Investment Real Estate: The Return of the 3% Yield?
Executive Summary
The prospect of higher yields is an encouraging indicator for the future development of the Vienna real estate market. The current development with declines in investment property prices combined with increases in rental yields for more and more investment properties offers attractive investment opportunities for those willing to study the market carefully and invest strategically.
Intro
In recent years, the real estate market in Vienna has changed significantly due to various economic and political factors. After a phase of price declines, we are now seeing an encouraging turnaround: Yields for investment properties, multi-family houses and apartment buildings are rising.
Investors who carefully monitor the market may find that even some apartment buildings and investment properties in Vienna are once again generating gross rental yields in excess of 3% (net rental income per year divided by purchase price before incidental costs). This is pleasing on the side of buyers as well as for wealthy money investors, foundations and institutional investors looking for stable and attractive returns. Especially those who have enough equity reserves and do not need to finance expensively at high interest rates. And want to be spared the strong fluctuations of the financial markets.
Get in now ?
During the price decline in the first phase, many investors were hesitant to enter the market. But the current phase of the market now offers the first opportunities. Compared to the highs of the last two years, prices have fallen quite a bit in some areas - especially in the B and C locations of cities such as Vienna. While some investors are certainly still waiting, some investors with an affinity for real estate will use the current situation to enter the market.
The rising yields in combination with falling prices are also a sign that the Vienna real estate market is resilient and can sometimes "recover" in the other direction (that of buyers). It underlines the fact that real estate in Vienna, despite temporary fluctuations, is a solid long-term investment vehicle.
Examples
An excerpt from our apartment house list for Vienna shows a significant increase in apartment houses and investment properties with more than 2% or, at the beginning of 2023, still rarely seen 3% rental yields (see figure).
Optimize & Diversify ?
The current situation also offers an opportunity to optimize the portfolio in the direction of higher-yielding assets. Of course, as for all investment assets, it is recommended to: Diversify across different types of real estate, such as investment properties, multi-family houses, apartment buildings or apartment packages, in order to minimize risk in the portfolio.
It is advisable to conduct thorough due diligence and engage the services of an experienced advisor to identify the best investment opportunities and minimize potential risks.
For more information or consultation you can reach me, Dr. Andreas Bonschak, here:
