don't live in the posh areas, though, and there's little to no reason for most tourists to travel to the 10th, 15th or 20th districts that have very high immigrant populations.

[Valmy]

Well maybe we want to find a decent Middle Eastern Restaurant.

[CountDeMoney]

Considering that 40% of the people here born outside Austria ...

Most of them don't live in the posh areas, though, and there's little to no reason for most tourists to travel to the 10th, 15th or 20th districts that have very high immigrant populations.

No wonder there's such projections for growth. Too many people.

Gotta find some links for you about the condo/apartment glut in D.C.  So much construction, but nobody's dropping prices, so you have a shitload of empty housing.  It's like China writ small.

[Syt]

Living space is growing slightly slower than people moving in, and the city suspended their public housing projects ten years ago (though there's still funding for subsidized housing).

Compared to other cities, renting is still very popular, mostly because the rents aren't rising as sharply as sales prices.

[derspiess]

Vienna, Virginia ain't too far behind.  My aunt & uncle lived there in the 80s and if they had held on to that house, they'd have made a killing.

[CountDeMoney]

Vienna, Virginia ain't too far behind.  My aunt & uncle lived there in the 80s and if they had held on to that house, they'd have made a killing.

No shit.  That's primo NoVa property now.

You remember Vienna, Maryland?     The little drawbridge by the power plant?

[The Minsky Moment]

Good news is with the squeezing of the middle class and increased immigration, hourly wages for zither players have declined, thus making Viennese living more affordable, and keeping out South Carolinian film critics.

[Syt]

Most property purchases in Vienna are made by residents for their own use. The population has been steadily increasing, and is estimated to rise from 1.8 million now to 2.04 million by 2034.

So it will only take Vienna 120 years to recover from Word War I and get back to its 1914 population.

It's got twice the area, though. But it's generally frowned upon to have ten people living in a room these days.

[MadImmortalMan]

The city is not known for speculation, partly because the local authorities set rents based on a building's age, services and location. Though newer buildings with better facilities may have better rental prospects, the yields are often less than 3 percent, even in the best areas.

3% is terrible.