Investing in commercial real estate and business: Austria, Germany. Buy an income-generating house, shopping or office center, hotel (guesthouse) in Frankfurt, Vienna, or the Austrian and German mountains? Answers to these questions will be described in this publication.
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Is it time for stability? Are you tired of the business rhythm in CIS countries and want to invest in a prestigious jurisdiction, have a stable income, immigrate, and obtain residency in Germany or Austria? Are you interested in investments or how to get citizenship (Germany, Austria) through them? Simply not sure where to invest your money? In this article, we will discuss which properties to consider when foreigners buy commercial and residential (income-generating real estate) in Germany and Austria, we will talk about financing and show, through real examples, the profitability of different properties, and mention the sale of land plots. This article will be particularly useful for residents of (e.g., Ukrainians, Russians – foreigners) Russian-speaking countries such as Russia, Ukraine, Belarus, Kazakhstan, Moldova, Armenia, Uzbekistan, etc., who are interested in buying and selling income-generating houses (Western Germany or other parts) and other types of real estate.
The main types of properties for investment in Germany and Austria are:
Office centers typically have several tenants, usually 2-3, with long-term leases.
Shopping centers in Austria or Germany may have more small tenants and one major tenant, known as an “anchor.” This anchor tenant could be a large supermarket chain with a lease for 20-30 years.
Income-generating houses have physical persons as tenants. These are families renting residential spaces, typically with leases that automatically renew annually or every few years.
Hotels often have restaurants, especially if they are located in the mountains. An important consideration when buying a hotel with a restaurant is that in Austria, there is a quota requiring owners to employ a certain percentage of local residents, which in the Austrian mountains may be less developed than in major cities.
Office-residential complexes are buildings where the first floor is typically leased to a company or bank, and the upper floors are residential, housing families.
Purchasing property in Germany by foreigners is almost the same as for local residents, except for financing (which will be discussed later in the article). Which property to buy is up to you!
It’s also important to remember that there are many other investment and business immigration opportunities. For example, if you are not interested in Vienna or investing and doing business in Austria in general, we can offer investments in Germany, such as in Berlin, Hamburg, or Munich.
We disagree with the notion that good properties are only available upon request, though this is often the case. For example, we currently have several good properties listed on our website that do not require special searching. However, some properties are not listed on our site for various reasons: one main reason being the owner’s desire to keep the sale private. If you wish to purchase a hotel somewhere in Germany, Vienna, or the Austrian mountains, we will be happy to find what interests our clients.
Biogas Project 1 (Innovative Investment) General contractor – a major German international company Project Details:
Preliminary agreements for raw material procurement are in place. The technical aspects of the project are ready and suppliers of components are agreed upon. The project owner is an experienced operator of biogas plants. This company provides EUR 2.3 million of its own equity and will manage the biogas plant technically and economically. The planned completion of the project is November 30, 2020, provided financing is resolved by December 20, 2019. For bank financing, shareholders’ equity must constitute at least 50% of the project cost. This means that additional required equity must be at least €2.95 million. Profitability is approximately 23.80%, fixed for 20 years.
Biogas Project 2 (Innovative Investment) Biogas production plant with 2 cogenerators with a total capacity of 500 kW and 851 kW. Land: 32,000 m² is included in the property price and will be the buyer’s ownership. Project:
Equipment:
Raw materials: Corn and grass silage, dry and liquid chicken manure, cattle manure, and pig manure are used as raw materials. Long-term agreements with suppliers for the full volume of raw materials are in place. Annual Income (approximately):
Annual total income: €4,611,400 before operating expenses. Annual expenses (approx.):
Total annual expenses: €2,983,750 Net income (approx.): €1,627,650 Full cost: €14,500,000 turnkey Profitability: 11.23% before taxes and depreciation Depreciation: Depreciation of the installation through taxes over the next 10 years will be approximately €976,667 per year.
Income-Generating House Year of construction: 1910 Major renovation: 2010 4 apartments and 2 commercial spaces Total living area: 309 m² 2 commercial spaces: 78 m² and 24 m² 100% of the spaces are rented out Annual rent: €31,524.21 Price: €420,000
Shopping Center Consists of two parts with useful areas of about 6000 and 4000 m² respectively. Total useful area: about 9700 m². Currently, over 60% of the space is rented out. Opening of the first part in Q4 2019, opening of the second part in Q2 2020. Anchor tenants: large and very large chains. Sufficient number of parking spaces. Rental income: about €1,250,000/year when fully rented. Yield: about 5.6% per year. Price: upon request (€22.5 million)
Office Center Area: 1,072.11 m² Parking spaces: 8 Total price: €3,550,000 net Total rental income/year: €165,616.80 (excluding VAT) Lease term: 10.5 years (until 2029) Annual yield: 4.67%
Supermarket Price: €4,850,000 Annual rent: €262,200 Yield: 5.4% Lease term: 15 years + options for 5 x 3 years The supermarket is located in the suburbs of a large city in western Germany. The store is situated on a plot of land about 7,000 m². Due to the need for expansion, works were carried out to increase the trading area and modernize the existing building. After expansion and modernization, the supermarket’s rental area is 1,900 m². The supermarket has more than 80 parking spaces. From January 2020, a new lease agreement with a well-known German chain company comes into effect for 15 years + options for extension 5 x 3 years. The rental payment is €11.5/m² x 1,900 m² = €21,850/month. Annual rental income = €262,200.
As you can see, alternative energy facilities, specifically biogas installations, dominate in terms of profitability, but the increase in land prices under them is not as significant as in major cities. The decision is always up to the buyer.
It is also worth noting that EU banks offer very favorable financing conditions. For example, you can buy a shopping center in Austria for thirty million euros, having only ten million of your own, and receive a loan from the bank for the remaining twenty million for 10-20 years at 2%-3% annual interest. In Germany, this may be 3%-4%. The financing process usually takes several months, provided that both the buyer and seller have their documents and financial arrangements in order.
Regarding property management
Usually, for an operational property, contracts for cleaning, garbage collection, and minor repairs are already in place and do not cause problems. These services are also paid for by the tenants themselves. The situation is different if you plan to invest in a property that is not yet built, not yet operational, and therefore no contracts have been signed yet.
We are ready to handle all these routine tasks.
We offer a service for selling land in Austria and Germany. Is it worth buying land as an investment? It’s probably worth considering, as investing in land, which is continually increasing in value, capitalizes your savings. However, this is very rare. Typically, clients want to buy land for the construction of an investment project, such as a multi-story building or business center.
We would be happy to become your business partners, find a successful investment property for you, and support your real estate transaction.
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