“Since 2017 the real estate market in Austria has been quite steady, and we’ve seen a lot of cash inflow and a lot of demand ⎯ in particular for offices,” reports Birgit Kraml, Partner in Wolf Theiss Vienna’s Real Estate & Construction team. She adds that yields are rather low, with four percent considered good.
“As for the investors,” Kraml continues, “I would say that more than 50% are Germans, around 20% are international investors and pension funds, and the rest are locals. There are huge office buildings at the moment that are being built, and most of them already have a 70% lease rate,” she reports, adding that hotels and student hotels are also of interest, marginalizing shopping centers. Forward-deals are becoming more and more interesting for investors.
Birgit Kraml says that despite the fact that real estate is quite a driving force for the Austrian economy, the Austrian Lease Act is fairly tenant-friendly. “The new government is talking about modifying the Act, to refine it, and we are all waiting to see if this will really happen, because in the past all governments have promised to simplify it, but none of them did,” she says.
“Right now, as a landlord, when falling under the full application of the Austrian Lease Act you are bound to certain rents and you are not allowed to charge more,” Kraml says. “Now they want to open this up and make the prices actually mirror the market’s state, rather than just following regulatory prices. It also should be simplified, as at the moment you always have to research to see if you fall under the full application of the Austrian Lease Act, the partial application, or no application at all.” She describes “this is in particular an issue for shopping center leases where landlords may in some cases terminate leases for an undetermined period only for good reasons mentioned by the law.”
Finally, Kraml says that, in addition to real estate, Austrian law firms are being kept busy by the ongoing technological revolution, including digitalization processes, legal-tech, prop-techs, and blockchain developments. “Our firm has developed two legal prop-tech tools lately, for lease and for building agreements, called Lease-IT and Build-IT,” she says with pride. “Our goal was to simplify standard lease agreements and purchase agreements for our clients. They now have the ability to purchase these software tools from us and make business processes much faster.”
