Vienna increasingly popular among wealthy second home buyers
Vienna is rising up the preferred list of second home locations for buyers looking to combine culture with privacy and security, according to a new report.
But property is not of the bargain variety as the global financial crisis largely passed Vienna’s housing market, says the analysis from Knight Frank. The report points out that since the collapse of Lehman Brothers which signalled the start of the global credit crunch mainstream prices in Austria have risen 34.7%, the highest level of price growth in all of Europe.
Indeed, prices in Vienna went one step further and outperformed the national average, increasing by 55.1% over the same period, according data from the Austrian National Bank.
In Vienna prices increased by 8.3% in the 12 months to June 2013. Luxury prices range between €15,000 and €18,000 per square meter but the most prestigious properties in Vienna’s old town can command upwards of €20,000 per square meter. However, despite expectations the record sale price of €30,000 per square meter has yet to be reached.
‘Austria’s property market, in terms of its structure and recent performance, is more closely aligned with its German speaking neighbours than it is with its more volatile southern Eurozone partners,’ said Kate Everett-Allen of Knight Frank’s international residential research team.
‘Furthermore, owner occupiers represent only 56% of households and the country fortuitously avoided a housing boom pre 2008 which kept supply tight and mortgage lending still only accounts for around 35% of GDP, making it one of Europe’s least indebted nations,’ she explained.
Vienna’s luxury apartment market is largely confined to the city’s 1st district, the area which encompasses the Imperial Palace, which was the original home of the Habsburgs. Districts 2 to 9, which encircle the 1st district, and the 13th, 18th and 19th districts are also targeted by international buyers, particularly those seeking family homes.
The report says that development in the ‘Innere Stadt’ or old town is severely restricted given its preservation rights as a UNESCO world heritage site. However, one of the largest inner city developments in decades is the restoration and redevelopment of the Goldenes Quartier, a mixed use scheme which will add 12 luxury apartments to the old town’s housing stock.
Most purchasers are lifestyle buyers seeking a second home but those investors that are active in the city centre are typically focussed on capital appreciation as opposed to rental return given the rent regulation that applies to pre-war buildings.
International buyers in Vienna tend to be from Eastern Europe, Russia, the US, Germany or Switzerland but the city is also increasingly on the radar of Asian buyers given it is widely considered the ‘world capital’ of classical music and culture.
Knight Frank has found that the number of searches for Viennese homes conducted by web users based in Asia increased 11% in the first nine months of 2013 compared to the same period in 2012.
A key attraction for buyers is Vienna’s secure and private environment. This is underlined by the presence of international organisations such as OPEC, the OSCE and the United Nations.
‘Anecdotal evidence suggests that celebrities and wealthy individuals can retain their anonymity here in a way few other cities permit. Indeed, in 2013 Vienna topped the rankings for quality of life for the fourth consecutive year in a survey conducted by HR consultants Mercer,’ added Everett-Allen.