Walter Huber, Managing Director at DPC Immobilien the Austrian partner of IRELS, shares his insights on the industrial and logistics property market in Austria.

DPC immobilien is a key player in the austrian corporate real estate market

Share on

 

Austria is an attractive logistics location due to its location in the heart of Europe as a connection between Western and Eastern Europe, or Northern and Southern Europe. Nevertheless, until around 10 - 12 years ago there were hardly any modern logistics properties and practically no international developers on the Austrian market. For years there was a corresponding need to catch up in international comparison. In the last 10 years, especially in the last 7 years, the picture has changed completely. International developers of logistics properties have come onto the Austrian market. Above all, numerous logistics properties have been developed and successfully let in the greater Vienna area around the federal capital. But also in the submarkets of Upper Austria (Linz - Wels) and Styria (Graz + Graz area).

From 2017 onwards, letting performance also increased sharply and even multiplied compared to previous years. Despite the sharp increase in supply, also prime rents in the logistics sector also rose by around 30% - 35% since 2019 due to high demand. Prime rents in Vienna and the surrounding area currently stand at EUR 6.50 - 7.00/m²/month net.

However, with the increased demand for new projects, land prices in urban centres have also risen sharply in recent years. Despite the increase in net rents, new-build projects are often no longer profitable in prime locations due to higher construction costs, but above all because of the sharp rise in land prices. Developers are therefore increasingly switching to B-locations or brownfield properties. Brownfields will continue to gain in importance over the next few years, also due to the further expansion of the EU taxonomy and the hotly debated topic of    "surface sealing" in Austria, which will make rezoning more difficult.

In the investment sector, yields have fallen sharply until 2023 - in line with the international trend - and have come very close to prime office yields (note: prime yield 2022: 3.50 % gross).
The transaction volume in the asset class logistic has also risen year on year and posted a record year in 2022 at just under €800 million.
Due to the turnaround in interest rates and the resulting increase in financing costs the entire investment market was massively slowed down in 2023.
Yields rose to 6.00% gross at times but have now levelled off at around 5.7 % gross. Only around 175 million was invested in Austrian logistics properties in 2023, a decline of 75% compared to 2022.
Significantly more investment is expected again in 2024.

For 2024, we expect a decline in letting figures compared to the previous year 2023. In view of the many projects in recent years and the pipeline, completions will exceed take-up and the vacancy rate will increase. The rental growth of recent years will be curbed by reduced demand and the available supply, and we do not expect rents to rise in 2024.

Danube Property Consulting Immobilien GmbH (DPC) was founded in 2012 and quickly established itself as a strong brand on the Austrian property market.
DPC has become an important partner for owners and investors, tenants and buyers, particularly in the areas of industrial and logistics properties, office letting and investment, valuation and corporate real estate services.
DPC has an excellent regional, national and international network. The entire Austrian property market is served from the Vienna office.

Walter Huber
Managing Director
DPC Immobilien

To discover more :

https://www.dpcimmobilien.at/de/