What is your current assessment of the Viennese market; how do you see the near future?

Hans-Joachim Kühl: Especially in turbulent times, the stable growth of the last few years and the (compared to some other European metropolises) low volatility of real estate prices is contributing to stable cash flows and therefore strengthening the performance of investments. This can also be attributed to the fact that Vienna is influenced more by national conditions than international cyclical fluctuations.

Thomas Schmengler: Vienna is among Europe’s most stable office markets, but has of course not remained unaffected by the economic and financial crisis. For 2009/2010, we expect an average decline of seven percent in rentals in the top sector, and growth to pick up again as of 2012. The vacancy rate is comparatively low at nearly four percent; for 2010, we expect a vacancy rate of five percent.

Barbara Knoflach: Vienna is characterized by having relatively low volatility. That applies to yields as well as the rentals side. For us, as professional real estate investors, this makes the Viennese market calculable and stable.

Where and how do you see Vienna’s office market in comparison to other European office markets?

Kühl: We expect rent prices for office properties in prime locations in the European metropolises to slowly rise again as of 2010, and returns to increase moderately. For the Viennese market, we see this happening as of 2011 at the earliest.

Schmengler: In the last few years, the Viennese rental market has not experienced overheating, which means that declines in rentals are only moderate. However, this also curbs the rental growth fantasies for the upcoming recovery phase. From a revenue point of view, Vienna is one of the most solid markets. We are prognosticating an average of 8.5 percent in total annual revenue for the period from 2010 to 2013.

Knoflach: Vienna is the gateway to Eastern Europe! In addition, demand on Vienna’s office market is stable in comparison with the rest of Europe. We are even seeing a slight increase in supply, albeit not as skyrocketing as in Paris or Madrid, for example.

Are you planning further investments? If so, what is your timeframe?

Kühl: Generally, we keep a very close eye on the Viennese office real estate market, and should we believe that a property might fit our investment profile, we will investigate acquisition opportunities on an individual basis.

Schmengler: Austria is still a focus of our investment interests. Demand is high due to the country’s stability, advantageous tax situation and low volatility of rental and purchase prices. The supply of available properties, however, is limited at the moment.

Knoflach: Diversification is a strong pillar of our investment strategy. Therefore, not only Vienna, but all of Austria has been on our radar screen for years. We continue to follow this diversified and return-oriented strategy; therefore, further investments in Vienna are certainly a possibility. [ WS ]