Sectors are shifting – housing as a crisis winner
Vienna (OTS) – The corona crisis also left its mark on the domestic investment market last year. With a total investment volume of almost 3.2 billion euros, this value was around 40% below the – albeit particularly good – result of 2019 and around 15% below the five-year average. The market for hotel and retail real estate came to an almost complete standstill, while the residential sector was the asset class with the highest transaction volume for the first time, according to a current press release from OTTO Immobilien.
Around 40% of the investment volume in the previous year related to residential properties, 31% to office properties. This is followed by industrial and logistics properties with around 13%. Retail properties are at around 8%, according to the experts in a preview of the current investment market report from OTTO Immobilien.
Recovery expected in the hotel sector
- Im Residential sector the trend of recent years continued with over EUR 1.3 billion in transaction volume and a growth of 50% compared to 2019. “The high volume is due to the great interest and the strong inflow of institutional capital – but also to the availability of suitable products from national project developers,” says Dkfm. Christoph Lukaschek MBA, MRICS, Head of Investment at OTTO Immobilien. The company has historically focused on the residential segment and expects demand in this area to continue to increase next year.
- Office objects were able to maintain their position on the Austrian investment market as a classic institutional asset class and continue to see strong demand from international investors. In 2020, offices saw the strongest decline in transaction volume compared to the previous year with a minus of around 1 billion euros, but this was also due to the limited availability of suitable products. “Several transactions such as the sale of CompanyBuildings 06 in TownTown by OTTO Immobilien as well as the still strong total transaction volume of more than 1 billion euros demonstrate the strong excess demand for long-term rented core properties, which led to a further decline in prime yields,” emphasizes Lukaschek .
- Industry / logistics was certainly one of the winners of the corona crisis in Austria last year. In particular, the area of city logistics is very much sought after by investors due to the rapidly growing Internet trade and the demand for space from parcel logistics companies such as Austrian Post and AMAZON, which means that the returns in this area are sometimes below that of office properties with comparable location quality. “In contrast to living there are also many international players among the project developers active in Austria”, said the investment experts from OTTO Immobilien, who were able to support the largest transaction in the area of city logistics with the sale of the CityPark in the 23rd district last year. The total transaction volume in the areas of industry and logistics amounted to approx. 450 million euros in 2020.
- The market for Commercial real estate came to a complete standstill, especially in the second half of 2020. Although transactions were still concluded in the first half of the year, investors were very cautious, according to the experts from OTTO Immobilien, due to the heavy loss of sales in stationary retail, which was exacerbated by the second hard lockdown at the end of the year. “It remains to be seen whether the price expectations of buyers and sellers will be found again in 2021,” explains Lukaschek. The only exceptions are the little affected local suppliers, who will continue to present a risk-return profile suitable for institutional investors in the future.
- The transactions in Hotel area fell by around 80% in 2020 and amounted to around 170 million euros. In the medium and long term, however, OTTO Immobilien is assuming significantly fewer downward corrections. “Investors cannot currently predict which hotel operators and tenants will emerge from the crisis without substantial damage. This uncertainty is likely to persist in 2021, and from today’s perspective, a return to pre-crisis levels is to be expected for established brands ”, according to the forecast.
Historically low returns
In the previous year, the returns in almost all market segments fell compared to 2019, a strong downward trend can be seen at OTTO Immobilien, especially in office, residential and logistics properties. “The prime yields in the asset classes are historically low, which is mainly due to the very high investment pressure of institutional investors and the low interest rates on the capital market,” emphasizes Dkfm. Christoph Lukaschek MBA, MRICS in the broadcast.
Further details on the transaction volume, individual deals and the exact returns can be found in the investment market report from OTTO Immobilien, which will be published on January 31, 2021.
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