Record year for investment in Austria

Last year was a record year for real estate investment in Austria, with office deals dominating the market, according to property advisers CBRE.

There were €4.8bn of deals in the country last year, comfortably outstripping the €3.9bn of deals transacted in 2015. In the first half of 2017 alone, €2.55bn of deals were transacted.

German investors dominated the Austrian real estate market in 2017, accounting for 51% of deals, thereby outstripping investment from Austrian investors, who accounted for just 30% of real estate deals in their home market, according to CBRE. Other international investors, including French and Luxembourg-based investors, made up the remaining 19%. Interestingly, mega deals were prevalent, with 11 transactions in excess of €100m.

‘We were headed towards a record year from mid-2017 onwards,’ said Georg Fichtinger, head of investment properties at CBRE.

Once deals accounted for 65% of transactions, followed by retail (12%) and residential (11%).

Prime yields tightened slightly last year. Office yields now stand at 3.9%, down from 4% in 2016. High street yields are around 3.3%, down from 3.4% a year ago. Shopping centre yields have contracted to 4%, down from 4.1%, with retail parks hovering around the 5.6% mark, down from 5.7%.

‘After such a record year, it is difficult to give a prognosis for this year,’ said Fichtinger. ‘However, we expect 2018 to be a good year, even if it doesn’t keep pace with last year’s record,’ he said.

Austria’s strong performance is reflected across Europe. A near record performance in Germany (€57bn), coupled with an unexpected uptick in UK investment volumes (€72bn), provided a strong boost to European real estate markets last year. German investment volumes were up 8.4% on the previous year, according to CBRE, boosted by a strong fourth quarter, which saw €17.8bn of transactions bringing the annual investment turnover for Germany above the €50bn mark for the  fifth time since 2006. Over in the UK, investment volumes in 2017 jumped by 11.6% from 2016, driven by large volumes of international capital and several landmark deals, according to CBRE. This included the sale of 20 Fenchurch Street, or ‘The Walkie Talkie’, for £1.28bn and the sale 122 Leadenhall Street, aka ‘The Cheesegrater’, for £1.15bn.