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Market Research - Austria

Austria: Vienna office market - March 2018

- New investment record and good prospects for the occupier market
- Low office take-up in 2017 will yield to more activity in 2018
- Greater demand from international buyers for Vienna’s office properties

Low office take-up in 2017 will yield to more activity in 2018

Office take-up in Vienna in 2017 was significantly weaker than in previous years, totalling approximately 175,000 m². However, the outlook for 2018 is good, as many deals are currently under negotiation and some large scale lettings are expected. The vacancy rate decreased from 5.8% in 2016 to 5.4% in 2017, but is expected to increase again in 2018, due to new office properties coming onto the market. Prime rental values remain stable at a high level, amounting to €26/m²/month. The CBD average rent is approximately €19.5/m²/month. The office market in Vienna will see major office properties added to the stock, as many schemes are under construction. 2017 saw some completions, for instance ORBI Tower, QBC and Europlaza Phase 6. The key office buildings due in 2018 are THE ICON VIENNA and Austria Campus; over half of the space has already been preleased.

Greater demand from international buyers for Vienna’s office properties

Around €4.6bn was invested in 2017 and the record set in 2015 (approximately €3.6 billion) was already exceeded by Q3 indicating an accelerating market. The volume was mainly driven by eleven transactions above €100m such as DC Tower 1 and THE ICON VIENNA. Office properties were again the strongest segment of the Austrian real estate investment market with almost two thirds of the volume. The interest of international buyers increased and they accounted for approximately 70% of the total volume in 2017. Prime office yields have fallen from 4.30% to around 3.90% since the beginning of 2016 and are expected to remain stable in 2018.

EOM Austria 2018
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