Austria's economic performance during the pandemic and how COVID-19 affected the real estate market. Forecasts for 2021 on the cost, construction of new facilities.
During the first one and a half months of quarantine there were no real estate transactions in Austria. Transactions that were about to be launched on the market were postponed or put on hold.
That was caused by restricted measures such as self-isolation, total remote work mode, closed courts and other steps. Since 1st of May, most of the restrictions have been lifted.
According to real estate companies reports, demand for rented property declined in light of coronavirus containment measures. Demand for buy-for-rent property is likewise showing signs of slowing, with the decrease expected to be less pronounced than for condominiums. In the commercial real estate segment, rented retail space has been particularly hard hit. However, the second half of the year looks much more promising, and there are some reasons for it.
By summertime the number of requests for Austrian property has increased by up to 90% compared to the pre-crisis level. According to experts of the Vienna Chamber of Commerce, the prospects for the local real estate market are generally favorable.
Listing platforms such as Redfin and Zillow highlighted the resumption of web traffic, which indicates that buyers are ready to invest their money in real estate again. The jump in weekly mortgage applications goes even further, suggesting that the number of applicants is constantly increasing at the moment.
It should be noted that before the pandemic came to Austria, the country was experiencing a good moment in terms of economy and real estate. This fact is of great importance, since residential real estate, shaped by hiring, affordability, and income evolution, was in high demand. This leads to think that until the situation goes back to normal, investment activity will wait for the market to recover. However, business activities in Austria were largely resumed already at the end of May. Driven by the demand for secure investment options in the sectors residential, office and logistics, an increase in investment activities is predicted for the second half of 2020, so that a total volume of around EUR3.5 bn is expected by the end of the year.
In almost all regions of Europe, real estate investment volumes declined massively in the first half of the year. In Austria, the decline in the second quarter was only about 16% compared to the same period of the previous year. Due to early political intervention and its fundamental stability in both good and difficult economic times, Austria is a preferred investment location.
The coronavirus crisis does not appear to have had any negative impact on the level of rents office properties in Austria. When it comes to rents, we can see that it has been relatively constant in recent years and are currently at a moderate level. As an example the basic rent is about 25.00 euros / sq. m. per month and expected to remain stable until the end of the year. Due to a further decrease in the vacancy rate and a high level of pre-leasing of new and renovated premises, landlords have no need to adjust their asking rents.
After an almost 10-week-long lockdown in spring, most office users have now got back to their offices. Extended short-time working hours and the current holiday period keep offices still half empty. And some companies do not plan a complete return of their employees to the office before the end of the year.
The following factors contribute to the rapid recovery of the real estate market in the context of the pandemic:
In General, the real estate market was almost frozen. Under quarantine restrictions, employees of the companies continued their work remotely. At that time, it was only possible to complete current transactions and maintain communication between employees.
Now, after the quarantine the real estate market almost got back to normal busy life. And iit has also become possible to conclude new transactions, because now interested parties can meet to discuss the terms and sign all documents.
The pandemic in Austria has caused a serious imbalance in urban life. The infrastructure worked with serious limitations. So, during the period of strict quarantine restrictions, only grocery stores and pharmacies worked.
After Easter, the situation began to get a bit easier. Immediately opened stores with an area of up to 400 sq. m., then shopping malls. Since the middle of may, public catering establishments have been opened, and since the end of the month, children have gone to school.
Public transport within the country worked smoothly, but trips outside Austria were excluded.
Needless to say that during the spring time and quarantine restrictions in Austria , the real estate market was on hold. But since May, the deferred demand has resumed: customers have become actively interested in the market and sent requests for viewing real estate units.
The residential sector proves itself as highly resilient – demand remains high and continues to rise.
Now is the time for reasonable purchases on the market, as commercial properties can be found at a very attractive price. Analysts say that in the near future there will be objects of hotel real estate with very pleasant discounts. This means that interested ones will be able to invest profitably.
Despite the spread of the pandemic in Austria, the local real estate market is recovering quickly. However, purchasing a property by yourself can be quite a difficult task. Difficulties may arise due to language barriers, ignorance of local laws, etc. So why is it always better to contact professionals to prevent and avoid them.
Our experts will help you avoid problems when buying an apartment in Austria. Having extensive experience in the local market, we will help you choose the object that will best meet your needs. At the same time, our specialists will check the purity of the transaction and help you avoid problems and red tape.
At the moment, the restoration of housing construction is already completely reopened. However, the real estate business has felt the negative impact of the economic and health crisis. Due to the pandemic crisis, many real estate transactions were postponed indefinitely. However,during summertime everything's got back to normal. Investors are beginning to become more active and interested in Austrian residential and commercial real estate.
The rapid and consistent containment of the coronavirus pandemic and the fast introduction of a generous short- term working model have limited the negative effects on the economy in Austria to a much greater extent than in other European countries. So the real estate sector of the economy is expected to stay stable and developing.