Buwog is one of the biggest players on the Austrian residential market. How many apartments are currently in your portfolio?
Buwog’s portfolio currently includes approximately 32,000 apartments. Out of these, 12,000 are located in Carinthia where we are very strong due to the takeover of the railway employee cooperative housing society; 8,000 apartments are in Vienna, 5,000 in Styria, and the rest is distributed across the entire country. But our portfolio always changes, since we constantly try to sell vacant apartments on the free housing market. We have developed individual strategies for each of our approximately 1,200 properties, which will enable us to generate optimal revenues in the next few years and work well together with tenants and buyers. We are a big and stable player in the Austrian residential market.
What amounts do you invest in maintaining your apartment portfolio?
Each year, Buwog invests approximately 43 million EUR in renovations to the existing residential portfolio. Since many of the buildings are from the 70’s, we rely strongly on thermal upgrading of the buildings, and we also bring the heating systems up to the latest standards on an ongoing basis.
Is Buwog also active as a property developer?
Yes, of course. For the most part, we are building in Vienna and the greater Vienna area, developing subsidized as well as freely financed condominiums, townhouses, investment apartments and also (mostly through competitions by the City of Vienna) subsidized rental apartments as part of big urban development projects. In addition, we work on specialty projects as well. For example, we are currently converting the heritage-protected former Heller candy factory in Vienna’s Favoriten district into a geriatric facility with 265 beds on behalf of the Vienna Hospital Association. Until the completion of this PPP project, scheduled for 2011, we will invest approximately 51 million EUR. Furthermore, we are developing 246 residential units at the Heller residential park; the total investment cost at the Heller location therefore comes to 108 million EUR.
Is the area of “residences for the elderly” a new line of business for Buwog?
No; in this case we only took advantage of the opportunity to make optimal long-term use of the premises of the Heller factory from our portfolio. At the moment however, this will not become an additional line of business for Buwog. But in 2009 alone, we invested 230 million EUR in the new construction of 500 apartments, for example in the Laaerberg area, on the former Waagner-Bìro premises in Vienna-Stadlau, and on Linzer Straße in Vienna’s 14th district – among them also are 61 investment apartments. The demand for investment apartments is very high these days.
How is the sale of apartments from Buwog’s existing portfolio properties going?
It is going very well. Austrians currently like to invest their funds into residential properties, which they clearly favour over investments in the stock market due to security concerns. Most of these investments are made from saved money. For all credit financed projects, such as townhouses, we and our clients can feel the banks’ hesitation in issuing loans. This does not make the business arena very easy at the moment. But I am convinced that once the economy starts booming again, there will be higher demand again for those townhouses that are being built close to metro stations. In this field, Buwog currently has a project under development in the 23rd district, close to the U6 metro line.
Do you already sense relief in the investors’ market?
The demand for rental properties with a good occupancy level, especially those with a good tenant structure, is rising strongly. Infrastructure funds and private investors repeatedly approach us with purchase intentions, and some excellent business opportunities have already arisen from that.
Is Buwog also taking care of managing its own properties?
Yes, and we are going to aggressively expand this line of business in the coming years. This year, we will take over 900,000 square metres from IMV. With this, we will be managing a total of 3.6 million square metres of residential and commercial space, as well as retail parks, hotels and a few specialty projects. This will make Buwog one of the big players in the Austrian property management market.
Will you also be offering these property management services to third parties?
Yes; besides new construction and renting, we want to make property management the third, strong leg of Buwog. We will also offer continued full service to potential buyers of our properties.
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