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Income-generating houses in Austria and Vienna in particular, as an example

Every year, the population of Vienna grows. As of 2018, it was 1,821,582. By 2022, it is expected to exceed 2,000,000, according to official data. Around 65% of Vienna’s population lives in rental housing, with demand for rental properties continuously increasing, along with the number of renters. In 2017, renters occupied 633,000 apartments in Vienna, and the total number of apartments in the city is approximately 1 million. The number of income-generating houses in Vienna accounts for 90% of such houses in Austria. The market is growing and developing. Every year, around 500-600 transactions for the sale (purchase) of income-generating houses take place in Vienna.

Income-generating houses in Vienna: district distribution

Vienna has 23 districts, but not all have an equal number of income-generating houses:

• The 16th district has around 1,300 buildings,
• The 15th has 1,117,
• The 3rd district – 1,058,
• The 18th – 1,020,
• The 23rd district has only 92 buildings,
• And the 22nd has 114 buildings,
• The 11th has 120,
• The most expensive and upscale district has 605 buildings.

Income-generating houses in Austria: number of deals, market, and its turnover

Currently, the Austrian market, especially in Vienna, is stable, as noted by experts, and is growing every year. It’s worth mentioning that during the 2008 crisis, fewer deals were made, and market turnover was lower than usual. This continued until 2015, but by 2016, the market began to stabilize and reached €1.3 billion. While this is not quite the €1.4 billion seen in 2012, it is far from the €780 million in 2008.
Each year, the number of income-generating houses in Vienna decreases by about 1%. Old buildings are demolished, new ones are built, or they are repurposed. Affordable properties (priced between €1 million and €2 million) are quickly sold, and by 2019, they were almost gone. As in many prestigious cities, income-generating houses in Vienna’s central districts, located near parks, squares, and shopping centers, are highly sought after.

Districts in Vienna where it’s best to buy income-generating houses

Vienna’s most prestigious district is the first or inner city. Here, the price of income-generating houses averages between €10 million and €15 million. Over five years, around 20 transactions for income-generating houses can occur in this district.
Good and relatively inexpensive districts are the 16th and 17th. Prices here are much lower, and the number of income-generating houses, as well as the choice of properties, is much higher. Compared to the first district, the number of houses in the 16th and 17th is three times greater.

Why you should consider investing in an income-generating house in Austria, and Vienna in particular

1. Income-generating houses in Austria, especially in Vienna, are constantly increasing in value. Sometimes the growth is more active, sometimes not, but it is always present, meaning you will always preserve and increase your capital through risk-free investments in residential real estate in Vienna or other Austrian cities, such as Salzburg, for example.
2. On average, income-generating houses increase in value by 4%-7% each year. Their annual return is about 3%-5%, so the total return is around 7%-12%, which is very good and quite stable.
3. You can obtain a bank loan to purchase such properties. Residents of countries like Russia, Ukraine, Belarus, Kazakhstan, Moldova, Uzbekistan, Armenia, and many other CIS countries can also take advantage of such loans. More details about loans and other considerations when purchasing commercial and income-generating properties in Austria or Germany can be found in the neighboring article.
4. Sociologists and the Vienna authorities predict that the demand for housing in Vienna will continue to rise due to the following factors:

• There is no space to build large residential complexes,
• The population of Vienna is constantly growing.

As a result, rental rates will also rise, increasing the return on investment. While it may not be as high as in high-risk investments, the return on income-generating houses in Vienna is respectable for low-risk investments.
Income-generating houses in Vienna can be renovated and refurbished to increase their value and rental rates. For example, an investor purchases an income-generating house for €2 million to €2.5 million, with a total area of 1,000 square meters, renovates and refurbishes the building, sells half the apartments at €5,000 to €6,000 per square meter, thus recouping their investment, and continues to earn income by renting out the remaining part of the house at higher rental rates than would have been possible immediately after purchase.
The most interesting part is that you can add another attic floor to the top of an income-generating house, creating penthouses and selling them at a high price. These square meters will definitely be more expensive than the lower floors of the house. Such deals can yield a profit of around 20% to 30%, which is quite good for income-generating houses in stable Vienna.

As you can see, income-generating houses in Vienna can be an excellent investment with a sensible approach. Our company can help you buy or sell income-generating houses in Vienna or other Austrian cities, as well as any other residential or commercial real estate or business. We have income-generating houses in Vienna, Salzburg, and other Austrian cities, as well as renovation and refurbishment projects where you can earn a good return by using our services. We can find almost any property in this country or in Germany, depending on the investor’s preferences and the integrity of their people, who often decide “who to work with.” Only a part of the available properties is listed on our website, so we ask you to contact us in writing or by phone with your requirements.

Should you buy a shopping or office center in Austrian cities like Vienna, Salzburg, or elsewhere?

Shopping and office centers, like income-generating houses, are passive investments. They are usually sold with existing long-term or open-ended rental agreements.
Shopping and office centers are located in Vienna, its suburbs, and other cities in Austria – the capitals of federal states and regional centers.

Investing in Austria is good because it is stable, reliable, and offers decent returns, specifically:

• As already mentioned, the Austrian real estate market is constantly growing, which can be observed over the last 20 years, showing an annual growth rate of about 4%-7%;
• Shopping centers in Austria are in demand, not only among the local population but also among residents of neighboring countries such as Hungary, the Czech Republic, Slovakia, and Slovenia. These visitors frequently shop in Austrian malls due to lower product prices and higher quality compared to their home countries. Additionally, many tourists, both those passing through and those vacationing in the Austrian mountains, contribute to the demand;
• The local population in Austria believes that investing in real estate is a better option than keeping money in bank deposits, meaning there are no liquidity issues with such properties;
• The return on commercial real estate hovers around 5%-7% annually, based on the property value. If we consider the return on invested capital, the rate is 9%-12%, including the use of a loan. Without a loan, the return is higher by 2.5%-3%, resulting in an 11.5%-15% annual return on invested capital in commercial real estate without a loan. This is very impressive;
• Residential real estate yields a return of 3%-4% annually, but capitalization adds another 4%-7% each year. Furthermore, it can be renovated and refurbished, which adds a substantial percentage to the value. We have been engaged in this process for a long time, and the risks are minimal, especially if you collaborate with our company;
• A loan in Austria can cover 50%-70%, and sometimes up to 75%, of the property’s value. The term of such a loan is usually 10-20 years. There are no penalties for early repayment;
• The market is stable, the jurisdiction is European, and it is among the top in the EU, with full and highly favorable government support, as well as protection for foreign investors and their investments.

How to buy commercial or income-generating real estate in Austria?

An enterprise is established, owned by the investor or their authorized representative, and the property, along with a bank loan if necessary, is registered under this company. Such a company can be purchased with the desired real estate already registered to it, typically representing 80%-100% of the company’s capital. You may wonder why not always 100%. After the purchase, agreements are made with management companies, which sometimes hold a small percentage of the company. Why is this necessary? The management company should be incentivized to manage the property as effectively as possible to maximize profits. If they are a co-owner, even with a small stake, their profit depends on how well the property is managed, just like the investor’s profit. There is no need to worry, as the management company, being a minor co-owner, cannot make any decisions without the knowledge and consent of the majority owner.

All service charges and utility bills are paid by the tenants themselves. If desired, you can save on the services of a management company.

For more details on what to pay attention to when making a purchase, please read the adjacent article.

In conclusion

As mentioned, everything depends on the investor’s preferences and investment strategy, which can be either very passive or moderately active. Each property has its own advantages.

We can help select and support everything mentioned in this article. Furthermore, if you are interested in higher returns and more active types of investments, feel free to contact us, and we will find exactly what you’re looking for.

INVESTMAKLER

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