ImmoFOKUS

VERMITTLUNG VERWALTUNG BAUMANAGEMENT BEWERTUNG

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The magazine for sustainable real estate Österreich 12,– • P.b.b. Verlagspostamt A-1020 Wien • Zlg.-Nr. 13Z039777 M

GERHARD SCHUSTER The face behind Austria’s largest urban development project

BUSINESS LOCATION AUSTRIA

Stable business & operating environment

REAL ESTATE HOTSPOTS

The best places to invest

Kann man Häuser glücklich machen?

Wenn Sie ein von Attensam betreutes Haus betreten spüren Sie es sofort: Dieses Haus hat Seele. Und wird ein Haus perfekt gepflegt, ist es auch glücklich, sind seine Bewohner glücklich, ist auch der Hausverwalter glücklich.

Ist Ihr Haus schon glücklich?

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Unbenannt-7 1

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Editorial

Editorial The sector has entered 2015 with optimism. The year should be marked by significant growth in the area of real estate investment. This is the conclusion of the 2015 Global Investor Sentiment Report from Colliers International, which asserts that investors will continue to show an increased willingness to take risks – a development that began in 2014 and could even intensify in 2015.

MIPIM in Cannes (10th to 13th March 2015) will provide the first evidence of whether investors have good cause to be so optimistic.

The popularity of MIPIM continues. All the significant pl yers from home and abroad can be found there amongst the exhibitors or, at least, amongst the visitors. The most important international investors include the asset managers Aberdeen Asset Management, AXA Real Estate, Aviva Investors, banks such as Union Investment Real Estate and ING and insurance companies such as Generali and Allianz Real Estate, as well as sovereign wealth funds and pension funds including the Abu Dhabi Investment Authority, GIC Real Estate International, the Korean Investment Corporation, the Qatar Investment Authority and the Teacher Retirement System of Texas.

why one of the focuses of this special edition of ImmoFokus is the presentation of Austria as a real estate location. In recent months the Austrian real estate market has repeatedly become the focus of international investors on the lookout for suitable investment objects – and companies – as demonstrated by Deutsche Wohnen‘s takeover offer for onwert.

One thing is certain: these will be exhausting days for exhibitors and visitors alike. For me, the session entitled “Growth of the European listed real estate sector”, with Christophe Cuvillier, CEO and Chairman of the Management Board, Unibail-Rodamco, Luciano Gabriel, CEO, PSP Swiss Property AG, Chris Grigg, Chief Executive, British Land and Serge Grzybowski, Chairman CEO, ICADE will be unmissable. A further major topic at this year’s MIPIM is the digitalisation of the sector. You will be able to read a comprehensive report on MIPIM in the spring edition of ImmoFokus.

PS: All the texts of the English edition can be found at: QR Code.

Investors continue to concentrate on top locations such as London and Paris. Spain, Ireland and the Netherlands are, according to the experts, on the way back. In Germany - our own, extended home market – increasing numbers of investors are being attracted into medium-sized German cities, some of which are even outperforming the “Top Seven Locations” in terms of yields and locational quality.

Following last year‘s relaunch, we at ImmoFokus will be present in Cannes for the first time as a media partner of the Austria stand. This is

03

Mag. Michael Neubauer Editor in Chief

ImmoFokus Austria

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Content 7 4

Publisher Editorial

Business Location Austria 08

In the heart of Europe Austria offers nume ous Advantages for international companies

50

It’s final y time to handle the hot potatoes Commentary: Christoph Neumayer

Investing in Austria 14

Record year

Living and working, Leisure and culture

Gerhard Schuster

2014 was a great year, a year that brought high commissions for brokers.

CEO of Wien 3420 Aspern Development AG

In 2015 the investment volume is certain to top 3 billion euros Commentary: Andreas Ridder

20

The retail in transition Austria currently has nearly 220 shopping centres with 3 8 million square metres of rentable space. White spots on a map look diffe ent. But, all the same, this asset class still has a lot of potential.

32

What makes this asset class attractive in Austria, where do you see the opportunities and risks…

Commentary: Christoph Augustin Olaf Ley

26

Older hotels in B and C locations will disappear Commentary: Martina Maly-Gärtner

04

38

Bulls and Bears 42

The wave of takeovers

Owner-occupied apartments: the peak phase has passed. Today’s buyers are taking a closer look at the price they pay for the apartments they buy.

Low interest rates and highly attractive dividend yields mean that residential real estate in Europe and, above all, in Germany is currently a much soughtafter form of investment amongst both investors and shareholders. At the moment, the sector is marked by numerous takeovers and mergers as a result of the clearly increasing difficulty of eely acquiring portfolios on the market.

Healthy and somewhat conservative Commentary: Michael Ehlmaier

Stop fighting and sta t working Commentary: Michael Neubauer

A highly attractive investment instrument Commentary: Eugen Ottor

Overbooked & underpriced Tourism is a major growth driver for the Austrian economy, and the hotel branch has benefit ed from the related steady strong demand. The era of fi e-star openings has passed, but the mid-scale and low-budget segments are currently scoring with clever concepts.

The Viennese „Zinshaus“ Strong emotional value. The classical Viennese “Zinshaus”, i.e. a larger apartment building built before 1945, is still very popular among investors – even though the estimated transaction volume of more than one billion euros in 2014 is below the long-term average.

Stagnation at a high level

ImmoFokus Austria

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MIPIM TEILNEHMER 2015

IMPRESSUM „Visionen ohne Umsetzung bleiben geträumt“ (© MMag. Philipp Kaufmann)

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Redaktion: Christoph Augustin, Patrick Baldia, Michael Ehlmaier, Erika Hofbauer, Olaf Ley, Martina Maly-Gärtner, Christoph Neumayer, Eugen Otto, Andreas Ridder, Agnes Schmid, Karl Senk, Harry Weber

PICCOLOPAKETE

Lektorat & Übersetzung: Donna Schiller, Rupert Hebblethwaite

Urban Development and Planning

Design&Layout: Caroline Abl Anzeigen: Ronald Goigitzer , Ferdinand Neubauer Coverfoto: Cityfoto

46 Vienna‘s metamorphosis The transformation in Europe has placed Vienna in an excellent position. A location on the edge of the former Iron Curtain has moved into the heart of Europe, close to the rapidly growing markets in the east. The entire metropolitan region is expanding, and urban planning must now react to the resulting social, technical and ecological demands

50 Living and working, Leisure and

culture

68 Vienna continues to grow.

72

84

Off to the suburbs B-locations catching up

Investing in Europe – Emerging Trends 76

The top five European real estate investment markets in 2015 Dublin is forecast to be Europe’s second preferred location for real estate investment in 2015, according to the latest report from the Urban Land Institute (ULI) and PwC.

aspern Vienna’s Urban Lakeside is one of Europe’s largest urban development projects. Interview with Gerhard Schuster, CEO of Wien 3420 Aspern Development AG

54 aspern Vienna´s Urban Lakeside

The power is in the urban quarters

80

The reshuffling of the cards In 2014 the CEE Region was most notably affec ed by falling oil prices and EU sanctions against Russia. These lead to a massive decline in the Russian market which, until then, had been the strongest in the region.

Back to the city Recognise the location advantages. Just like people and companies, cities also have their strengths and weaknesses, explained Urban Land Institute Chairman Manfred Wiltschnigg.

Wordrap 66 For sale: Barracks and Railway Station High development potential. The Austrian Armed Forces and the Austrian Federal Railway Corporation (ÖBB) are planning a series of land sales over the coming years.

ImmoFokus_MIPIM_2015.indb 5

86

Wordrap – amongst real estate managers Is the danger of a bubble increasing?

Too much capital and too few investment opportunities.

OFFENLEGUNG NACH § 25 MEDIENGESETZ Medieninhaber und Herausgeber Fokusmedia House GmbH Sitz der Gesellschaft Breitwiesergutstraße 10, A-4020 Linz, FN 400944z, UID-Nr.: ATU 68100011, Tel. +43.1.813 03 46-0, Fax +43.1.813 03 46-15, E-Mail: office@fokus-media.at; www. fokus-media.at Geschäftsführer MMag. Philipp Kaufmann Gesellschafter K2 Holding GmbH, Breitwiesergutstraße 10, A-4020 Linz Unternehmensgegenstand a) Die Herausgabe von periodischen Druckwerken und Büchern sowie die vertragliche Erbringung von Verlagsfunktionen gegenüber Dritten einschließlich der Gestaltung von Medien und anderen Druckwerken, deren Anzeigenverwaltung und Anzeigenakquisition, des Druckes und des Vertriebes, b) der Buch, Kunst- und Musikalienhandel sowie die Verwertung von Urheberrechten und jedweden Lizenzrechten, die geeignet sind, dem Geschäftsgegenstand dienlich zu sein, insbesondere an Verlagen und Medienunternehmen.

Erklärung über die grundlegende Richtung Unabhängiges Magazin für Entscheider der Immobilienbranche - Der Immobilienfokus: Das Wissen für Immobilienprofis. Copyright der namentlich genannten Artikel bei den Autoren.

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The other side of the coin

P

oliticians, urban planners and project developers are responsible for our cities and positive cooperation is an obligation if these cities are to be successful. In practice, however, cooperation is often anything other than positive. Far too often, politicians plan using instruments – such as, in Austria, zoning plans and planning frameworks – and are surprised when real estate developers are less than happy when required to implement them. And vice-versa, developers often cite such frameworks as precisely the reason why they are unable to develop a piece of land. In such situations there are only losers: the politicians who need building projects and satisfied users and property owners; the project developers, who earn nothing from a stalemate, and, above all, the cities and society in which we live.

The solution is to bring all the players together around one table and introduce cooperative instruments. It helps no one if politicians plan visions that no one implements and, conversely, project developers want frameworks that are neither acceptable nor implementable. The art lies in finding the best compromises and skilfully moderating the process. And this is the true secret: even if these processes cost both time and energy they are essential. But even before this, it is essential to speak the same language and to understand “the other side”. This is precisely the area of conflict in which organisations such as the ULI or the ÖGNI offer their services as a moderator – and it is our heartfelt desire at ImmoFokus to act as a translator in the process.

Vienna is an international showcase city in this area: a complete urban district - aspern Urban Lakeside - is being created (see page 54) and the Vice Mayor Maria Vassilakou, supported by Christoph Chorherr, is turning precisely this cooperative approach into reality. A “cooperative planning process” is driving the expansion of Viertel Zwei into a showcase urban quarter at the international scale. If Viertel Zwei is, in my opinion, already a highlight of the Austrian real estate industry, then its expansion will be a crowning glory.

ImmoFokus_MIPIM_2015.indb 7

With this focus on process and stakeholder involvement the above-mentioned obligation is, in Vienna at least, already reality. The next task must be to go the extra mile and address sustainability in its entirety, because up until now individual site owners have concentrated on the issues of avoiding CO2 production and creating a healthy environment for users. Increasing urbanisation means that living and working environments are growing ever closer together. Today’s forward-looking urban quarters are notable for their combination of resource-saving, energy-efficie construction and operation with a high quality of life and experience – across the entire quarter and with a long-term perspective. This requires foresighted, comprehensive and transparent planning.

But without their flipside – the planning of the city and, more specifical y, the urban quarter – these efforts have their limits. I see these as two sides of the same coin: project development and the urban quarter. Only when these two intertwine and complement each other will the experience be truly successful. Where this happens it is already possible to build and operate sustainably in the urban quarter, as Sabine Dorn explains in her interview on page 62. This extra mile makes it possible to think and act in a networked, smart and integrated way. This is a revolution which is only just starting and many more ideas and pilot projects will be needed before the approach has become standard. ImmoFokus feels obliged to participate in this process. n

MMag. Philipp Kaufmann Publisher

ImmoFokus Austria 07

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.

Business Location Austria

In the heart of Europe Austria offers numerous advantages for international companies. In spite of the difficult market environment and a simmering internal debate over the country as a business location.

Author: Harry Weber

E “Current statistics show that Austria is an attractive and competitive location for international investors in spite of the difficult economic conditions.”

Reinhold Mitterlehner, Economics Minister

08

urope is defini ely not on a growth course at the present time: high taxes, excessive sovereign debt and in part oppressive legal and regulatory conditions leave the European economy little room to generate sustainable growth – for example, like the USA has done since 2009. On the other hand, the latest statistics issued by the EU Commission provide a glimmer of hope: forecasts for the European Union are now pointing to growth in all member states for the firs time since 2007. The EU should see an increase of 1.7 per cent in 2105 in contrast to the previously estimated 1.5 per cent, while the forecast for the euro zone has been raised from 1.1 to 1.3 per cent. However, a clear upswing is only expected in 2016, when forecasts are calling for growth of 2.1 per cent in the EU and 1.9 per cent in the euro zone.

Economic stimulus packages

The EU Commission is projecting growth of 0.8 per cent for Austria in 2015 and an improvement to 1.5 per cent in 2016. With this type of performance, Austria will defini ely not be one of the top countries in the EU-28. Then again, the country has launched numerous economic stimulus packages in recent years as a reaction to the financial and economic crisis. Their outcome was to give the country a certain degree of stability – in contrast to the recessionary developments in other EU countries – as indicated by the mantra-like praise coming from Austrian politicians.

Results for the first half of 2014 (more recent data is not yet available) published by ABA-Invest in Austria, a consulting firm operated by the Federal Ministry of Science, Research and Economy, show positive developments for Austria as a business location: “The international companies settled here by our federal and regional agencies increased their investment projects by 30 per cent year-on-year from 88 to 114”, commented Economics Minister Reinhold Mitterlehner. The related investment volume totalled nearly 180 million euros, which is 16 per cent higher than the first half of the previous year.

“Current statistics show that Austria is an attractive and competitive location for international investors in spite of the difficul economic conditions. However, we must continue to develop our own resources and support companies as a partner to defend our position on the competitive international stage in the future”, indicated Mitterlehner at the press conference for presentation of the data. German companies were once again the largest investor group with 31 newly founded enterprises (2013: 30), representing 27 per cent of all new set-ups.

ImmoFokus Austria

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Austria in international location rankings Word Competitiveness Scoreboard Austria

2009

2010

2011

2012

2013

2014

16

14

18

21

23

22

Source: Institute for Management Development, World Competitiveness Yearbooks, (May2014; 60 countries)

Global Competitiveness Index Austria

2009/10

2010/11

2011/12

2012/13

2013/14

2014/15

17

18

19

16

16

21

Source: World Economic Forum, Global Competitiveness Reports, (September 2014; 144 countries)

Index of Economic Freedom Austria

2009

2010

2011

2012

2013

2014

23

22

21

28

25

24

Source: Heritage Foundation und Wall Street Journal, (February 2014; 186 countries)

Economic Freedom of the World Austria

2009

2010

2011

2012

2013

2014

13

15

19

27

27

31

Source: Libertarian Fraser Institute, (October 2014; 152 countries)

“German companies have represented the largest group of foreign investors in Austria with 40 per cent of all location set-ups“

successful results: cross-sector R&D expenditures in Austria rose to 8.61 billion euros in 2014, which represents an R&D rate equal to 2.8 per cent of GDP. That makes this alpine republic one of the leaders in Europe. “There is a growing focus on the advantages of Austria as a location for innovation, research and development“, indicated ABA. More than 15 per cent of R&D expenditures in Austria are the result of foreign research contracts, which is more than any other country.

This momentum originates, above all, in the Austrian subsidiaries of foreign corporations – four of every fi e also operate research facilities in this country. What do they benefit from? “Attractive subsidies and a 10 per cent research premium for companies with headquarters in Austria as well as the bundled know-how of international experts and strong connections between business and science“, explained Siegl.

With a view to the branch mix, life sciences (the pharmaceuticals market, biotechnology and medical technology) as well as energy/environmental technology and ICT (information and communications technologies) are particularly well represented.

René Siegl, Managing Director of ABA-Invest in Austria

Low-cost electricity

Subsidies & incentives

The 1,000-th German investor was welcomed during the first half of 2014. “Since the founding of ABA in 1983, German companies have represented the largest group of foreign investors in Austria with 40 per cent of all location set-ups“, said René Siegl, Managing Director of ABA-Invest in Austria, and referred to a further trend. A growing number of high-tech start-ups with a global business perspective are selecting Austria as their launching ramp. A broad range of subsidies, well-developed transfer paths between science and industry, a high quality of life and a young, still unsaturated scene make Vienna, in particular, a very fertile biotope for innovative start-ups.

The Austrian business sector is not as optimistic: Similar to the rest of Europe, a passionate debate is in progress over Austria’s competitive position as a business location. Many organisations like the Federation of Austrian Industries (Industriellenvereinigung), the Austrian Federal Economic Chamber and numerous top managers are worried about the country’s future development and are pressuring legislators to introduce additional measures to protect the country’s position. In response to this criticism, the Federal Ministry of Science, Research and Economy points to numerous measures similar to the ones relating to research and development (R&D) that have already been implemented and brought the firs

Photos: Credits

High-tech start-ups

ImmoFokus_MIPIM_2015.indb 9

Medium-sized companies are a key factor for the Austrian economy – 996 of 1,000 companies that

ImmoFokus Austria

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Business Location Austria 2014 International Tax Competitiveness Index Ranking Overall Score

Overall Rank

Corporate Tax Rank

Consumption Taxes Rank

Property Taxes Rank

Individual Taxes Rank

International Tax Rules Rank

1.

Estonia

100

1

1

9

1

2

11

2.

New Zealand

87,8

2

22

6

3

1

21

3.

Switzerland

82,2

3

7

1

32

5

9

4.

Sweden

79,8

4

3

12

6

21

7

5.

Australia

78,2

5

24

8

4

8

12

12.

Austria

67,2

12

17

22

18

22

4

Source: The Tax Foundation’s International Tax Competitiveness Index (ITCI) measures the degree to which the 34 OECD countries’ tax systems promote competitiveness through low tax burdens on business investment and neutrality through a well-structured tax code.

operate in Austria fall under this category. Against the backdrop of the current global economic challenges, Austria turned its attention at an early point to subjects that are becoming more important for small- and medium-sized enterprises (SMEs). One of these focal points is supply security: the protection of electricity supplies is given top priority. With regard to energy networks and the availability of electricity, Austria is one of the top three in Europe. The country has a further advantage in that electricity prices are comparatively low, a positive factor cited by the International Business Compass 2014. The average

price for electricity equalled 26.36 cents per kilowatt hour in the 27 surveyed OECD countries, but only 19.76 cents in Austria. Additionally, electricity prices for industrial customers are much lower. The study’s authors also emphasised the low-cost access to information and communication technology (ICT). Domestic tariffs are unsurpassed in international comparison (see the graph). At the same time, a broadband campaign is currently in progress on the Austrian market.

One billion euros will be spent on infrastructure modernisation to set the stage for nation-wide, high-speed Internet coverage starting in 2020.

Strong purchasing power

Further arguments for Austria as a business location are productivity and purchasing power.

According to statistics published by the EU Commission, Austria ranks third among the EU-28 for labour productivity per thousand employees and fifth for per capita GD .

Tax breaks

Austria is considered a high-tax country and has a corporate income tax rate of 25 per cent.

However, tax experts agree that group taxation, a procedure permitted by the national tax code,

Global Real Estate Transparency Index Market 1.

United Kingdom

2.

United States

3.

Australia

4.

Investment Performance

Market Fundamentals 1.01

Listed Vehicles

Regulatory and Legal

1.56

1.04

1.29

1.40

1.32

1.00

1.40

1.48

1.11

New Zealand

1.79

1.52

5.

France

1.61

21.

Austria

2.31

Transaction Process

2014 Composite Score

1.27

1.25

1.41

1.33

1.34

1.31

1.40

1.36

1.09

1.43

1.00

1.44

1.80

1.28

1.55

1.07

1.52

2.99

1.50

1.53

2.11

2.10

Source: Jones Lang LaSalle - The Global Real Estate Transparency Index is covering 102 markets worldwide.

10

ImmoFokus Austria

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Economic Forecast for Austria

Estimate

Prognosis

Prognosis 2016

2010

2011

2012

2013

2014

2015

2016

Economic growth (real, compared with previous year)

1.9

3.1

0.9

0.2

0.2

0.7

1.5

Private consumption (real, compared with previous year in %)

1.5

0.7

0.6

-0.1

0.3

0.6

0.9

-2.4

6.8

0.5

-1.5

1.0

0.4

3.0

1.9

3.3

2.4

2.0

1.6

1.3

1.9

Unemployment rate (nationale Definition)

6.9

6.7

7.0

7.6

8.4

8.6

8.4

Employment (compared with previous year in %**)

0.8

1.9

1.4

0.6

0.7

0.8

1.0

-4.5

-2.6

-2.3

-1.5

-2.8

-1.9

-1.3

Investments (real, compared with previous year in %) Inflation rate (compared with previous year in %)

Official budget balance (in % of GDP)

*) Gross capital investments **) excl. Recipients of maternitiy leave payments, those on miltary sercive and in training

Source: Bank Austria Economics & Market Analysis Austria

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Business Location Austria

Innovation Cities Index 2014: Europe Region Rank

Global Rank

1

3

2

5

3

6

4

7

5 6

City

Country London

Index Score

United Kingdom

56

Paris

France

56

Vienna

Austria

56

Munich

Germany

56

8

Amsterdam

Netherlands

55

9

Copenhagen

Denmark

55

7

13

Berlin

Germany

54

8

16

Stockholm

Sweden

53

9

18

Hamburg

Germany

53

10

19

Lyon

France

53

Source: 2thinknow - Global Innovation Agency

represents a significant bonus for companies.

It allows for the fast utilisation of losses within a tax group, also when the profits and losses were recorded by group members in diffe ent countries. The decisive advantage of this calculation method is that the positive and negative results of all group members can be offset for tax purposes – with no limit. This is particularly attractive for mergers & acquisitions because goodwill can also be amortised on share deals and part of the acquisition cost of new investments can be immediately used to reduce taxes.

Another tax break: there is no inheritance tax in Austria, which is an advantage especially for family-owned companies.

The gateway to the east

Within Austria, the nation’s capital has long since established a position as a gateway to the east and is one of the most important business locations in the heart of Europe. Vienna is considered a hub to the markets in Central and Eastern Europe, and more than 300 international companies have already settled here, including global players like Hewlett Packard, Henkel, Baxter, Siemens and Eli Lilly. Major international organisations such as the UNO, UNIDO, IAEO and OPEC have established their headquarters in this city. In addition to the favourable location, these companies value the good infrastructure, outstanding educa-

12

tional system and high number of well-trained employees. 19 per cent of Vienna’s residents have a university degree, a further 19 per cent have completed secondary school, and 38 per cent have graduated from a technical college or completed an apprenticeship (status as of 2012).

A 2014 study by the international consulting fir Mercer ranked Vienna as the city with the highest quality of living in the world for the sixth time in succession.

Mercer‘s annual Quality of Living Survey evaluates the most important cities in the world based on 39 factors that are important for expatriates.

The criteria include, among others, political, social, economic and environmental aspects.

The survey also covers factors like personal safety and healthcare, education and training, traffic and transport as well as other public services.

The results of the Quality of Living Survey are a valuable source of information and a decision-making aid for governments and international businesses. According to Mercer, Vienna is one of the top ranking cities, the region west is one of the ten richest regions in Europe and the cost of living is comparatively low in relation to other European cities like Copenhagen, Paris, Oslo and London. Above all apartments and the public transportation system in Vienna are comparatively less expensive. n

ImmoFokus Austria

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It’s finally time to handle the hot potatoes Commentary: Christoph Neumayer General Secretary of the Federation of Austrian Industries

n Falling competitiveness, dwindling attractiveness and a lack of willingness to reform in a whole range of areas – these are all characteristics repeatedly ascribed to Business Location Austria by experts from such bodies as the OECD. This year Austria will once again be one of the European countries with the lowest growth rates and conclusively take its place amongst the continent’s also-rans.

There are varying reasons for this: geopolitical insecurity, the Russia-Ukraine conflict and an economic environment that is far from pro-growth. And naturally this analysis is being made from the starting point of a relatively high level of economic performance. The largely self-inflic ed trend has, however, been clear and painful for several years and is particularly strongly reflec ed in rising unemployment rates. In addition to this it is also clear that we will only be able to retain our prosperity and broad social system if we rapidly change course in the direction of growth.

What treatment is necessary if Austria wishes to re-join the list of attractive business locations? A number of levers must be pulled.

Ideally, the country requires a transparent, phased location strategy which has clear objectives and is supported by federal and provincial government as well as by many of society’s most relevant groups. The first step must be to restore faith in the country’s legal framework. Such tampering with, for example, the tax structure and introduction of partially retrospective measures as occurred in 2014 leads to a long-term loss of confidence and scares off investors. The tax reform which politicians have long promised but in reality cannot affo d must lead to a real reduction in the burden on both taxpayers and companies. This must include tariff reform and a reduction in both non-wage labour costs and the bureaucratic burden on the self-employed. In addition to this any packet of measures should also make a clear statement in favour of Austria’s position as a research and investment location.

ImmoFokus_MIPIM_2015.indb 13

The discussion about how to finance these measures underlines the missed opportunities of the last few years and decades: the continuing structural inefficienc of the state sector in such areas as public administration, public expenditure, health and pensions offers endless potential for structural reforms designed to free up resources which could be handed back to taxpayers and companies without the need to increase public budgets or forego vital investment for the future in such areas as education, research and development, infrastructure and innovation.

Unsurprisingly, many governments have already failed in this task, but there are also examples to the contrary: Styria’s provincial government, for example, at least managed to change course and implement courageous structural changes in the face of a budgetary crisis. The same show of strength is expected of the federal government but as long as at least part of this government refuses to address the task we will have to prepare for the suffering to increase to the point at which even more comprehensive – and, for some, even more painful – action simply becomes unavoidable. This is a clearly less responsible approach but one which the anti-reformers and the smooth-talkers apparently hope will still lead (at least next time) to their re-election.

There is no lack of ideas and concepts – industry has also repeatedly presented its own – but of the political determination to implement these decisively. Today, we need such determination more than ever before. Because only with the right economic and political environment – one which supports innovation, risk-taking, infrastructural investment, capital and knowledge – will Austria be able to rediscover the path towards sustainable growth and jobs. Those who can see the challenges and are ready for change have the responsibility of communicating this message to our political decision-makers.

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Investing in Austria

Record year 2014 was a great year, a year that brought high commissions for brokers. At roughly 2.8 billion euros, the real estate investment volume in Austria reached a new all-time high during the past year, reported the experts at CBRE. And at EHL there is talk that the magical threshold of 3 billion euros was also topped.

Pt.

Author: Michael Neubauer

I

n contrast to 2013, the investment volume rose by more than one billion euros, or 60 per cent. Roughly three-quarters of the total volume invested in Austria was located in Vienna, whereby retail properties were the most popular. Austria reflec ed the European trend with this development, while the CEE countries remained slightly below expectations – above all due to the Russia crisis – with an increase of roughly 25 per cent over 2013.

“Investors – increasingly from the Middle East and Far East – are turning to the “core+“ segment.“ Franz Pöltl, EHL investment expert

14

The real estate investment market in Austria has undergone a transformation in recent years.

In the record year 2007, the market was infl enced, above all, by portfolio sales, with offic properties being the most popular. In 2014, retail properties represented roughly 47 per cent of all transactions, with offic properties ranking second at approx. 31 per cent. The market gained momentum during the fourth quarter with an increase of nearly 16 per cent. Following the low point in 2009, the real estate investment market in Austria has improved steadily. This development has been accompa-

nied by the return of international investors, roughly half of which come from Germany, with a market share of 51 per cent. “The distribution is very similar to 2006 and 2007, where we can see a number of parallels“, explained Georg Fichtinger, Head of Capital Markets.

Approximately three-fourths of the total volume invested in Austria are attributable to Vienna.

Demand was highest for retail properties: this asset class represented roughly 47 per cent of all transactions, followed by offic properties with roughly 31 per cent. That places Austria in line with the international trend. Germany also rose to a record level since 2007 with a transaction volume of roughly 39.8 billion euros.

“The record set in 2014 reflects the fact that the previous year saw seven transactions, each with a volume of more than 100 million euros”, reported EHL investment expert Franz Pöltl. The largest deal was the sale of the Millennium City, including the Tower, for 320 million euros.

Other major transactions included the sale of

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Real Estate Transactions 2014 Adress 1200 Vienna, Handelskai 94-96

Seller

Purchaser

MPC

CC Real/MSREF

2201 Gerasdorf, G3 Platz 1

BAI Bauträger Austria Immobilien GmbH

ECE

1030 Vienna, Guglgasse 2-4

BAI Bauträger Austria Immobilien GmbH

DEKA

APN Property

Tristan Capital Partners

1210 Vienna, Iganz Köck Strasse 1 1010 Vienna, Schottengasse 6-8 1100 Vienna, Am Euro Platz 4 1100 Vienna, Gerhard-Bronner-Straße 15 1140 Vienna, Linzerstraße 221-227 2345 Brunn a. Gebirge, Hubatschstrasse 3 7111 Parndorf, Kälberweide 3 1010 Vienna, Wipplingerstrasse 33

Bank Austria

Private Investor

Strauss & Partner

Union Investment

BAI Bauträger Austria Immobilien GmbH

Bank Austria Real Invest

Raiffeisen Property International GmbH

Warburg Henderson

CBRE Global Investors

Private Investor

Warburg Henderson

Villagio Group

Pramerica

Private Investor

1210 Vienna, Brünnerstrasse 73&73B

Immofinanz AG

Private Investor

1060 Vienna, Mariahilferstrasse 37-39

Private Investor

Warburg Henderson

Uniqa

Do & Co

1010 Vienna, Stephansplatz 12 1060 Vienna, Mariahilfer Straße 50-52 1100 Vienna, Arsenalstrasse / Canettistrasse 1200 Vienna, Handelskai 100 1150 Vienna, Felberstrasse 4 1190 Vienna, Muthgasse 24-34

Bank Austria Real Invest

Private Investor

Erste Bank

Bauträger Austria Immobilien GmbH

Private Investor

Premium Immobilien AG

E&P Real Estate

Private Investor

Raiffeisen Property International GmbH

Union Investment

Source: EHL, CBRE, own research

the G3 in Gerasdorf (220 million) and the new ÖBB tower at the Central Railway Station (140 million). In earlier years, there was only one transaction of this size, according to Pöltl.

This year Pöltl expects an even higher transaction volume, despite the fact that the market for “core” products is “virtually sold out”. Investors – increasingly from the Middle East and Far East – are turning more and more to the so-called “core+“ segment for their transactions. There is still a great deal of liquidity on the market, indicated Pöltl, and the low interest rates are serving as a catalyst for many transactions.

And last but not least, the Wien-Mitte offi and retail complex, one of the largest properties since the sale of the SCS shopping centre, is also on the market. Experts are expecting the Wien-Mitte to change hands for roughly 500 million euros. This property is part of the UniCredit Bank Austria portfolio – the public tender is directed to Austrian and foreign investors and should be concluded in autumn 2015. Im-

ImmoFokus_MIPIM_2015.indb 15

mobilien Holding GmbH holds investments in roughly 80 properties throughout Austria, including the Donauturm, Garage am Hof, Schlosshotel Lebenberg in Kitzbühel and Wien Mitte Immobilien GmbH. It also owns various investments, among others in project development and service companies such as BAI Bauträger Austria Immobilien GmbH, Ekazent Immobilienmanagement GmbH, the facility management company Dr.W.W.Donath Immobilienverwaltung GmbH and the real estate brokerage firm BA Real Immobilientreuhand GmbH.

Returns are weakening

The returns for offic properties have remained constant at roughly 5.6 per cent for average locations, 5.3 per cent for good locations and nearly 4.6 per cent in the inner city districts outside the Ring. “Vienna is also in line with the international trend in this area and is comparable to the major German cities. In Berlin, for example, the top returns equal roughly 4.55 per cent“, explained Andreas Ridder, Managing Director of CBRE Austria. The returns on retail properties are also declining, more slowly than in the office segment, but at a lower level. For the first time,

“The international investors have returned and currently hold a market share of 51 per cent, with roughly half coming from Germany.“ Georg Fichtinger, Head of Capital Markets.

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Investing in Austria

Rents in Vienna´s Eight Office Locations Q4 2014 (€/m2 /Month) Central Districts (CBD) Office Buildings 13.00-25.75 Office Towers 15.25-25.75

North Office Buildings 10.00-13.50 Office Towers 13.00-17.00

Donau City – Lassallestraße Office Buildings 11.25-14.00 Office Towers 13.00-23.00 NORTH

West Office Buildings 9.50-13.50 Office Towers 13.00-17.00

DONAU CITY – LASSALLESTRASSE (Northeast) Prater Office Buildings 12.50-15.00 Office Towers 13.00-21.00

WEST CENTRAL DISTRICTS (CBD) CENTRAL STATION

Wienerberg (South) Office Buildings 10.50-14.75 Offuce Towers 13.00-18.50

PRATER

ERDBERG-ST.MARX (East)

WIENERBERG (South) Erdberg (East) Office Buildings 10.75-13.25 Office Towers 13.00-18.00 Central Station Office Buildings 10.50-15.50 Office Towers 13.50-20.00

Source: CBRE

the returns for retail properties on shopping streets have fallen below the four per cent-mark, in shopping centres the return equalled roughly fi e per cent at the end of 2014, and six per cent is still realistic for specialty retail parks.

The rental market, however, has become difficult. “We were expecting a take-up of 250,000 square metres. Based on our latest information, the total will amount to only 210,000 square metres. In other words, the new leases for offi space fell by roughly one-third in 2014. “This development resulted, above all, from declines in the large and very large lease segment, i.e. more than 5,000 square metres“, explained Felix Zekely, Head of Agency & GCS at CBRE Austria. “However, we have apparently passed the low point, and third and fourth quarter rentals were higher than the first half of 2014“.

16

Limited space in Vienna

The optimistic outlook of investors on the Vienna offic market appears to be based on the fact that prime rents did not stagnate but, in contrast to comparable European markets, rose to 25.75 euros per square metre in the third quarter, according to an analysis by the consultants at CBRE. Approximately 200,000 square metres of new offic space will be added to the market in the coming year, but 95 per cent of this space has already been rented or will be owner-occupied. “We haven’t seen this type of situation in the nearly 25 years covered by our analyses of the Vienna offic market“, commented Andreas Ridder, Managing Director of CBRE Austria. “Vacant space is difficul to fin “, and this situation is not expected to change in 2016 when only about 65,000 square metres of new space will be added to the market. “That

represents the lowest completion rate in this century. Since more than half of this limited space will be owner-occupied or is already rented, the vacancy rate in Vienna – which is now very low in European comparison at slightly over six per cent – should decline further, added Ridder.

The shortage of office space should lead to a further increase in rents. Even if the rents at a number of locations have already reached their ceiling. If the two prominent locations, Fleischmarkt 1 (which, according to Zekely, is now half rented) and the Goldenes Quartier, were fully occupied, there would be no further increase in rents. The prime rents at these locations equal 25.75 euros per square metres and month, and the second most expensive location is the new Central Railway Station.

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Investment Volume in Austria in TEUR 2007 – 2014

Completions 2014 2014

3,500 3,000

MEUR

2,500

ÖBB--Headquarters*

35,000 sqm

1100 Vienna, Central Station

2014

Gate 2*

34,000 sqm

1030 Vienna, Guglgasse 2-4

2014

Euro Plaza, Bauphase 5

20,000 sqm

1120 Vienna, Wienerbergstraße 41

2014

Silo Liesing Offices

12,000 sqm

1230 Vienna, Lernböckgasse 57-61

2014

Schottenring 19

9,500 sqm

1010 Vienna, Schottenring 19

2,000 1,500

3,000

2,550

1,000

1,750 1,250

500 0 2007

2008 2009

1,455

2010

1,700

2011

1,600

2012

Source: EHL

Completions 2015 2015

Erste Campus*

90,000 sqm

1030 Vienna, Arsenalstraße/ Wiederner Gürtel

2015

Fleischmarkt 19

7,000 sqm

1010 Vienna, Fleischmarkt 19

2015

Renngasse 4

4,200 sqm

1010 Vienna , Renngasse 5

1,700

2013

2014

Source: EHL, * pre-let

www.erstegroupimmorent.com

„We benefit from a financier that has extensive knowledge of the entire CEE market.“ David Hay, CEO AFI Europe Romania

Visit us h at boot 2 No. R7.E

AFI Palace Cotroceni Bucharest, Romania © AFI Europe

Shopping centre 80,600 m2 300 shops

Financed by

ImmoFokus_MIPIM_2015.indb 17

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Investing in Austria

Vienna Office Market 2008 – 2015

New space in sqm Demand in sqm * Prognosis

Vacancy rate (%)

170,000

220,000

260,000

270,000

260,000

130,000

100,000 m2

7%

6%

120,000

180,000

210,000

180,000

220,000

250,000

185,000

150,000 m2

190,000

220,000

250,000 m2

200,000 m2

8%

300,000

300,000 m2

5%

50,000 m2 4%

0

2008

2009

2010

2011

2012

2013

2014

2015*

Source: EHL Market Research | Q1 2015

The Europeans are catching up

International investors are expected to increase their focus on Europe‘s offic markets in 2015, a development that could also benefit Vienna.

According to the Global Investor Sentiment Survey 2015 published by the real estate consulting firm Colliers International, roughly 78 per cent of all investors are planning to increase their real estate investments in 2015. “Our studies show that the current low interest rate environment has increased the attractiveness of real estate as an asset class throughout the world and also indicate that global capital has risen to an unprecedented level“, analysed Ignaz Trombello, Head of Investment at Colliers in Germany. There are indications of a renewed increase in competition, above all between European institutional investors, in the core markets, which were previously dominated primarily by Asian and North American investors.

With regard to the investment destinations for these international capital fl ws, there are signs that Asian investors are no longer focused only on London as an entry to the European market, but are increasingly turning to other prime continental locations like Munich, Frankfurt, Paris, Madrid or Rome. Real estate investors like Union Investment are also looking more toward properties with higher long-term yield security. One thing is clear. Money will continue to fl w into real estate from all capital markets. However, investors should begin to think

18

about the possible end of the cycle and prepare for the next cyclical downturn in a few years.

That was the conclusion by LaSalle Investment Management in its 2015 Investment Strategy Annual (ISA) Report.

“One of the questions most frequently asked by real estate investment managers – and with good reason – is where we currently are in the real estate cycle”, said Jacques Gordon, Global Head of Research and Strategy at LaSalle. “The global markets are in completely diffe ent stages with respect to their fundamentals,

capital markets and future performance. For that reason, it makes sense to have an investment plan that is based on the real estate cycles.”

Examples of cycle-sensitive strategies are profit-taking and the sale of real estate in dynamic capital markets, the realisation of higher rental increases in growth markets and concentration on locations/sectors that are positioned to be generally considered as “core” assets in a number of years. “Europe is forecasted to record the lowest growth in 2015, even though it includes both thriving and stagnating economies”. n

Major Rental Contracts 2014 ÖBB Headquarters

31,000 sqm

1100 Vienna, Central Station

KAV

5,000 sqm

1210 Vienna, Florido Tower

MA 40

4,500 sqm

1230 Vienna, Silo Liesing Offices

Alcatel

4,200 sqm

1220 Vienna, Saturn Tower

Wiener Wohnen

4,000 sqm

1110 Vienna, Marximum

Fonds Soziales Wien

3,800 sqm

1030 Vienna, Schlachthausgasse

ABV

3,600 sqm

1110 Vienna, Litfaßstraße

ÖBB

3,500 sqm

1120 Vienna, Inno-Center

Automic

3,300 sqm

1120 Vienna, Euro Plaza

Ruby Hotel

3,000 sqm

1010 Vienna, Fleischmarkt

Santander Consumer Bank

2,700 sqm

1220 Vienna, IZD Tower

WIFO

2,500 sqm

1100 Vienna, Quellenstraße

Source: EHL

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In 2015 the investment volume is certain to top 3 billion euros Commentary: Andreas Ridder CBRE Managing Director of CBRE Österreich & Chairman Central & Eastern Europe

n First of all, we had a record year in 2014 with 2.8 billion euros of investments on the Austrian market. Most of this capital was invested in retail properties (46 per cent) or office (32 per cent).

The remaining categories like hotels, residential, industrial or logistics made up the rest. The hotel share of the market in this country is normally higher than the European average (undoubtedly because of Austria’s position as a tourism destination). In contrast, the industry and logistics categories are usually below the European average because we don’t really have large modern logistics centres – this development appears to have skipped over Austria in favour of Central and Eastern Europe.

For 2015, we are expecting a new absolute record year with an investment volume that is certain to top 3 billion euros. The following factors will be decisive for this growth: * Interest rates are extremely low and should remain at or near the current level for some time. That makes the substantially higher returns on real estate very interesting for investors, relatively speaking. As a result of these developments, the global markets are now seeing an enormous shift of liquidity into real estate – and that will also lead to an increase in prices and values.

All in all, we are now seeing enormous international interest in investments in Austria with vast amounts of money available for almost all asset categories. The only exception is, perhaps, residential: since 2008, the prices in Austria have risen faster than anywhere else in the world and, from the foreign point of view and especially with regard to returns (not so much the price per square metre), these properties are often considered overpriced.

Whether more transactions will be closed in the retail or office sector is not really dependent on the demand (which is extremely high in both segments) but, above all, on the properties that come onto the market during the year. From the current point of view, the outcome of this contest is still open. There will probably be one or the other hotel transaction, but this segment will not exceed the normal 5 to 10 per cent of the total market. Transactions in the logistics sector should remain reserved.

Top Yields for Office Buildings in Vienna

* Europe is generally interesting for these investors because it is basically seen as a safe haven (at least most of the countries). In contrast to other regions that have generated sound growth for a number of years and witnessed a stronger increase in prices and rents, Europe is only recovering slowly from the crisis.

* Numerous larger properties as well as portfolios are currently, or will soon be, up for sale. That means demand will final y be matched by a larger supply, also in Austria.

ImmoFokus_MIPIM_2015.indb 19

Good Locations

Central Districts outside the Ring

7.00 6.50 6.00 %

* Austria is considered a particularly safe country by international investors and, in this respect, also profits from its close proximity to Germany. One reason for the previously limited volume of investments in Austria were the relatively low returns. However, these returns now look more attractive in comparison with many other European countries.

Average Locations

5.50 5.00 4.50 4.00

04

05

06

07

08

09

10

14

15e

ImmoFokus Austria

19

11

12

13

Source: CBRE

24.02.15 12:01

Investing in Austria

The retail trade in transition Austria currently has nearly 220 shopping centres with 3 8 million square metres of rentable space.

White spots on a map look different. But, all the same, this asset class still has a lot of potential.

Author: Erika Hofbauer/Agnes Schmid

T “We are expecting to see one last peak in the expansion of space during 2015 and 2016.“ Hannes Lindner, Managing Director of Standort + Markt

20

he market defini ely appears to be saturated: “We’re expecting to see one last peak in the expansion of space in this segment during 2015 and 2016. After that, the project pipeline should start to dry up – the highest level of shopping centre growth will probably be reached in 2016“, explained Hannes Lindner, Managing Director of Standort + Markt. This could be viewed as a sign that the momentum – the previously seen dynamic growth – in this segment will soon be a thing of the past – but that isn’t quite correct: “What we really assume is that the pie has been sliced and each of the players has reserved a piece, but the battle over the expansion of market shares will be much tougher“. Lindner continued: “Until each market area has a dominant centre with a clearly established position as THE best place to shop, we will continue to see

intense turf wars over market shares”, analysed centre expert Lindner.

Retail consultant Ingo Hödl surveys these developments from a different perspective: “For years, I‘ve heard that we have reached ‘the end of the flagpol ’ with the expansion of retail space..... either the prophets will be right this time and we will see an end to this growth in 2016, or we must final y dismiss the story as a fairy tale.“ For “conventional“ shopping centres, however, things could soon start to get tight from a regional planning standpoint, suggested Hödl, but, on the other hand, specialty retail parks are popping up all over: “It will be interesting to see what happens to the really “weak“ locations that no longer work because a larger and better retail park has opened up around the corner. Maybe also a complete disaster for the countryside.“

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Proof that the intelligent and on-going development of a location can pay off is provided by Vienna‘s Auhof Centre, explained Hödl. The revitalisation concept for the Gasometer also appears to be working well, but he is convinced that the economic component is very diffe ent than expected when the location was originally planned: “But since the “Gasometer Shopping Center“ is still listed as an attraction in numerous tour guides, visitors are at least not as disappointed as in earlier years when they found a dirty, neglected “ghost town“ instead of an attractive shopping world.“ The owner was apparently lucky to see the pressure on his return decline over time.

that are better able to address and meet the needs of customers. One example of why some shopping centres thrive and others fail: “A number of 15,000-square metre centres are extremely successful because, for example, they also offe convenience shopping – and that is exactly what is needed. In contrast, the UNO shopping centre in Leonding hasn’t really worked.“ In any event, the future will bring a greater differentiation among shopping malls: we will still see good, conventional centres – “which are also needed“ (Richter) – and then we will have specialised facilities with, let’s say, a concentration on fashion or entertainment or a focus on gastronomy (Richter: “But with a really good gastro-offering“)

Concentration trends

Photo: ATP/Kurt Kuball

Location expert and Regioplan Managing Director Wolfgang Richter has noted “lively acquisition and sales activity“ in the branch. That is almost certainly a result of the concentration tendencies that now characterise the market, indicated Richter, who is convinced that retail is a very special asset class that requires a great deal of know-how: “More than you need to sell an offic tower.“ His reasoning: centres need continuous attention and experience – “or this class just won’t work“.

The market has undergone significant changes in recent years. Opportunities are still available, but their realisation will separate the amateurs from the experts: “We will see centres that can’t be sold, even at an extremely low price, and others that change hands at a sound profit . Richter´s tip: “Filling a shopping centre with the same chains doesn’t work anymore. Shopping can’t be the only function or attraction for a centre.“ In other words, the shopping mall must be optimally positioned to meet the needs of customers, meaning the buyers. Richter: “We need to see more flexibility in the enant mix.“ Do we need more centres? “Not really“, stated the Regioplan boss, “but there are always projects

ImmoFokus_MIPIM_2015.indb 21

Elimination of structural weaknesses

For Ingo Hödl, the demands on shopping centres really haven’t changed in recent years: What counts is a “critical mass“ of the “right“ shops, a “critical mass“ of potential customers in the direct catchment area (10 to 15 minutes driving time) and fast and simple access from home or the office Hödl is convinced that “Spectacular architecture, hightech features or USPs like a new anchor tenant’s first shop in Austria help to establish and maintain a profile, but can never offset the structural weaknesses of a centre“. This centre consultant also sees a certain development with respect to prices and rents: “What I hear is a sharp rise in rents by the – generally fund-linked – international operators. That will function as long as international tenants don’t really do their math – and here I mean profitability calculations – or are focused on a particular location. It’s anyone’s guess whether that will be successful over the long-term. But in general, this saying also applies to the shopping centre branch: greed is not good.“ Standort+Markt Managing Director Hannes Lindner also believes that the range and logic of the offering still play a decisive role in ideal-

“Filling a shopping centre with the same chains doesn’t work anymore. Shopping can’t be the only function or attraction.“ Wolfgang Richter, Managing Director of Regioplan

“What counts is a “critical mass“ of the “right“ shops and a “critical mass“ of potential customers.“ Ingo Hödl, Hödl & Partner Werbe- und Marketing GmbH

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Investing in Austria

The analysis by Regioplan Managing Director Richter is similar and points to a revolutionary phase in the retail trade: Many retail companies have capped their expansion – and that naturally has an influence on this asset class. The previous strong drive to develop new projects, either in Austria or other countries, has faded – because the tenants are no longer there. Richter: “And the ones who stay want a reduction in their rents – during the contract term.“ The pie is getting smaller.

Consequently, it’s not surprising that average rents range from 15 to 20 euros in district centres, while “well developed“ malls with established

22

Top Yields

11

12

6.25 %

3.75 %

5.50 %

6.25 %

4.00 %

5.75 %

6.50 %

6.00 %

Retail Parks

4.00 %

6.00 % 4.00 %

10

09

|

6.50 %

Shopping Centres

6.75 %

6.25 %

|

4.00 %

4.50 %

6.40 %

7.00 %

Shopping Streets

14

13

Source: EHL Market Research | Q1 2015

Top Retail Yields in Vienna Retail Parks

Shooping Centres

Shopping Streets

(excl. Kohlmarkt, Graben and Kärnter Straße)

9 8.5 8 7.5 7 6.5

%

ly positioning a shopping centre in the competition for customers’ attention. However, a strong, upcoming trend, continued Lindner, is that shopping centres and retail parks must make a massive improvement in the quality of visitors’ stays. That means: a substantial expansion in gastronomy facilities, services and other recreational areas. Lindner: “Our regular analyses in this area clearly underscore my point: within only two years, the volume of space in this segment has risen from 14.3 per cent to 15 per cent.

We see this as a sign that shopping centres are expanding to also include functions that were previously provided only by cities – a logical trend in times of threatening revenue losses due to the increased popularity of e-commerce.“ In rents, we also see a growing distinction between dominant and non-dominant shopping facilities, Lindner adds: “Dominant centres are and will remain a focal point for consumers and, for that reason, the tenants and rents in this segment remain stable.“ In contrast, the rents in sub-centres – like smaller city districts – are coming under increasing pressure.

6 5.5 5 4.5 4 3.5 3

06

Source: CBRE

07

08

09

10

11

12

13

14

15e

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regional positions can demand average rents of 20 to 30 euros, or even more, added Standort+Markt Managing Director Lindner. Retail parks, on the other hand, are “easy-care “ properties – the rents and ancillary costs are substantially lower than smaller malls. Retailers still see them as locations where money can be made. However, the returns have apparently not noticed this development and are continuing to fall, rather than rise – the investment pressure is simply too high, knows centre expert Lindner: “That isn’t entirely riskfree because the possibility of a decline in the demand for space – and here, above all, in the smaller shopping centre asset class – may not be adequately reflec ed in the price. Investors‘ demand for retail parks remains high – which is not really unexpected since operations in these types of facilities are substantially less expensive than a shopping mall.“

A look into the future

What will the future bring? Retail expert Hödl: “The retail landscape in Austria will be on the move in 2015!“ New concepts like Dressman (fashion), Bik Bok (fashion) and Stenders (cosmetics) could trigger promising changes. Then again, it remains to be seen whether these concepts will do well over the long-term: CCC and Colloseum were successful in the past, explained Hödl. The extreme hype surrounding the market entry of Hollister and Primark has now faded, and there are occasional signs of slight disappointment: Abercrombie & Fitch, Hollister‘s parent company, has been confronted with declining revenues on its global markets, and Primark has led to an increase in customer frequency, but we need to determine whether so many other tenants at a single location are helpful, continued Hödl. He is very interested

It is often said that the growth phase for shopping centres is a thing of the past. And new projects are few and far between. Coverage has reached enormous proportions. Standort+Markt Managing Director Hannes Lindner sees the situation somewhat diffe ently. “In 2014 roughly 142,000 square metres of new space in shopping centres and retail parks were placed on the market. 75,000 square metres of this space were located in entirely new centres“. In addition to the Citygate in Vienna-Floridsdorf and

Retail Parks: Top Rents and Top Yields

Shopping Centres: Top Rents and Top Yields

120.00

in the outcome of the expansion and relaunch of the Alpenstrasse shopping centre in Salzburg, which is being transformed into a “shopping arena“: “Salzburg is not exactly an uncontested market with a lot of room for expansion, and a number of locations there are faced with intense competition.“

16.00

6.25%

7.00% 100.00

15.00

5.75%

14.00

6.50% EUR/m2

80.00 EUR/m2

6.00%

60.00 5.50%

6.00%

13.00

40.00

20.00

0.00

H1/12 Source: EHL

ImmoFokus_MIPIM_2015.indb 23

H2/12

H1/13

H2/13

H1/14

H2/14

5.25%

12.00

5.00%

11.00

5.50%

5.00%

H1/12

H1/15f

H2/12

H1/13

H2/13

H1/14

H2/14

H1/15f

Source: EHL

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Investing in Austria Rent in Euros per Square Metre Vienna – City Salzburg

New Openings: (75,000 sqm GLA) A-Location

B-Location

320

60

120

50

Pado Shopping Park Danube Shopping Hainburg Retailpark Wiener Neudorf Weberzeile (Ried im Innkreis) Ginzkeystraße Retail Park (Salzburg) Zams-Landeck Retail Park Citygate (Vienna 21)

Vienna – Mariahilfer Straße

120

32

Innsbruck

100

30

Linz

100

25

Graz

90

40

Salzburg: (67,000 sqm GLA)

Bregenz

50

22

Vienna– Favoritenstraße

45

30

Dornbirn

45

20

Vienna – Landstraße Hauptstraße

35

22

Klagenfurt

35

8

Vienna – Meidlinger Hauptstraße

30

20

Frauenkirchen Retail Park Fashion Outlet Parndorf (Villaggio) Traisenpark (St. Pölten) Fischapark (Wr. Neustadt) Shopping Center Haid Perg Retail Park Shopping Nord Graz (Retail Park) Citypark Graz Kollibri Shoppingsafari

St. Pölten

29

11

Steyr

27

14

Feldkirch

27

11

Baden

26

11

Wels

26

11

Villach

26

8

Eisenstadt

23

9

Krems

20

7

Leoben

16

8

Wiener Neustadt

16

8

Relaunch: Bad Ischl Shopping Centre(Götzstraße) Promenade (St. Pölten) Plus City (Pasching) Sillpark (Innsbruck) SCA (Salzburg) Passage 22 (Rankweil) Source: Standort + Markt

Source: Standort + Markt

the Weberzeile in Ried/Innkreis, these new facilities include the Danube Shopping Hainburg, the retail park in Wiener Neudorf and the Pado retail parks in Parndorf, Zams-Landeck and Ginzkeystrasse (Salzburg).

Nearly as many square metres, namely 67,000, will be added by the expansion of existing centres – among others at the Villaggio in Parndorf, Traisenpark in St. Pölten and Fischapark in Wiener Neudorf. That should mark the end of the flagpole. Lindner: “We should see a notable slowdown in growth during 2015“.

The news is not good for city locations. “International chains need more space than they can find in the typical Viennese “Gründerzeit” houses in shopping streets”, explained Lindner. When a chain vacates one of these buildings in a shopping street, it’s usually not possible to find an adequate replacement. 65,000 square metres, or 4.1 per cent, of the best inner city shopping locations in Austria‘s 15 largest cities are currently vacant, and this level is expected to increase in the future. By way of comparison: the vacancy rate in the Austrian shopping centres currently equals 3.6 per cent of the total space. n

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What makes this asset class attractive in Austria, where do you see the opportunities and risks…

Commentary: Christoph Augustin, Managing Director International Austria, Denmark, Hungary, Olaf Ley, Director Mergers & Acquisitions, ECE Projektmanagement G.m.b.H. & Co. KG

- Austria is an economically and politically stable country with relatively high purchasing power and high per capita retail spending in comparison with other European countries. This is also reflec ed in the good sales levels in our shopping centres.

- Shopping centres are an asset class which, basically, retain their value well due to, amongst other things, inflation-p oof (indexed) rental contracts. However, the prerequisites for long-term value growth include, in particular, excellent centre management and the continuous adjustment of the sectoral and tenant mix in line with continuously changing market conditions.

With almost 200 centres under management across Europe and extensive experience in the development and letting as well as the restructuring and expansion of existing shopping centres, ECE is particularly strong in this area. This know-how benefits all project participants and, in particular, investors, tenants, banks and the cities in which the shopping centres are located.

- The challenges to bricks-and-mortar retail continue to include competition with growing on-line trading. We examined this challenge very early and intensively and, for example, designated two centres in Germany (in Hamburg and Essen) as so-called Future Labs, where new digital and interactive shopping experiences and service offerings could be tested. The objective is to combine the advantages of the online world with the special quality of real shopping and then to roll out and continuously develop the most popular services in further ECE centres at home and abroad. A very successful example of a digital service is the “Love to Shop” app for Apple and Android devices. This free app allows centre visitors to receive

ImmoFokus_MIPIM_2015.indb 25

offers from retailers tailored to their personal needs as well as information about discount actions, events, news and service-offerings in their preferred centre. The great success of the idea led to its introduction in around 30 more ECE centres in German, and a first roll out to our centres abroad has taken place, namely, in Turkey with further countries to follow soon.

- Interest rates are currently at a very low level and this situation is not expected to change significant y in the near future. The result is that the asset class “shopping centre” has become even more interesting for many institutional investors and this rising demand has already led to a clear price increase. This suggests that there is a fundamental risk that a price bubble could develop. We assume, however, that selected properties can still be acquired for reasonable prices on the Austrian market.

- The service provider ECE Austria (Vienna) already operates six shopping centres in Austria. These include the new Bahn­ hofCity at Vienna Central Station, the BahnhofCity at Vienna’s West Station, City Arkaden in Klagenfurt, DEZ in Innsbruck and two centres which have been acquired by the ECE European Prime Shopping Center Fund, the Haid Center in Linz and G3 in Gerasdorf.

- In summary it can be said that we are interested in further new developments in Austria, also quite happily as part of a joint venture, but that in this market such opportunities are very limited in this market. Hence, we pay special attention to the provision of services, especially related to the design, letting and management of centres, and to the acquisition of existing shopping centres for, for example, our ECE Fund as well as for other investor partners.

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Overbooked & underpriced Tourism is a major growth driver for the Austrian economy, and the hotel branch has benefitted from the related steady strong demand. The era of five-star openings has passed, but the mid-scale and low-budget segments are currently scoring with clever concepts.

Authors: Erika Hofbauer /Agnes Schmid

C “The investors from Russia and Ukraine have disappeared.

Maybe Swiss investors will fill this gap“.

Lukas Hochedlinger, Managing Director of Christie + Co

26

ities are, and will remain, the growth driver for tourism in Austria. Last year Vienna set a new record with 13.5 million overnight stays (+6.3 per cent in comparison to the previous year).

Excluding the nation‘s capital would have led to a minus: the number of overnight stays in Austria fell slightly by 0.63 per cent to 131 million.

All the same, the roughly 13,000 Austrian hotel properties with their 600,000 beds form the backbone of tourism in this country. But the pressure felt by hotel operators is not to be underestimated.

Lukas Hochedlinger, Managing Director of the hotel consultants Christie + Co, has noted this development, above all, in leisure hotels and seasonal operations: “It’s essential for every hotel – also the ones on ski slopes or lakes – to develop and maintain clear positioning and efficien operations.“ A comparison of the trends in supply (rooms) and demand (overnight stays) in the provincial capitals presents an interest-

ing picture, explained Hochedlinger: Innsbruck has the best ratio, followed by Linz und Graz.

“The hotel projects currently under realisation in Vienna, for example near the Central Railway Station, will make this imbalance even more obvious in the future“, estimated Hochedlinger.

The importance of Vienna as the country’s most attractive hotel investment market for international investors hasn’t hurt this standing: statistics show that one-third of all the overnight stays in Austria are recorded in Vienna. Matthias Hautli, the Vienna branch manager for Kohl & Partner, has identified a similar development: “In Vienna, new hotel projects are realised or developed parallel to the increase in demand. The focus now is on the area surrounding the new Central Railway Station – nearly 1,000 rooms in the budget and mid-scale segments will open at this micro-location during 2015.“ Project developers are still interested in the city hotel market, but the demands on the location and concept have risen, summarised Hautli.

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Photos: Christie + Co, pkf hotelexperts, Kohl & Partner, mrp-hotels, Fotolia

Hotel openings continue

Russia crisis – new markets

This year is scheduled to include a number of major openings near Vienna’s new Central Railway Station – and everything appears to be on track. Motel One (533 rooms), the second largest hotel in Austria, should open during the spring or summer, explained Michael Widmann, Managing Director of pkf hotelexperts. Operations should also be starting in other hotels, including the Star Inn, Hotel Schani, Ibis, Novotel etc. Reports of hotel openings in recent years were concentrated, above all, on the luxury category, which brought only about 600 rooms, but 2015 and the following years will see a greater focus on hotels in the budget and medium price segment, believes Widmann: “In the lifestyle-oriented hotels – like the Daniel, 25hours and Ruby – further growth is in sight, among others with the Weitzer Group’s hotel on the Schubertring and another Ruby Hotel in the 1st District.“ The first signs of a change in direction can also be seen at a number of 1st District properties that would also be suitable for hotels – including the Riemergasse and Postgasse. Widmann: “It’s not clear whether hotels will be developed at these locations, and if so, which hotels. Just the same, national and international investors still have a strong interest in acquiring and developing hotels in Vienna.“

If only the problems in Russia didn’t exist … The on-going crisis in the east has already left its mark on local tourism. Christie Managing Director Hochedlinger: “In spite of the positive outlook for 2015, we are expecting a decline in investments from Russia and Ukraine because of the political situation. It remains to be seen just who will fill this gap, perhaps investors from Switzerland.“ pkf hotelexperts Managing Director Widmann has a similar analysis: “The interest in Austrian leisure hotels – especially hotels in the luxury segment – has weakened. That is a direct result of the crisis in Russia. There are still numerous Russian, Kazakh and Ukrainian investors, but their attention is turning more and more to city hotels with strong cash fl w and away from prestigious leisure hotels.“ This development goes hand in hand with another trend: the expected sharp drop – which actually started several months ago – in overnight stays by Russian guests. Widmann: “Even if this doesn’t have a very strong impact on the numbers, there has been a sharp decline in this segment – above all for the luxury hotels – because the purchasing power of these guests was high, at least in the past. However, the development of demand in Austria remains positive, particularly in Vienna.“

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“There are still numerous Russian, Kazakh and Ukrainian investors, but their attention is turning more and more to city hotels with strong cash flow and away from prestigious leisure hotels“.

Michael Widmann, Managing Director of pkf hotelexperts

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A change in the approach to developing new markets would be a good idea, suggested hotel expert Martin Schaffer from mrp-hotels – also as a reaction to the recent fi e per cent decline in the demand by Russian guests. Even though the inquiries from CEE countries like the Czech

“There are opportunities not only in new openings, but also in the conversion of existing hotels.“ Matthias Hautli Vienna Branch Manager, Kohl & Partner Republic, Poland, Hungary and Slovakia have risen between two and seven per cent, Schaffer sees the future potential of new markets in the increasing demand from Asia (plus 16 per cent from China and plus 30 per cent from South Korea). Tourism can look forward to a new record year, above all May could be exciting, indicated mrp-hotels manager Schaffe : “May 2015 should be an extremely strong month where high average prices are possible. The Munich hotels show just how much upward movement in pricing is possible – for example during the Oktoberfest or Expo Real“. In addi-

28

tion, Vienna will host the Eurovision Song Contest this year, which will also provide key impulses for tourism: “This competition is a good opportunity for Vienna to present itself as liberal-minded, modern, hip city apart from the classical historical sights. From the hotel point of view, the contest is scheduled at the “wrong“ time because May is always a strong month – it has several holidays and various events that set the stage for good reservation levels and attractive rates.“ Five-star segment covered

New openings at the Central Railway Station as well as the inner city, the Vienna market has recently seen everything from fi e-star houses to low-budget hotels. What about supply and demand? Does the market need more hotels?

Kohl & Partner-Manager Hautli explained that “there is no further demand for new five-star hotel projects on the Vienna hotel market at the present time, above all because overnight stays in this segment fell slightly in 2014. The budget hotel branch has registered enormous growth rates over the past 10 years, +180% in overnight stays, and an increased share of overnight stays.“ pkf hotelexperts Managing Director Widmann sees the situation in the same way: “There is virtually no need for more fi e-star hotels in

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Hotel Transactions 2014 Orange Wings Wr. Neustadt

Location

Rooms

Seller

Purchaser

Wr. Neustadt

106

List Group

Friedrich Fehr

Orange Wings Krems

Krems

46

List Group

Friedrich Fehr

Do & Co Hotel Vienna

Vienna

43

Uniqa Versicherung

Do &Co

NH Wien Atterseehaus

Vienna

73

Private Investor

Confidential

Holiday Inn

Villach

113

Hypo Alpe Adria Bank

Private Investor

Harrys Home

Vienna

97

MPC Capital

Morgan Stanley/CC Real

Artis Hotel am Rennweg

Vienna

165

Private Investor

Private Investor

Mercure Hotel Vienna

Vienna

242

E&P Real Estate GmbH & Co. KG

Family Office from Russia

Austria Trend Hotel

Salzburg

97

AXA Immoselect

Confidential

Artis Hotel Schloss Krumbach

Krumbach

65

Tose Private Trust

Vienna Real Estate Entrepreneur

Schlosshotel und Schlosscenter

Waidhofen

92

S+B Group

Private Investor

Fürstenhof Reutte

Reutte

40

Chenen Group CZ

Tyrolean Hotelier

Hotel Kärnterhof

Vienna

44

Private Investor

Private Trust

Hermagor

169

Robinson/TUI

Dutch Private Fund

Robinson Club Schlanitzen Alm Source: Christie + Co, own research

Vienna. However, there is still a substantial shortage at the other end of the spectrum, meaning the budget and economy segment.“ The success of Motel One clearly illustrates the very strong demand for reasonably priced hotels at good locations. The second gap in the offerin – in both the city and the leisure hotel segments – is the lifestyle-oriented, casual hotel like, for example Daniel, 25hours or Ruby, Widmann is convinced. Similar to previous years: “Chic, sexy hotels with a reasonable price-quality ratio have the best market potential. The traditional fourstar and four-star superior hotels are coming under increasing competitive pressure from two directions: lower cost and “younger“ hotel concepts. And then there is the steadily growing offering in the nearly unregulated apartment market à la Airbnb“.

For Christie Managing Director Lukas Hochedlinger, the fi e-star hotel market in Vienna has caused more commotion than hardly any other market in recent years with its new openings and increased competition. Officia statistics also show that the average increase of 4.2 per cent in demand over the past 10 years is still substantially higher than the 3.2 per cent increase in the number of rooms: “The market is disrupted by new openings over the short-term, but stabilis-

ImmoFokus_MIPIM_2015.indb 29

es again fairly quickly.“ On the other hand, added Hochedlinger, the budget segment is faced with significant changes, above all due to the new openings of Motel One, Star Inn or Moxy at the airport. The consequence, he fears, could be that private hotels, in particular, are left behind: “The three- and four-star hotels in the middle of the spectrum must now also focus on positioning and sales – just the same as leisure hotels.“ Where are today‘s market opportunities?

Hotel expert Matthias Hautli explained: “There are opportunities not only in new openings, but also in the conversion of existing hotels. That means an increase in quality and no further cutthroat competition from new capacity.“ Michael Schaffer from mrp-hotels would describe the potential as follows: “Branding is becoming more and more important: Destinations as well as family businesses are working on brand development, just the same as chains are expanding their portfolios.“ Other chances can be found in the combination of dual-branded properties (e.g. Novotel and Ibis) or extended stay products (Elements, Adagio etc.).

What will the future bring?

Kohl & Partner-Manager Hautli sees three trends for contemporary city hotels: space efficien , a focus on bed quality and multifunctional

“The Song Contest will be good for business. The Munich hotels show just how much upward movement in pricing is possible – for example during the Oktoberfest or Expo Real“.

Martin Schaffer Managing Partner mrp-hotels

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Investing in Austria

lobbies. In the leisure hotel branch, he names stronger cost/benefit optimisation (e.g. in secondary areas and room sizes). In the provinces, there are signs of a concentration on larger units (in all areas: large hotels, large infrastructure facilities, large destinations) and an increase in hotel brands. Above all, hotels that are open all year round have once again started to increase their investments in product concepts, added Hautli, which is reflec ed in operating results for 2014: “In general, the steady decline in the length of guest stays has also led to a decline in the demands on room size. Resort hotel operators with bad weather infrastructure and attractive, target group-oriented offerings were among the big winners in 2014, with its in part bizarre weather.“ His return expectations: “The current low interest rates will have a positive effect on returns for the high-debt hotel branch.

Strong returns in Austria can be generated, above all, with hotel concepts that focus on space and cost efficien . The trend to budget and mid-scale hotel projects is not only a guest trend, but also a focal point for investors.“

placing full- and half-board at the haute cuisine level. All in all, there is an extraordinary amount of creativity in Austria’s hotel branch. We are seeing the introduction of more new concepts than in almost any other country.“ His return projections have declined significant y in recent years, but this is simply a reflection of reality, indicated Widmann: “Hardly any new hotel in Central Europe has been able to generate a return on investment over six per cent – based on the overall operating return. Combined with the still very low interest rate levels, this creates opportunities for further investments in Austria’s city and leisure hotel branch.“ Lifestyle and design

Smaller rooms, but large-scale

Christie Managing Director Lukas Hochedlinger also sees a trend toward Lifestyle + Design (Rubie Sofie, 25hours, Daniel) for city hotels: “Budget hotels like Motel One and the planned Moxy Hotel at Vienna Airport are also focusing on lifestyle. In particular, they want to target guests who have had enough from the standardised hotel chain offerings “ In the leisure hotel segment, there is a trend toward authenticity and high-quality materials.

Michael Widmann, Managing Director of pkf hotel experts, sees this as the continuation of a previous established trend: “Smaller rooms, but large-scale, chic public areas. In particular, gastronomy has regained its position as the anchor for successful hotel concepts.“ Over the coming years, the number of budget and lifestyle hotels will increase, also outside Vienna – for example in Innsbruck, Salzburg, Linz, Graz and Bregenz. The leisure segment has also seen the first successful transplantation of ideas from city-budget hotels to the medium-price hotel category. And gastronomy is also playing an important role here, Widmann is convinced: “Simple, regional cuisine is increasingly re-

Most of all, seasonal operations must establish a clear positioning or pricing strategy to remain profitable throughout the entire year. “From the viewpoint of investors, we still see the greatest interest in hotel properties in Vienna, followed by the top holiday destinations and provincial capitals. The returns on these hotels should remain stable or, in exceptional cases, decline slightly – as long as there is sufficient demand“, added Hochedlinger. And mrp-hotels consultant Martin Schaffer explained: “A more attractive F&B offering for local residents and neighbours can represent a viable alternative for all categories – not only for Sunday brunch.“ n

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Older hotels in B and C locations will disappear Commentary: Martina Maly-Gärtner Managing Director Michaeler & Partner

n The positive trend of the past six years in the number of overnight stays in Austria is generally continuing. Between 2009 and 2014 the number of overnight stays grew by a total of 8.2 million or 6.1 per cent. In this context it is important to note that tourism developed much more strongly in Austria’s main cities than in the country as a whole. This fact is also reflec ed in the number of transactions – most of which occurred in Vienna – which rose again slightly in 2014. However, a number of holiday properties also changed hands last year. The range of investors is broad.

Both local and international institutional and private investors are players on the Austrian market.

Alongside its rich cultural heritage Austria can also attract international attention with a number of awards as it seeks to strengthen both its brand and its attractiveness as an investment market. Amongst the most important awards received by Vienna are its first place in the “Mercer 2014 Quality of Living Survey” and the “Global Liveability Ranking” which focusses, above all, on questions of security, health, education, infrastructure and environment. In this ranking, Austria’s capital city took second place behind Melbourne. Vienna also occupies 3rd spot behind Paris and Madrid in the Top Ranking of the ICCA (International Congress and Convention Association) – a result that is especially important for congress tourism in Austria.

Photo: Michaeler & Partner

The most common land of origin of visitors (after Austria itself) continues to be Germany with almost 50 per cent. Even Austria is not immune to current geopolitical crises but, despite a decline in the number of Russian visitors, very positive developments can be seen in, for example, the number of visitors from Asia (and, above all, from China, South Korea, Japan, India and the Arab Region) who are not only making good this shortfall but even “outperforming” previous visitor numbers.

Examining developments in Austria’s provincial capitals over the past fi e years more carefully, the largest growth in the number of overnight stays after Vienna can be seen in Graz, Salzburg and Innsbruck. Capacities have also risen - albeit at a much lower rate when one considers the period from 2009 to 2014. This, in turn,

ImmoFokus_MIPIM_2015.indb 31

has had a positive effect on occupancy rates and, hence, on overall hotel performance.

In the holiday hotel market the challenges are somewhat greater despite the fact that Austria, as a so-called skiing nation, has again succeeded in strengthening its position as a summer destination. All-year-round tourism is particularly important and a destination must offer a functioning summer and winter infrastructure in order to avoid seasonal fluctuations which are too high. Alongside infrastructure, however, two further important ingredients for successful hotel development are the creation of an umbrella brand – as exemplified by Zillertal and Flachau – and the positioning within a niche.

The density of hotels in Vienna naturally means that it is here that most hotel transactions occur. The special attractions of the coming years include the Central Station location, which will be occupied by international chains, and the recently opened luxury and budget hotels, whose performance is set to develop healthily over the next three years. Older hotels in B and C locations which require heavy investment and have an unprofitable size (15 to 50 rooms) will disappear from the market. This will contribute to a positive consolidation. The larger hotels have either recently been refurbished or their refurbishment is imminent, as a result of which Vienna is very well-placed in terms of quality beds. Outside Vienna there will be positive developments on the hotel markets in Innsbruck and Salzburg where, as mentioned above, the growth in capacity has clearly lagged behind the growth in the number of overnight stays. These cities also offer an e cellent range of leisure activities.

The greatest investment potential on the holiday hotel market is for selected establishments with Austrian and international operators and a minimum capacity of 120 rooms which are open for at least 290 days per year.

Finally, other factors which guarantee the security of an investment are a good location, public transport connections and/or easy access, high quality standards and professionally managed establishments which are not suffering from a lack of investment.

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The Viennese „Zinshaus“ Strong emotional value. The classical Viennese “Zinshaus”, i.e. a larger apartment building built before 1945, is still very popular among investors – even though the estimated transaction volume of more than one billion euros in 2014 is below the long-term average.

Author: Patrick Baldia

T

he Vienna Zinshaus has a strong emotional value“, explained Richard Buxbaum, Head of the Residential Property and Zinshaus Department at Otto Immobilien. The traditional features – such as artistic stucco decorations, spacious lobbies and attractive stairwells make the hearts of many investors beat faster. “Almost everyone wants to have a property of this type in the portfolio“, added Buxbaum.

32

Focus is on security and long-term potential

Not least as a consequence of the financial crisis and the still uncertain economic development, the mind-set of Zinshaus investors has changed: today the focus is on security and the long-term potential of these historic collections of concrete and bricks. And the experts’ general opinion is that this situation is unlikely to change in the near future. “The Zinshaus is no longer a speculation object, it has become an important asset

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component“, commented Gerhard Hudej, Managing Director of Hudej Zinshausmakler. A postscript by this expert: “Or no one would accept a yield of one per cent for an apartment building in the 1st District of Vienna.“ “Anyone who buys a building within the beltway and is satisfied with a yield between one and three per cent doesn’t need to live from the rental income“, added Markus Arnold, Managing Director of Arnold Immobilien. A number of speculators are still active on the Zinshaus market in Vienna, but they tend to concentrate on locations outside the beltway. In these areas, higher yields could be possible – according to the Zinshaus market report by Otto Immobilien, the maximum yield of 5.8 per cent was last registered in the 10th and 11th Districts – on the other hand, the risk – for example, of unpaid rents – is much higher there.

2015: a good year for Vienna‘s Zinshaus market

Photos: Otto Immobiien, Hudej Zinshausmakler, Fotolia

Arnold is optimistic that 2015 will be a good year for Vienna‘s Zinshaus market – at least for his firm. “In January, we started where we left off in December“, he said. Arnold Immobilien brokered Zinshaus transactions with a total volume of 120 million in 2014 – more than ever before. “I expect a number of large Zinshaus packages will be up for sale in Vienna this year. And there should also be an interesting number of individual transactions“, continued Arnold. This view is shared

by Hudej: “We’ve been receiving numerous requests from asset managers and family offic that want to invest substantial amounts of money.“ The focus of investors is clearly on locations within the beltway – i.e. the 1st, 3rd, 4th, 6th, 7th, 8th and 9th Districts. With regard to prices,

ImmoFokus_MIPIM_2015.indb 33

which were recently moving at a high level, the experts don’t expect any sharp jumps for the time being. Valentino Donau, Head of Asset Management & Sales for the Zinshaus specialist conwert, sees stagnation or a slight rise in prices.

The tax reform – keyword: real estate purchase tax – has alarmed many investors who are now taking a wait-and-see approach. “If interest rates weren’t this low, we would be seeing fewer transactions“, he indicated.

According to Buxbaum, companies were the main players on the Vienna Zinshaus market in recent years. Even though most of them were Austrian – not least because of the legal and tax framework – Buxbaum still sees an interest in this asset class beyond the country’s borders. He believes investors, above all from Germany and Switzerland, will begin to examine the advantages of the Vienna Zinshaus as an investment in 2015 and consider the acquisition of portfolio packages and individual properties. The reasoning: stabile framework conditions.

– even though this market is dominated by local players. Similar to Vienna, the supply is limited, but the prices are significant y lower. A square metre at top locations costs roughly 3,000 to 3,500 euros – for Hudej a “bargain“ compared to the capital city. He sees yields ranging from 3.5 to 4 per cent in the inner city, and from 5 to 7 per cent outside this area. “On the other hand, the asset values are much lower than in Vienna“, explained Hudej. The asset values are higher in Salzburg – which is another interesting Zinshaus market. Top locations can bring a yield of 3 per cent, and good locations 3 to 4 per cent.

There are also interesting opportunities for investors just beyond Austria’s borders. Arnold expects sound development on the Zinshaus market in Prague this year. “In addition to the

Opportunities beyond Austria’s borders

“These properties are examined much more closely today. Investors look precisely to see how they can further develop a property and increase its value“, commented Buxbaum on a further important development. The issue is not only the tenant structure, but how the value of a Zinshaus can be increased – for example, by adding balconies, extending the roof or renting previously unused rooms. The owners have also become more professional and are seeking advice for transactions.

A number of investors from Vienna have also recently discovered the Zinshaus market in Graz

“The Vienna Zinshaus has a strong emotional value.“ Richard Buxbaum, Head of the Residential Property and Zinshaus Department at Otto Immobilien

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Yields between 7 and 10 per cent

“The Vienna Zinshaus has become an important asset component.“ Gerhard Hudej, Managing Director of Hudej Zinshausmakler

34

Arnold estimates the yields in Prague at 3 to 4 per cent in very good locations and 4.5 to 5.5 per cent in normal locations. Even more attractive in this respect is Bratislava, where Arnold Immobilien has been active for more than a year.

The supply of historical Zinshaus buildings in the Slovakian capital is much smaller than Vienna at only a few thousand. Properties in top locations, which could be purchased for roughly two million euros, could generate yields between 7 and 10 per cent. “We are also expecting a good year for Bratislava“, added Arnold. The project volume for residential and offic properties in that city totals 2.5 billion euros.

Alexander Neuhuber, Managing Director of Magan Holding, discovered the Zinshaus market in Berlin during 2014. Since that time, he has accompanied more than 100 transactions. When the massive rise in prices began in 2012, he started to put out his feelers in the East German markets. “Dresden, Leipzig, Magdeburg, Erfurt, Halle and Potsdam are interesting – these cities have all have a population over 200,000 and positive development with respect to the vacancy rate, unemployment rate and GDP“, he explained.

Similar to the German capital, Neuhuber is concentrating on undervalued Zinshaus buildings in the eastern provinces. In many cities – with the exception of Dresden, which was particularly hard hit by Allied air attacks during World War II – there is a large supply of buildings from the 19th Century Gründerzeit. “There are nearly 16,000 listed properties in Leipzig alone“, continued Neuhuber. The yields in the Saxon city are 2 to 2 ½ times the comparable levels in Vienna. “And that in an amazingly prosperous region“, he added. n

Photo: Fotolia

changes in the legal environment, loans are also easier to fin “, he indicated. The expert is anticipating an increase in Zinshaus prices in this city on the Vltava River during the course of 2015, which should strengthen the trend toward residential properties that started to take shape in the previous year. “Many investors who evaluated transactions in 2014 will close deals in 2015“, hinted Arnold.

ImmoFokus Austria

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www.erstegroupimmorent.com

Erste Campus, Vienna, Austria

© ZOOM VP.AT

Viertel Zwei, Vienna, Austria

R1 Expressway, Slovakia

Key facts

What we realize

– 300 specialists across CEE/SEE – Manages a financing portfolio of EUR 10.6bn – One of the leading companies in CEE/SEE commercial real estate business – More than 40 years of in depth experience – Erste Group Immorent was awarded “The Most Valuable Real Estate Brand in Austria” in the category “real estate bank” by the Real Estate Brand Institute GmbH (EUREB).

Real estate – Office and commercial buildings – Business parks and logistics centres – Factory buildings – Shopping centres and retail parks – Hotels and tourism facilities – Apartment buildings

What we offer – – – – –

Real estate financing Infrastructure financing Asset Management Real estate development and construction services Property solutions

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Visit us h at boot E2 No. R7.

© IC Projektentwicklung

AFI Palace Cotroceni, Bucharest, Romania

© AFI Europe Group

Erste Group Immorent: Your real estate partner for Central Europe

Infrastructure – Transport infrastructure – Energy and environmental projects – Social infrastructure – Project financing

Contact Erste Group Immorent AG Windmuehlgasse 22–24, AT-1060 Vienna Tel.: +43 (0)5 0100 - 27000 E-Mail: office.at@immorent.com

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Investing in Austria

A highly attractive investment instrument Commentary: Eugen Otto OTTO Immobilien GmbH

n The traditional Vienna apartment building remains a highly attractive investment instrument. Solid, inflation-p oof and proven over generations, interest in this “Vienna Gold” remains unbroken and demand continues to clearly exceed supply. With regard to prices, these appear to have peaked for the moment and this year may even see tentative price corrections. Another reason for this is the upcoming placing on the market – as reported by our experts - of a number of apartment building portfolios.

This development is thoroughly positive because the fact that prices do not rise inexorably but also, in some periods, move sideways or even fall a little increases the “appetite” of investors to put their money into apartment buildings. A little more movement and a few more transactions would undoubtedly be good for the Vienna apartment building market.

This is because, in terms of completed deals, 2014 was one of the weaker years and the volume of transactions – the total of all sales prices – will be clearly below the magical billion euro mark, despite a number of larger deals. The actual volume will, however,

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first become clear in March when the rush of deals carried out just before the end of the year is recorded in the land register. In contrast with some competitors who apparently already know in January how they performed in the previous year, we also record this not inconsiderable number of late deals and include them in our next Apartment Building Market Report which is ready for our readers in the spring.

I see the current discussion about tenancy law as a significan challenge for the market. Even if one assumes that much of the discussion is mere pre-election posturing and that less will come of it than some people hope or fear, it still unsettles the market.

Our clients ask us what we think about fi ed upper rental limits and how we set rents in an apartment building as well as whether they should fear a legally-imposed reduction in rental income. As agents who take their responsibilities seriously we have to give professional answers. But we can only do this if lawmakers introduce comprehensible and market-oriented rules. This would also be a service to the Vienna apartment building market.

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Investing in Austria

Stagnation at a high level Owner-occupied apartments: the peak phase has passed. Today’s buyers are taking a closer look at the price they pay for the apartments they buy.

Author: Michael Neubauer

“The peak phase has passed. Our outlook for 2015 is optimistic, but developments should be much more moderate.“ Sandra Bauernfeind, Head of the Residential Department at EHL Immobilien

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he bank and euro crisis, which triggered an enormous demand for real estate investments in recent years, has also led to a significant increase in prices, especially in the owner-occupied segment. However, there are now growing signs that the upward price spiral has started to slow.

The unusually strong increases from 2011 to 2013 have vanished. “The peak phase has passed. Our outlook for 2015 is optimistic, but developments should be much more moderate“, indicated Sandra Bauernfeind, speaker for the brokers in the Austrian Real Estate Association (“Österreichische Verband der Immobilienwirtschaft”, ÖVI) and Head of the Residential Department at EHL Immobilien.

A closer look at the price

In addition, buyers have again become more critical: All that glitters is not gold – “Today’s buyers are taking a closer look at the price they pay for the apartments they buy“, Bauernfeind is convinced. In individual segments it is now obvious that the current high market level will prevent sellers from meeting their price expectations. Adjustments are also necessary on this side to reflect the changed market conditions.

The times when residential property developers and sellers could do almost nothing wrong are over. “The demand for housing remains sound, but not in all segments“, added Bauernfeind.

“There is still strong demand for efficien units with prices up to 350,000 euros or total rents

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RREFIX 2015: Apartments

RREFIX 2015: Price Segments

6.0

6.0

4.0 +2.5

4.0

+3.1

2.0

2.0

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-2.0

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-0.9

Freehold Rental

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Suburban Location

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0.3

Price

Demand

Price

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Upper Price Segment

Middle Price Segment

Lower Price Segment

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up to 1,800 euros. However, we are seeing problems with apartments in the medium-priced segment and very expensive apartments or apartments in poor locations – here the owners must expect vacancies or reduce their price expectations.“

slight decline in prices. “The real estate prices that have been increasing steadily for years have started to stagnate and could even decline slightly. That not only applies to the luxury segment, where the weaker demand has led to a drop in prices, but to all areas“.

per cent, or 1.1 per cent over the previous year’s forecast. Prices in this segment are expected to fall by 1.8 per cent. These forecasts, in total, are roughly one percentage point lower than the 2014 estimates, but only one-third of the decline forecasted from 2013 to 2014.

The average price for owner-occupied apartments in Vienna currently equals 3,500 euros per square metre. The inner city continues to rank first for selling prices. Within the beltway districts (excluding the inner city), the prices for newly built owner-occupied apartments range on average from 4,000 to 5,000 euros per square metre, whereby the most expensive areas are the 4th, 7th to 9th Districts and Döbling (19th District): here average prices have topped the 5,000 euro-mark. The 5th District has also seen a strong rise in prices, which is also reflec ed in the current high level of construction.

Pessimistic for the top price class

In the lower-price segment, the demand for real estate should increase by 5.8 per cent. That is 0.6 per cent higher than in 2014, but roughly the same as 2013 and 1.4 per cent lower than 2012.

The offering in this segment is projected to rise by 1.9 per cent. Price expectations are only 0.3 per cent higher than 2014 and only one-third of the increase forecasted for 2014.

Large demand on smaller marketable units

The price trends in recent years have made favourably priced apartments increasingly difficu to find. Above all for smaller marketable units, the demand is much larger than the supply, explained Andreas Wollein. Apartments priced at 150,000 – 300,000 euros can be sold easily, while buyers are more difficult to find at 350,000 euros or more. Simmering (11th District), Favoriten (10th District), Floridsdorf (21st District) and Rudolfsheim (15th District) are still the most reasonably priced areas with average prices under 3,000 euros.

Photos: EHL, RE/MAX

Rural Location

-4.9

1.9

0.1

0.0 Demand

0.0

Supply 1.9

Supply 0.8

Bernhard Reikersdorfer, Managing Director of the real estate broker RE/MAX, even expects a

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Forecasts for the top price segment point to a 4.9 per cent decline in demand, a slight 0.8 per cent increase in the supply and a 3.8 per cent drop in real estate prices. “The demand and price projections for the top price class in 2015 are much more pessimistic than for 2014 – and those estimates were more pessimistic than for 2013.

Demand and price expectations have fallen by two percentage points each year, but are now better than in summer 2014“, explained Anton E. Nenning, RE/MAX Managing Director.

The demand for properties in the medium-price segment should remain nearly constant with a minus of 0.1 per cent, or 0.5 per cent below the prior year’s expectations. The offering in the medium-price segment is projected to rise by 1.9

“The real estate price formula for 2015: The prices for high-price properties can be expected to decline by roughly four per cent, while the comparable estimates for medium-priced properties are lower with a minus of nearly two percentage points. The increase in prices in the low-cost segment should generally reflect the interest rates on savings books, in other words negligible“, summarised Nenning. n

“The real estate prices that have been increasing steadily for years have started to stagnate and could even decline slightly.“ Bernhard Reikersdorfer, Managing Director of the real estate broker RE/MAX

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Commentary: Michael Ehlmaier EHL Immobilien GmbH

n The importance of residential real estate has increased consid-

erably in recent years, both for owner-occupiers and as an asset class for investors. The uncertainty on capital markets, particularly since 2008, has led to a steady shift towards real values – under the motto “property rather than savings”.

This rising demand has led to a sometimes considerable rise in purchasing prices whereas the rental level of new contracts has only increased marginally above the rate of inflation. This has caused yields to fall from around 5.5 per cent to their current level of between 3 and 3.5 per cent in just six years.

There has also been a change in the financial structure of acquisitions by private clients, with investment security replacing tax optimisation as the main focus of such deals.

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The resulting prognoses assume that Vienna requires around 10,000 new homes every year in order to satisfy this demand for new living space.

Despite lower returns, residential real estate remains a popular form of investment which represents security and stability.

A further area of residential real estate which should be emphasised is the market for luxury apartments. This sector experienced price developments in recent years which have never before been seen in Vienna. Prices in the 1st district quadrupled over the course of ten years and a handful of top objects in the city centre are on offer – and being purchased - today for prices ranging between around 25,000 and 28,000 euros per square metre.

In international comparisons, however, these prices remain middle of the range.

In conclusion, one can summarise by saying that the Vienna residential market is healthy and somewhat conservative – which is an optimal pre-condition for sustainable investment.

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The most important factors for the future of the residential real estate sector will be changes in the size of the population and the shape of households – and the trends in both these areas appear positive. As the population of Vienna is set to rise back up to two

This trend is intensified by the development of the structure of households. Not only is the share of single-person households growing – towards the 50 per cent level – but there is also a trend towards a reduction in the living space required by multi-person households.

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There has also been a change in terms of location. Whereas the premium locations inside the Gürtel and the prestigious 13th, 18th and 19th districts were the most sought-after for both owner-occupation and investment just a few years ago, clients are now turning their attention to areas outside the Gürtel whose good transport connections and infrastructure make them popular amongst tenants while they still offer considerably higher returns.

million within the next 10 to 15 years, the city will have to absorb an annual population increase of around 20,000.

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We work with a wide range of parties within the real estate industry and provide services on both a national and global level. Our industry focus combined with a profound industry network enables us to live up to our clients’ expectations.

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Bulls and Bears

The wave of takeovers Low interest rates and highly attractive dividend yields mean that residential real estate in Europe and, above all, in Germany is currently a much sought-after form of investment amongst both investors and shareholders. At the moment, the sector is marked by numerous takeovers and mergers as a result of the clearly increasing difficulty of freely acquiring portfolios on the market.

Author: Michael Neubauer

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ar chests – especially those of German real estate companies – are bulging. In contrast with their Austrian equivalents, German companies are being traded at, or even above, their net asset value. Their much better access to proprietary capital makes financing more economical. Hence, there is also an adequate supply of capital and liquidity. There are no portfolios on the market. Domestic and international competitors are feeling the heat.

In Germany the takeover merry-go-round appears to be in full swing. As recently as the end of January the country’s Federal Competition authorities approved the merger between Deutsche Annington and its competitor Gagfah. The deal cost Deutsche Annington a total of 3.9 billion euros. Annington now has a portfolio of around 350,000 residential units. With a residential real estate portfolio worth 21 billion euros the new giant is now Europe’s second largest after UnibailRodamco. Another current potential takeover candidate is TAG Immobilien, which has 70,000 apartments. Last summer, Rolf Elgeti - then Chairman of the Management Board and now Chairman of the Supervisory Board – already hinted that the company would not be averse to an offe . “I won’t stand in the way of an offe which is good for shareholders.” Experts put the fact that a deal has yet to happen down to the quality of the residential portfolio. There is also a lot of activity amongst “smaller companies”.

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In mid-February Adler Real Estate announced its desire to take over its rival Berliner Westgrund.

The sector had long considered Westgrund as a candidate for takeover. With around 18,000 apartments spread across the country the company has been too small to compete with other listed apartment companies. Since the takeover, the enlarged Adler has a total of almost 52,000 apartments, which makes it number fi e on the German market.

Things in Austria are diffe ent. Trading at a discount of almost 40 per cent (which, admittedly shrank significant y following the disclosure of Deutsche Wohnen’s takeover plans) CONWERT has long been considered as a takeover candidate. In terms of NAV evaluation, CONWERT’s share price was easily the lowest amongst residential real estate companies. The main reason for this was a level of profitability significant y below the average for the sector. One major problem is the high cost of financing which is largely down to swaps, most of which were entered into in 2007 and 2008.

As reported, Deutsche Wohnen would like to acquire 50 per cent plus one share, a strategy for which it has also secured the support of the major shareholders the Haselsteiner Family Private Trust and Karl Ehlerding and family, who are prepared to sell around 25 per cent of their holdings for a price of 11.50 euros per share.

A further core shareholder, Alexander

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Proschofsky‘s Cube Invest is basically welldisposed to such an investment in CONWERT by an expert, professional real estate investor.

However, the price on offer is no reflection of the fair value and takes into account neither the considerable valuation reserves nor any strategic premium. The first discussions about a takeover took place as long ago as 2009/2010, “since when CONWERT has been stagnating and,” according to Zahn, “the necessary capital measures have not been taken.” In turn, the Austrian company “has failed to develop its value creation in Germany further due to a lack of resources.”

Photo: Fotolia

For Deutsche Wohnen, the takeover of Austria‘s CONWERT would be its first international expansion. Its almost 150,000 residential units are currently located across Northern Germany and, particularly, in Berlin/Potsdam, Dusseldorf/Cologne, Wiesbaden/Frankfurt am Main/Mainz and Dresden. CONWERT would fit into Deutsche Wohnen‘s portfolio well. Around 90 per cent of CONWERT’s approximately 25,000 residential units are located in Germany and, according to Michael Zahn, CEO of Deutsche Wohnen, 15,000 of these “completely fit into our core strategy”. The Viennese company was a very early entrant to the markets in Leipzig and Dresden – Leipzig, however, is “not at a peak” and CONWERT has “very high vacancy rates” in the city. “We need simple investments in Germany in so-called development areas in

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order to be able to participate in the market” is how Zahn explained his company’s interest in CONWERT. “Our focus is growth”, says Zahn. Perhaps he has developed a taste for this and other Austrian real estate shares are already on the menu. Austrian real estate values are, in part, highly discounted and yet they feature amongst the most attractive real estate shares. This isn’t as strange as it seems as long as no or few core shareholders are willing to sell. Yet Austria’s real estate companies are well protected against hostile takeovers. Their CEOs have done their homework and ensured that one or more core shareholders have remained on board, even during difficul times. They have worked together instead of arguing. The CEOs, whether they are called Bruno Ettenauer (CA Immo), Eduard Zehetner (Immofinan ), Karl Bier (UBM Development AG) or Karl-Heinz Strauss (PORR AG) have concentrated on their core business. During the financial crisis they cleared the decks, raised capital through sales, divested where necessary of non-core real estate, used the profits to clear higher-interest debts and, partly, successfully turned to the capital markets for refinancing on more reasonable terms. Above everything else, however, they agreed everything with their core shareholders in advance and avoided falling out.

CA Immo has had a strategic investor - Boris Mints, the majority shareholder of the O1 Group - since

autumn 2014. Even after the spin-off, Immofinan still holds a share of 49 per cent of BUWOG. Immofinanz cannot point to a large strategic investor. With 5.8 and 6.2 per cent respectively, the investors Rudolf Fries and JP Morgan are amongst the largest. The attractiveness of the company is currently threatened by its large Russia portfolio.

There are enough other companies whose present prospects are better. Even if some experts talk behind closed doors about the crisis in Russia being over by April. Let us just hope so! Atrium European Real Estate, on the other hand, has a strategic owner in the shape of Chaim Katzman, who holds 55.09 per cent of the company. The largest shareholder in UBM Development is the Ortner Strauss Syndicate which also owns a majority share of PORR AG. Warimpex can be more or less excluded as a potential takeover candidate due to the fact that the owners are also responsible for the management.

All of which leaves S Immo AG. Just like BUWOG and CONWERT, S Immo also has an attractive real estate portfolio in Germany. The Vienna Insurance Group and Erste Group each own ten per cent. As banks and insurance companies are currently combing through their shareholdings in order to sell these at a profit as a means of raising equity ratios, it is quite possible that S Immo could come to be regarded as a candidate for takeover. Shares are listed at a significan discount of nearly 30 per cent of NAV. That could whet certain appetites. n

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Bulls and Bears

Stop fighting and start working Kommentar: Michael Neubauer Fokus-Media House, Editor in Cief

n In the past few years CONWERT has made more headlines with the open conflicts between core shareholders than with the healthy returns which also make small investors happy. While other real estate companies have been working diligently, CONWERT has been riven by infighting and, apparently, failed to recognise the sign of the times. Michael Zahn, CEO of Deutsche Wohnen AG, hit the nail on the head when he commented that CONWERT is currently in a cul-de-sac. It can no longer “act in the market as a stand-alone”. Alongside the interest burden from earlier financin deals, the share price has also been languishing for years.

Conflicts have something of a tradition at CONWERT. In 2007, three years before the investment by Hans Peter Haselsteiner (his trust owns 24.4 per cent of CONWERT), management was criticised by shareholders and investors’ groups due to the 216 million euros spent on the takeover deal involving CONWERT and the companies responsible for managing its real estate which proved very lucrative for CONWERT founders Günter Kerbler and Johann Kowar. Since Haselsteiner came on board in 2010 the investor Alexander Proschofsky and investors’ groups have constantly criticised management due to the sale of a large chunk of the Vienna apartment building portfolio and the investment of this money in apartment buildings in Germany.

After the turbulent CONWERT shareholder’s meeting in summer the “stock market rebel” Proschofsky went to court. Together with the real estate expert Peter Hohlbein, he had sought to join the Board of Administration as a means of limiting the influence of core shareholder Hans Peter Haselsteiner. Proschofsky only just failed. Several million votes were excluded at the last moment. A legal challenge and request for a declaratory judgement against the agenda item “Elections to the Board of Administration” remains pending at Vienna’s Commercial Court (HG).

Finally, Haselsteiner‘s former partner Klaus Umek and the fund managers Petrus Advisers had taken out advertisements in which they massively criticised CONWERT’s management and its real estate valuation. “As major shareholders we are disappointed by the

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company’s development“, wrote Umek. Over the past three years shares have underperformed the European real estate share index by 45 per cent. “If you have no plan we want to know how our money will be paid out with minimum loss or how you intend to pass on this task to more capable hands.” Criticism also rained down on sales of properties. The board has “radically devalued firs -class CEE residential real estate and then sold it at book value.” CONWERT boss Clemens Schneider also received his come-uppance.

“Your chaos is scaring off investors“. The fact is that CONWERT has had its weaknesses for years, many of which stretch back to the era of Kerbler and Kowar. The fact is that, when they departed, they left behind a company whose management was not in good shape.

However, even if some aspects of Umek’s criticism are justified one would also be correct in suggesting that such action by a key shareholder also scares off investors – and does nothing to ease the burden on a CEO. Or, as Haselsteiner put it in an interview in the “Der Standard” newspaper, “things aren’t made any easier for Schneider by difficul shareholders such as Klaus Umek or Alexander Proschofsky, who haven chosen CONWERT as the playing field for their wn neuroses”.

One would imagine that this should also be clear to the former Goldman Sachs banker Umek and Proschofsky, who failed in his attempt to join CONWERT’s Board of Administration. Can it be that these savage attacks have their roots in wounded pride?

Umek – and also Haselsteiner – must address the question of why they didn’t make more use of their influence between mid-2010 and April 2012, the period during which Petrus Advisers was CONWERT’s largest and most influential sha eholder.

It is difficul to avoid the impression that the core shareholders and management have been waiting for a bid and are now relieved that Deutsche Wohnen wants to take over CONWERT. The priority is now to optimise the deal. According to Haselsteiner, there is no prospect of CONWERT changing of its own accord as a result of which it is better off in the hands of Deutsche Wohnen.

And he is quite right.

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Urban Development and Planning

Vienna‘s metamorphosis The transformation in Europe has placed Vienna in an excellent position. A location on the edge of the former Iron Curtain has moved into the heart of Europe, close to the rapidly growing markets in the east.

The entire metropolitan region is expanding, and urban planning must now react to the resulting social, technical and ecological demands.

Author: Walter Senk

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ienna will be faced with two major challenges over the coming years. On the one hand, the city’s population is projected to grow to over two million by 2030, which means an increase of 200,000 residents. On the other hand, Vienna’s standing as one of the most liveable cities in the world needs to remain intact. The Mercer study ranked this Danube metropolis as the city with the highest quality of life in the world for the fifth time in succession. With the approval of the STEP 2025 urban development plan in autumn 2014, Vienna defined a strategic framework that will ensure quality growth over the long-term. Both the new STEP 2025 urban development plan and the Smart City Vienna framework strategy set clear goals for establishing focal points over the coming years that will best utilise the dynamic growth in Vienna and the surrounding region and effect vely address

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global trends. The main objective is to preserve and further improve the already very high quality of life for Vienna’s residents.

ple – in housing, in the design of public areas, in mobility, in social infrastructure –without losing sight of the goals for a smart, resource-conserving, sustainable and social city.“

The Smart City framework strategy

Vienna has taken a major step in support of change with its Smart City framework strategy, which provides future-oriented answers to the current global challenges faced by cities. While other municipalities are concentrating on pure technological solutions, Vienna has included the integration of social components in all areas as a major element of this strategy. The Smart City represents a long-term umbrella strategy that will be implemented in phases with specific goals up to 2050. Andreas Trisko, Head of the municipal department MA 18 – urban development and urban planning: “For urban development, that means we must create a suitable level of quality for a substantially larger number of peo-

The new mobility programme

The city of Vienna views urban development not as a mandate for the creation of housing and jobs, but as an issue with a much larger dimension.

By 2025 – if the city official have their way – Vienna’s residents will be walking, cycling or using public transportation for 80 per cent of their day-to-day routes. Plans for the public transportation system include an improved suburban railway network, new tram connections and an increase in frequencies – above all for the underground. The future U5 underground line is also part of the new mobility programme. Thomas Madreiter, Planning Director for the city of Vienna: “When we see a declining interest in car

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ownership, our job is to organise the city so people find more car rental options and easily transfer to public transportation.“ The underground lines also make urban development possible in previously less popular districts and neighbourhoods, for example in Vienna‘s 2nd District.

A district with wide-ranging possibilities

Photo: Fotolia

Leopoldstadt is one of the most interesting districts in Vienna because it includes and also unifies a number of development areas. Embedded in and crossed by three urban development quarters (Danube canal / waterfront / Prater – trade fair – Krieau – stadium), the entire 2nd District is in the midst of a dynamic revival. One of the most important examples is the VIERTEL ZWEI project by IC Projektentwicklung. This urban quarter is currently undergoing further revitalisation with new areas that will include 70,000 square metres of gross floor space with a utilisation mix covering 25,000 square metres of offices, student residences, 180 owner-occupied

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apartments and 100 studios – a new residential product developed by IC Projektentwicklung that meets the “small is smart“ trend. Over the coming years, the current VIERTEL ZWEI, with its dominant offic structures, will be transformed into a VIERTEL ZWEI with a balanced mix of 50 per cent residential and living space and 50 per cent working space. Similar to other urban development projects in Vienna, sustainability has top priority, explained Walter Hammertinger, Managing Director of IC Projektentwicklung: “Our goal is to set new milestones for energy efficienc and sustainable construction because we are convinced that the construction and real estate branches can have a significant impact on sustainable actions in society.“ Valuable urban structures

Also located in the 2nd District and in a further expansion phase is the area surrounding the North Railway Station. “The residential buildings along and behind the Lasallestrasse have been

completed“, explained Gerald Beck, Managing Director of Raiffeisen Evolution: “Now it’s time for the infrastructure. Restaurants and coffe houses are moving in, and a sense of local community is developing. Life is starting to fill the area.“ Plans include a number of exciting projects and residential communities that will also integrate the surrounding neighbourhood. Raiffeise Evolution relocated its headquarters to the ezone, one of its own properties, eight years ago. “When we moved here in 2006 there was nothing far and wide, and it’s a pleasure to see the valuable city structures that have developed over these past eight years“, commented Beck: “That is a developer’s dream: Creating a building and having the future prove that it was the right location.“ Similar results can be expected on the grounds of the nearby North-West Railway Station, which still acts like a wedge into the 20th District. This area, with its excellent location close to the inner city, Augarten and the right-side shore of the Danube, will become a new city quarter by 2025.

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Urban Development and Planning

The Forum Donaustadt – an urban quarter with six buildings and a diverse offering – is currently under realisation adjacent to the Kagran U1 underground station. Due to its prominent location, as seen from the planner’s viewpoint, at the end of the linear urban development axis formed by St. Stephan’s Square and Wagramer Strasse and as part of Vienna’s typical district centre structure, this location has the potential to become one of the most important urban centres in the north of Vienna – above all since it is ideally connected to the underground.

Strengthened by the designation of Kagran as a focal point for the city’s urban development, the Forum Donaustadt will serve as a starting point and initiator for a real estate revival. Plans also call for the further improvement of the public structures in this area and their expansion into a central hub north of the Danube. As a flagship project with its high-quality architecture, the Forum Donaustadt will also meet the sustainability criteria for buildings defined by the Austrian Sustainable Building Council (ÖGNI).

Railway stations are a key feature of urban development. The planned concentration of locations by the Austrian Railway Corporation (ÖBB) and the modernisation of rail operations in connection with the current railway station campaign will free up large urban areas with ideal connections to the transportation network. That will create a unique opportunity to convert land that is no longer required for rail operations into a new use. The development potential in Vienna alone is estimated at roughly two million square metres of gross floor space. The largest projects in Vienna – like the ones surrounding the Central Railway Station, the former North Railway Station and the North-West Railway Station – will provide the setting for future-oriented urban visions. By 2025 roughly 25,000 apartments will be realised on former ÖBB sites. However, plans also call for the stations themselves – such as the new Central Railway Station or the West Railway Station – to “become more of a living area, where people feel well, shop and start their trips“, added Andreas Matthä, member of the Managing Board of ÖBB-Infrastruktur AG. Architectonic challenges

One of the architectonically most exciting projects will be located on the previously used tracks

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of the West Railway Station along the Felberstrasse in the 15th District. This area, which will be developed together with the city of Vienna, has the potential to become a new urban quarter over the coming years. The optimisation and/or relocation of rail operations will release this nearly seven hectare ÖBB area directly behind the modernised West Railway Station for the construction of 800 to 900 apartments.

The special feature of this project is the roughly nine metre elevation between the Felberstrasse and the tracks. What may sound somewhat unusual, namely housing on former railway tracks, has already become reality in other European cities.

Opportunities in “Transdanubien“

The 21st and 22nd Districts are two of the largest development areas in Vienna and are currently characterised by an enormous growth rate. With approx. 297,000 residents, their combined population is slightly higher than Graz, the second largest city in Austria. Floridsdorf and Donaustadt, as the two districts are called, were previously known as “Transdanubien“ – the far side of the Danube – but the extension of underground lines U1 and U2 into the centres of these districts has triggered an enormous upswing.

Seestadt Aspern

The 22nd District is the site of another major European urban development project – the Seestadt Aspern, Vienna’s lake city. It will represent a new, multifunctional urban district with apartments and office as well as a commercial, scientific, research and educational quarter. On 240 hectares – the same size as the 7th and 8th Districts combined – buildings with more than 2.2 million square metres of planned gross floor space will be realised for more than 20,000 people and 20,000 jobs. The Seestadt will provide a setting to live the new ideas of a future-oriented city.

The Leopoldau natural gas plant is one of the largest urban development areas in Transdanubien. Wiener Standortentwicklung GmbH (WSE) is responsible for realisation of this project, which covers 13.5 hectares, 17 listed buildings and a great deal of open space. After operations at the natural gas plant are terminated, Neu Leopoldau Entwicklungs-GmbH, a subsidiary of WSE, and the property owner WIENER NETZE GmbH, will start work on the future use of the area.

As part of one of the first and also largest cooperative planning processes in Vienna, a master plan was prepared for this area. WSE Man-

Photo: STM, Bernhard Siquans

Homes replace rail

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aging Director Stephan Barasits: “In developing an area of this size, you must be particularly careful because the results have such a major impact, not only on the neighbourhood, but also on the entire city.“ The tender for the property developers will be held this year, and WSE is also looking for interested parties for the listed buildings.

A sustainable location

Vienna’s international airport is not located directly in the city, but in the province of Lower Austria – even so, it forms an integral part of the nation’s capital in the broadest sense of the term. The airport grounds are currently the site for the development of a sustainable Airport City. “Our goal is to position the airport as a multifunctional location to reflect the current trend toward ‘airport cities’“, explained Günther Ofner, member of the Management Board of Flughafen Wien AG. Roughly 1,200 hectares at

the site are still available for investors and project developers. This location is special in that it represents the first commercial area in Austria to be recognised for its commitment to sustainability. The Airportcity Vienna is the first commercial development in Austria to receive a quarter certifica e for sustainable real estate development from the Austrian Sustainable Building Council (ÖGNI). “Our real estate strategy is focused on sustainability and environmental awareness as well as ecological and economic criteria. This certifica e clearly confirms that we are on the right course“, added Ofner.

No way but up

The projected population growth faced by Vienna can, as many experts believe, not only be met with urban development, but must also include an “upward move“. Architect Heinz Neumann: “Considering the density in the city,

you can’t have a negative view of high-rise buildings. It’s important to use infrastructure resources as a means of further revitalising the inner city areas.“ He sees Vienna’s new building code, which was approved in summer 2014, as a step in the right direction. Neumann is convinced of this new direction and is interested to see what the next steps will bring because “the continuation and realisation of the concept defined by the urban development plan is a good idea“.

Urban development has long since become an issue in the competitive positioning of cities and metropolitan regions. Planning director Madreiter: “Vienna‘s performance will depend on the success of our regional positioning. What are Vienna’s unique features, what possibilities and options can we offer businesses and residents? What is our brand, our USP and what do we stand for in the world?“ n

www.erstegroupimmorent.com

„Anyone developing an entire town district needs vision, creativity and perseverance – and an experienced and strong financing partner“

Visit us h at boot 2 No. R7.E

Michael Griesmayr, IC Projektentwicklung

Viertel Zwei © IC Projektentwicklung

Vienna, Austria Multi-purpose properties: office buildings, hotel, apartment buildings 40,000 m2

Financed and monitored by

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Urban Development and Planning

Living and working, Leisure and culture aspern Vienna’s Urban Lakeside is one of Europe’s largest urban development projects.

The key to the idea of the urban lakeside is this principle of mixing. It is a place for living and working.

It has space for all generations and a whole range of lifestyles. Its mix of uses is not only a contribution to the work-life-balance but also a business factor.

Interview by: Michael Neubauer

You have been responsible for aspern Vienna’s Urban Lakeside for about a year. What is special about the job?

Gerhard Schuster. As the CEO of BUWOG I had the responsibility of meeting the housing needs of thousands of people. In the urban lakeside my role is to oversee the emergence of a multifunctional urban district – with optimal living and working conditions for people of all generations who are seeking an urban and sustainable lifestyle. For me the focus is people, with all their needs for living and working, education, leisure and culture.

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The urban lakeside will offer sophisticated architectural, urban design and mobility concepts in combination with an excellent infrastructure and an attractive environment for companies and their employees.

What is most complicated about this task? >> The greatest complications arise from the size of the urban development project because the urban lakeside is as big as the 7th and 8th districts combined. This means that our task is not only to build apartments but also to put in place a transport and social infrastructure.

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„A high number of innovative companies have already moved into aspern IQ Technology Centre“ Gerhard Schuster, CEO of Wien 3420 Aspern Development AG

In doing so one must ensure a balanced mix.

This mix is the key. We cannot just build apartments and villas for top earners. We also need affo dable accommodation for families and singles. The foundations have already been laid. The underground is on the doorstep and the lake is a recreational area.

The key to the idea of the urban lakeside is this principle of mixing. It is a place for living and working. It has space for all generations and a whole range of lifestyles. Its mix of uses is not only a contribution to the work-life-balance but also a business factor. The apartments generate footfall for local companies. Jobs and retail opportunities guarantee purchasing power. If the overall package works then companies will also come without the need for large public subsidies.

Which companies are you thinking about in particular? Which companies are coming to the urban lakeside? >> A high number of innovative companies including the research company ASCR and researchTUb have already moved into aspern IQ Technology Centre. And young start-ups are also using the centre’s excellent networking opportunities. The Vienna Business Agency’s

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aspern IQ Technology Centre is already home to around 20 research facilities, companies and start-ups with more than 80 employees who are researching and working in the urban lakeside.

What is the situation regarding industry? >> Work is starting on two large industrial facilities adjacent to the Opel Austria plant to the east and west of the underground line.

Between now and summer 2015 the non-profit organisation Wien Work will build workshops, an industrial kitchen and office for up to 600 employees and will also offer services to the residents of the urban lakeside.

In 2016 the technology company Hoerbiger, which also has 600 employees, will start operations.

Today one can still see a lot of building sites.

When will the last crane disappear? >> 2028 is an important date for Vienna. aspern Vienna’s Urban Lakeside, one of Europe’s largest urban development projects will then offer homes for 20,000 people and the same number of jobs on an area of 2.4 million square metres – which equates with the size of 340 football pitches. Between now and the achievement of this final objective, the urban lakeside will celebrate many milestones.

One underground railway station for 20,000 residents – is that enough? >> Currently only every second train continues as far as Aspern. This will soon change and intervals will be reduced. In future a suburban train will also stop at Aspern Nord underground station. This is the only major building site in Europe where the building workers can travel to work on the underground.

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Urban Development and Planning

„Our aim is to establish the urban lakeside as a place of culture beyond Vienna’s borders.“ Gerhard Schuster

How will one avoid the urban lakeside suffering the fate of so many other urban districts and becoming a dormitory town?

>> As I have already said. It is a question of the mix – gastronomic and cultural. Our aim is to establish the urban lakeside as a place of culture beyond Vienna’s borders. If all goes to plan the Theater in der Josefstadt will transfer its rehearsal stage with a special programme to the urban lakeside. The shopping mall, whose 9,500 square metres of retail space include a managed shopping street, will start operating fully in mid-2015. This will be the home to everything that the people of the urban lakeside require to meet their daily needs: drugstore, bank, bakery, hairdressers, stationers and bookshop, tobacconist and restaurant.

There will also be a chemist, various doctors’

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surgeries and a police station. The lake will provide an additional attraction. How many people can boast that they have a bathing pond on their doorstep?

lakeside. The reality is that delays are to be expected with such an ambitious project. We will know more in a few weeks but the plots for the project remain reserved.

What is the situation with the “Aspern Sports Area”? Critics predict the end of the project. >> It currently looks as if “Aspern Sports Area” will be realised. According to the current state of the design the Aspern Sports Area will provide a home to training centres for football, gymnastics, track and field athletics and swimming. In addition to this there will be a multifunctional hall and the approximately 100-metre-high ASA Tower which will house the office of a number of sports organisations. The Austrian Football Association (ÖFB) should also move its headquarters to the urban

What role is played by the issue of sustainability? >> Cities are responsible for around twothirds of global energy consumption and up to 70 per cent of all greenhouse gas emissions. Hence, it was clear from the very start that aspern Vienna’s Urban Lakeside should become an international showcase for the smart city of the future.

Sustainable building demands a multi-generational awareness of how to deal with resources.

This is why we established a comprehensive quality assurance process for dealing with

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building projects in aspern which is designed to support these objectives. We worked with the Austrian Sustainable Building Council (ÖGNB) to develop the TQB Monitor, a tool for evaluating building projects and accompanying and guaranteeing the sustainable design and construction of buildings in aspern Vienna’s Urban Lakeside.

For example, aspern IQ was built and certifie in line with the Klimaaktiv guidelines. The building meets a Plus-Energy standard (it generates more energy than it consumes) and is heated and cooled by concrete core activation.

The 1,300 square metre photovoltaic plant meets residual energy needs. Further green highlights include the solar-protection plant which responds to the level of incident light and the high-efficienc ventilation plant which

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responds to the number of people present by using CO2 sensors to measure and control air quality. This ensures both an ideal spatial and working climate and low operating costs.

Excavation work on a building site normally generates tonnes of material which must then be removed by thousands of trucks. This did not happen at the urban lakeside: the majority of this material was and is stored in situ and then re-used. This led to the creation of, for example, the aspern terraces which provide neighbours with both a leisure area and a protective wall against building noise. This re-use of the excavated material and other measures facilitated the avoidance of 100,000 truck journeys. This means less noise, less dust and less CO2 for the surrounding areas of the Donaustadt district.

Gerhard Schuster After completing his law studies at the University of Salzburg, Gerhard Schuster began his career as the Lower Austrian Chamber of Labour’s expert for labour and social law.

He then held leading positions in a number of ministries including as Head of the Department for Consumer Protection before he worked as an expert in the financing of residential buildings for the ERSTE Bank and as Managing Director of S-Wohnbauträger GmbH. Between 1996 and 2013 Schuster was CEO of BUWOG Bauen und Wohnen GmbH, one of Austria’s most active builders of residential property and real estate developers.

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Advertorial

Urban development with charm: aspern Vienna’s Urban Lakeside

V

ienna is growing. This is most noticeable in the city’s 22nd district – Donaustadt – where a highly ambitious project has been emerging for several years. aspern Vienna’s Urban Lakeside is a city within a city which offers all the ingredients of high-quality 21st century living.

The basic idea: the urban lakeside is a place for living + working. The main concerns of planners and policy makers in the urban lakeside were: how does one create the right mix for a dynamic urban district and what are the main obstacles when one is presented with 2,400,000 m² of virtually empty land? Just to compare: the planners had to shape an area the size of 340 football pitches. Beginning in 2003, they took a suitably broad approach to the planning process before bringing everything together in a large-scale masterplan.

Today, the first development phase in the south of the district is being realised. An aerial view of

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the urban lakeside reveals an underground railway heading for the heart of the district and many buildings and building sites. The pioneer was the Vienna Business Agency’s aspern IQ Technology Centre, a Plus Energy building completed in 2013 which is one of the urban lakeside’s key development drivers. The first residents have also already moved in. By March 2015, 1,400 apartments and 260 student apartments will have been completed and, by early 2016, the population of the urban lakeside will have risen to around 6,100. The first school campus is under construction and the shops and restaurants in the first shopping street overlooking the lakeside park will open this summer.

Alongside retail outlets other sectors are already present, including a number of exciting start-ups, for whom aspern IQ is the perfect high-tech location, and Wien Work and the HOERBIGER Holding, two companies who will each bring around 600 jobs to the urban lakeside in 2016 and 2017 respectively. n

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A wordrap between Gerhard Schuster, CEO of Wien 3420 Aspern Development AG, and Gerhard Hirczi, Managing Director of the Vienna Business Agency, two makers of the aspern Vienna´s Urban Lakeside

THE FULL LIFE: LAKE: Schuster: “Water is life. The lake and lakeshore are attractive environments. This is real added value. aspern Vienna´s Urban Lakeside is being developed in a huge park around the lake.

The lakeside park will be a local recreation area, a meeting place for those who live and work here. Atmosphere. And, naturally, a green lung for the entire district which, we are proud to say, has a very high share of green space.”

Photos: STM, Bernhard Siquans

SMART: Hirczi: “Mannerschnitten. Thanks to a smart Viennese innovation the famous biscuits are still produced for the global market in the heart of one of Vienna’s residential districts.

The magic words are vertical production – which saves space and works. Vienna supports bright brains with smart ideas – and some of these will certainly be realised in the urban lakeside.”

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Schuster: “This is both our claim and our offe : aspern Vienna’s Urban Lakeside succeeds in combining working, living, shopping, learning and leisure in a single business location.”

VIENNA: Hirczi: “… is unique! And combines tradition with innovation. The fastest growing city in the German-speaking region, an excellent business location and, according to the Mercer Study, time and again the city with the highest quality of life worldwide, Vienna is safe and offers both high social standards and a dynamic economy.”

VISION: Schuster: “The image of a future world/city worth living in. Those with vision come to the urban lakeside. We know how to help people & companies who have ideas and want our support in order to implement them. Our advantage: aspern IQ is conceived as the first practi-

cal docking station where even single-person companies can network and optimally develop.

And we have the space to implement even very large projects.”

ECONOMIC GROWTH: Hirczi: “Must be actively supported. 40 million euros of direct support for companies are available in Vienna every year. Vienna also supports infrastructural expansion – the new metro had already reached the urban lakeside before the first companies arr ved.”

EIA: Schuster: Due to its size the urban lakeside has to undergo an Environmental Impact Assessment (EIA). This was successfully carried out for the southern part in 2010 – and I must say that it has only brought benefits. Today I regard many of the measures developed during the course of the EIA as real assets for the urban lakeside. We are currently completing the EIA application for the northern part as a basis for our future development.

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Advertorial

Sustainability brings returns aspern Vienna´s Urban Lakeside is an international showcase of urban expansion of which Vienna is very proud and which regularly welcomes delegations from abroad. The urban lakeside thinks far into the future. Quality is the top priority: from the painstakingly developed masterplan which was unanimously approved by Vienna City Council via the detailed design guidelines for each individual plot to the multidisciplinary aspern advisory committee which provides independent support to Wien 3420 AG.

T

he typical urban lakeside building has innovative, high-quality architecture, intelligent energy concepts and sustainable building technology.

Particularly important: the mix of living and working. The apartments have flexible plans which can accommodate a range of uses as required. The many high ground-floor zones are deliberately reserved for shops, restaurants or public services.

This mix and flexibility guarantee variety, extend the building’s lifespan and, hence, also increase return on investment. In this respect, the urban lakeside is very well positioned: ten buildings from the first phase – including the aspern IQ, the Plus Energy building - have already been awarded klima:aktiv and EU Green Building certification by the Austrian Sustainable Building Council.

BUILDING LOGISTICS With its own concrete mixing plant the urban lakeside’s high-tech building logistics centre simplifies individual projects while ensuring that the enormous site is developed in line with the EIA. It also has its own railway siding. Existing material such as the concrete from the runways of the former airfield and the gravel, sand and earth excavated during the creation of the lake are recycled and then reused on site.

This has protected both the developers and neighbouring residents from the cost and impact of more than 100,000 truck journeys – and reduced CO2 emissions by around 1,400 tonnes.

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Reality check with selected pioneers of the urban lakeside: What are the special qualities of the urban lakeside?

Why does your project fit in he e so well?

What assets does the urban lakeside offer o your company?

HIGH-TECH, SUSTAINABILITY, SYNERGIES, URBAN LAKESIDE AS LIVING LAB Jointly established by Siemens, Wien Energie, Wiener Netze, the Vienna Business Agency and Wien 3420 AG, Aspern Smart City Research GmbH (ASCR) has also been working in aspern IQ since 2013.

It uses the urban lakeside as a living lab, researching energy efficiency by studying real buildings: “Aspern is not only a huge urban development project but also a research project. Aspern Smart City Research (ASCR) offers a unique opportunity to research a smart city network by using real data to test sustainable and innovative products from the energy sector. Thus, aspern Vienna´s Urban Lakeside will become an international showcase for the smart city of the future”. >> DWI (FH) Bernd Richter, ASCR – aspern Smart City Research GmbH & Co K

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WHY HOERBIGER IS COMING TO THE URBAN LAKESIDE, WHAT DISTINGUISHES THE BUILDING? ”Hoerbiger has been working closely with universities and universities of applied science in Austria and, in particular, in Vienna for years. We hope to find highly qualified employees here and expect the Vienna Business Agency’s aspern IQ Technology Centre to offer valuable input. Naturally we also appreciate the high design standards, the infrastructure and, especially, the excellent transport connections of our new premises in the urban lakeside.” >> Dr. Martin Komischke – CEO, HOERBIGER Holding AG

“Our architecture is the direct embodiment of the company’s slogan: “Hoerbiger - because performance counts”. Hence we can forego the use of the representative elements or other costly insignia of standard corporate architecture. “Not an ounce of fat” is our motto for the building. There is no recognisable difference between the workplaces of the assemblers and the administrators: untreated, simple materials, sober details and exposed pipework signal efficiency in not only the production but also the office areas. And because production, research and administration are of equal importance for the success of the company there is no external sign of where one department ends and the next starts.

The important heart of the new facility is the common atrium which plays a role in both recreation and orientation.”

>> Komischke

>> DI Jakob Dunkl, querkraft architekten zt gmbh

TECHNOLOGY TRANSFER + NETWORKING + BUSINESS AGENCY SUPPORT >> Richter

“The concept of the technology centre here in IQ in Aspern convinced us and our expectations have also been fully met. Networking with other Viennese and Austrian companies which, at first sight, have absolutely nothing to do with our specialist area has led to shared business interests and concrete cooperation projects (researchTUb / TU Vienna). Hence, aspern Vienna´s Urban Lakeside has brought us completely new market opportunities.

Furthermore we will soon enter a period of growth and need room for expansion.” >> Ernest J. Fantner, SCL – Sensor tech Fabrication GesmbH

Photos: Schedl, Katrin Bruder

“Research TUb stands for technology transfer, from science to production - “research to business” - and hints at the close cooperation with Vienna University of Technology and, in particular, with the Institute for Production Engineering and Laser Technology. Thanks to such excellent partners as the Vienna Business Agency and the ideal physical conditions here in Aspern we are able to develop innovative solutions which can then be tested and implemented on site. One example is the simulation of energy requirements in the production process, which is valuable information for companies. And we also work directly together with product developers. The most recent example is the Mi-Bike, a high quality electric bicycle which also fits well with the concept of sustainable mobility in the urban lakeside.”

>> Aspern IQ

>> Univ.Prof. Dr. techn. Friedrich Bleicher, Managing Director, researchTUb GmbH Vienna

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Früh-

ach-

Um-

ng in

dgeund

aße höhe

Advertorial

A look at life in the urban lakeside ‘The full life’ is what the urban lakeside requires of itself.

But does it meet this demanding requirement? An interview with the two Wien 3420 AG board members Claudia Nutz and Alexander Kopecek about what has already been achieved and what still lies ahead.

Frau Nutz, you are responsible for the areas of design, technical infrastructure and product development and were one of the first people involved in planning the urban lakeside. What was the most far-reaching strategic move to date?

Nutz: The most important decision was to base the entire project on diversity and mix. Instead of either/or we want both/and. In the city of the 21st century it is possible to balance life and work. The urban lakeside is a place for people who are looking for both sustainability and urban density. It has room for all generations and many lifestyles, for the full life. And it is an ideal location for companies who want to offer their employees a high-quality environment.

What are the special highlights for you?

Nutz: There are many highlights, one of which is the mobility concept that we are now gradually rolling out. The urban lakeside’s excellent public transport connections include two underground stations, one of which is also served by the suburban railway. Seven bus routes currently feed into the underground from all directions. A tramway is also in the pipeline. And the airports and stations of Vienna and Bratislava will be around half an hour away. For companies in the urban lakeside this means that connections with the local and long-distance transport networks are perfect.

How about cars?

Nutz: In the urban lakeside we think about mobility in an integrated way. One should always choose the optimal mode of transport for each situation.

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Naturally this doesn’t mean that there should be no cars here. We are simply providing so many alternatives that private cars will not be needed. In the city of short distances one should be happy to go by foot or bike. The interiors of the residential quarters will be carfree. For residents and companies this represents a low-traffi and, hence, a low-noise environment.

Herr Kopecek, you are responsible for, amongst other things, assets and property management. We have just heard about ‘the city of short distances’. This immediately raises the issue of local services and social infrastructure. How are these looking?

Kopecek: From the very beginning, the urban lakeside took a new approach in order to ensure that local services work. Shopping and other needs can be met on foot or by bike. Rather than a shopping centre there will be a central shopping street which will cover all daily needs from day one: a food shop, drugstore, bakery, chemist, bank and insurance company. And of course there will also be places to eat and drink.

Leisure areas are also very close by. As 50 per cent of space is public the urban lakeside has a lot of greenery. Its heart is the 50,000 m2 lake set in a park of almost the same size. With its lakeside facilities and promenade this will become a meeting place for everyone. Other large parks, numerous green squares and courtyards and generously planted alleys will shape the character of the urban lakeside.

These will benefit not only residents but also companies and their employees.

What is the situation with the social infrastructure?

Kopecek: The urban lakeside will be able to offer a comprehensive range of childcare and schooling. This includes the educational campus of the City of Vienna with its kindergarten, all-day primary school and school for children with special physical needs as well as a federal school building with a grammar school and vocational school for children up to the age of 18. There will also be a medical centre and there are plans for a hotel and much more.

And the cultural offering in the urban lakeside?

Kopecek: Culture has been a feature of the urban lakeside from the very start. A sensational multimedia event even put the cranes – of which there were then more than 40 – in the spotlight. The lakeside has already seen many events: from holiday activities for children to university lectures, theatrical performances and flea-mar ets for bicycles to parties organised by neighbourhood groups. Since 2015 we have been developing a new artistic format in the urban lakeside centred on media art in all its many forms. After all, a new city needs new art.

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“SHOPPING STREET RATHER THAN MALL”: THE LOCAL SERVICE CONCEPT OF THE FUTURE The residents of the city of short distances can meet all their daily needs within walking distance.

From autumn 2015, Austria’s first centrally managed shopping mile will invite locals to stroll and to shop. Wien 3420 AG and its experienced partner SES Spar European Shopping Centers are responsible for ensuring that all key sectors are covered.

>> SMART MOBILITY

As we have heard from Frau Nutz, the people of the urban lakeside have been very creative in the area of mobility.

We asked Lukas Lang, Wien 3420 AG’s mobility commissioner, where things are heading.

Photos: Schedl

Lukas Lang: Laid out as a city of short distances, aspern Urban Lakeside primarily invites people to walk and cycle. Our ambitious target is that motorised transport should only represent around 20 per cent of the modal split in the urban lakeside. All residential buildings and many public spaces have bicycle parking areas. The streets are governed by the principle of “sharing fairly” and a speed limit of 30 km/h applies almost everywhere. There is generally much less space for parked cars than in other parts of Vienna. Most parking spaces are located in collective underground car parks while most surface spaces are in short-term parking zones. E-mobility services, car sharing and attractive cycleways and footpaths enhance the

mobility mix. The first ‘Cycle Depot Box’ where bicycles can be securely parked is located close to ‘Seestadt’ underground station. The ‘Seestadt Fleet’ cycle hire system which will facilitate individual trips that only leave a positive footprint will open its first six stations in 2015

Immobilienfokus: How do you combine sustainable mobility with Aspern’s role as a business location?

The city of the 21st century has smart, high-performance transport connections – both within neighbourhoods and to the international hot spots. The mix of faster, environmentally friendlier public transport includes underground, suburban and regional railways, trams and buses. The urban lakeside combines things that are seen elsewhere as contradictions. The rapidly accessible international stations and airports in Vienna and Bratislava and the Port of Vienna network the urban lakeside with Europe and the entire world.

THE PRIZE-WINNING VISION

MOBILITY

40 per cent cycling and walking, 40 per cent public transport and just 20 per cent car traffic. This is the modal split with which aspern Vienna’s Urban Lakeside wants to make its future contribution to climate protection and, above all, be a liveable, intelligent 21st century city. The award of the VCÖ Mobility Prize 2014 in the category ‘Living’ confirms that the urban lakeside is also a pioneering urban development project in the area of mobility.

>> U2 metro with two stations (‘Aspern Nord’ and ‘Seestadt’) – 27 minutes to the city centre

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>> Seven bus routes feed the underground from every direction, plans for a tramway >> Trains (suburban/regional) and ÖBB Intercity (Bratislava) >> Priority given to environmentally friendly forms of transport (cycle hire, cycle depot, car-sharing) >> Public spaces largely reserved for pedestrians and cyclists >> Long-term parking in collective underground garages (around 1,900 parking spaces in six garages by summer 2015) >> Park & ride facility next to railway/underground railway hub and two connections to the road network

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Advertorial

All new on the eastern front While the first, mainly residential, quarter in the southwest of the urban lakeside is already nearing completion, building work will soon move eastwards towards the metro station.

The central lakeside park quarter with its dynamic mix of living and working will be built in the next two years to the south of the lake.

New office worlds with a feel-good factor and living with a view of the lake

T

he lakeside park quarter is just a few steps from the central Seestadt underground station and the shopping street, Maria-Tusch-Straße. The fi st landmarks will be the innovative and ecologically and sustainably built office being developed by the investor and real estate expert Günter Kerbler and his KERBLER Group. There are plans for a hotel and a modern offic campus consisting of a pair of slender buildings - each with a gross floor area of around 12,000 m² - which will be realised using an ecological composite timber construction method. Target tenants range from young start-ups to large companies who are interested in exchanging ideas, openness and uncomplicated solutions.

Elsewhere in the lakeside park quarter, BUWOG – Bauen und Wohnen GmbH will complete 250 privately-financed freehold apartments with a gross floor area of around 28,000 m² by the end of 2017.

A further project under preparation has the exciting title “Ideas for Change”.

“Ideas for Change” Herr Schuster, what is this tender process about?

How will the competition work and why are you launching it at MIPIM? Herr Thun-Hohenstein, how does this project fit in o the Biennale?

Gerhard Schuster: As part of the first “Vienna Biennale 2015: Ideas for Change” Wien 3420 AG and the Architekturzentrum Wien (Az W) are organising an invited competition which will be presented for the first time at MIPIM in Cannes. The well-known office have to design a building containing 28,000 m² of gross floor area and a mix of commercial (40 per cent) and residential (60 per cent) uses.

The idea behind this: that the focus should not be on the architectural object but on the urban building as part of the urban grain. The growing city is a heterogeneous city and – just like the architecture of the growing city - needs a shared language as a starting point for individual statements.

The competition entries and, eventually, the winning project, will be chosen by an expert

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jury in early July 2015 and presented at the Vienna Biennale which will take place under the aegis of Vienna’s Museum of Applied Arts (MAK) and its director Christoph Thun-Hohenstein.

“The VIENNA BIENNALE 2015: IDEAS FOR CHANGE brings together art, design and architecture and, hence, is a perfect fit with the urban lakeside. An invited international architectural competition co-organised with the Architekturzentrum Wien will develop new approaches to the architecture of the city of tomorrow. The process requires creative heads and lots of open space. aspern Urban Lakeside provides an excellent context for the challenging architecture which gives a city both its outline and its recognition value.

Thun-Hohenstein

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Your partner in the urban lakeside: Wien 3420 Aspern Development AG or, more succinctly, Wien 3420 AG. A multidisciplinary team that understands the needs of international headquarters just as much as it understands the needs of start-ups.

Wien 3420 is developing a city in which around 20,000 people will be living – and the same number will be working - by 2028. Together with its partners the development company is coordinating the urban planning and development of the infrastructure of the urban lakeside. This makes it responsible for ensuring that the urban lakeside offers all the ingredients of a modern business location. From high performance, innovative transport networks to a complete range of local services. All the connections for your plot as well as a logistics centre for the promotion of sustainable, efficient and, hence, economic building.

Wien 3420 Aspern Development AG is responsible for the sale of plots and provides support in all activities related to investing, setting up companies and generating profits in the urban lakeside.

The team brings a wealth of experience and acts as both a sparring partner and a multiplier for investors, clients and entrepreneurs.

The forward-looking location marketing has created a brand value for aspern Vienna’s Urban Lakeside that means added value for you.

High-quality, sustainable planning + secure legal framework + excellent infrastructure + strong partner + intelligently designed open spaces + optimal transport connections + high-quality local services + networking with local partners + Vienna as a high potential economic environment Results in = a sound investment

www.wien3420.at www.aspern-seestadt.at

URBAN LAKESIDE – FACTS AND FIGURES Photos: Schedl, Aleksandra Pawloff/MAK

− one of Europe’s largest urban development projects − location in Northeast Vienna – with connections to the railway stations, airports and centres of the Twin Cities Vienna and Bratislava − new, multifunctional urban district with high quality apartments and generous areas for offices, production and service companies, science, research and education − a total area of 240 hectares, which represents the area of 340 football pitches or of Vienna’s 7th and 8th districts combined − new buildings with a projected gross floor area of over 2.2 million square metres − total investment of around five billion euros − development horizon: more than 20,000 residents and 20,000 jobs − around 2,600 residential units for around 6,100 people and 2,000 jobs by 2016

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Green & Blue

Quarter Certificate Sustainability labels for individual properties have already become successfully established.

Now city authorities, developers and investors are focussing on certificates for entire urban quarters.

In this interview with ImmoFokus, Sabine Dorn (ÖGNI) revealed the criteria which must be met by the sustainable development of urban quarters.

Interview by: Michael Neubauer

>> Every second person on the planet is now a city dweller and the trend is upwards. Major urban areas face major challenges: resource and energy consumption, CO2 emissions and the rate at which green space is disappearing under concrete are higher than in rural areas. But we cannot return to the country and the city is and will remain the form of human cohabitation. If we are to meet these major challenges, addressing individual buildings is not enough.

We must address the whole. With this objective of setting not just individual buildings but entire districts and cities on the path to sustainability, certification systems for urban quarters have already been established across the globe.

The aim of such new international quality labels as “BREEAM Communities“, “LEED Neighborhood Development” and our own “DGNB Stadtquartier” is to make the criteria for sustainable settlements and urban quarters transparent and measurable.

Why does the real estate industry need certifica es for entire urban quarters?

Sabine Dorn:.As a partner of the DGNB network, the Austrian Sustainable Building Council (ÖGNI) is offering Urban Quarter Certification for the first time in Austria. Whereas certifica es have previously been awarded to individual real estate objects and buildings, the main feature of the new certifica e is that it follows the real estate trend towards the development of integrated location concepts and commercial quarters. This “Quarter Certifica e” guarantees that the large-scale development of locations can still meet objective sustainability criteria.

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And you will not be surprised to hear that we are convinced by our own system: ours is a second generation system with a strong emphasis on lifecycle and integrated processes. As I said before, I appreciate the competing systems but am convinced by ours.

What are the diffe ences between the certification of buildings and urban qua ters? >> In the DGNB System we wanted to leave the tried and tested foundations untouched yet still had to develop something new because a quarter requires a diffe ent systematic than a building. The aim was to integrate the two worlds, like two sides of the same coin, so that a

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The pillars (ecological, economic and socio-cultural) remain untouched. In contrast with buildings, however, diffe ent criteria and parameters play a role in quarters. To make this clearer, let me highlight such examples as the integration of the quarter as a whole into the city, the availability of open space and the energy efficien grouping of buildings. The inclusion of economic factors means that the DGNB System is the only one that puts the economic aspects of sustainable building on an equal footing with its ecological aspects. The focus of the evaluation is the entire lifecycle of a quarter. As a rule, it is not individual measures but objectives that will be defined: the performance alone counts!

Is certification also available for existing quarters? >> As with individual buildings, Urban Quarter Certification is available for both new and existing quarters. Existing quarters can be certified in line with DGNB New Building for Urban Quarters (NSQ) as long as the new building requirements are met. A good example of this is Potsdamer Platz in Berlin which was built between 1995 and 1999.

From the very beginning this major project was designed with a view to sustainability and three to fi e per cent of the construction costs were invested in a system of ecological management. The aim was to develop an environmentally friendly energy supply and a resource-saving approach to water and the earth combined with climatically-appropriate construction methods and ecological materials. The ecological management was then integrated into the general management.

How are individual subject areas weighted? >> The weighting of the subject areas is in line with the systematic of the DGNB building system and addresses the balance between ecological, economic, socio-cultural and functional quality. The only diffe ence with the urban quarter system is that the locational quality, which is integrated into the DGNB building system, is handled separately. This means that location has a significant influence on the overall evaluation of the quarter.

How is the evaluation carried out? >> The DGNB system for urban quarters supplements building profiles in line with DGNB Principles. It pays special attention to the space between buildings, the infrastructure and the location of the quarter. These factors have a substantial influence on the quality of an urban quarter and define the framework for the sustainable development of the buildings.

Higher-ranking concepts are also addressed – in terms of, for example, their approach to

sustainable quarter attracts sustainable buildings and, conversely, sustainable buildings can be even more coherently operated in a sustainable quarter.

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Green & Blue

energy, water and waste. The buildings themselves must not be certified for quarter certification and will only feature in the evaluation in terms of some basic values.

The first phase – the pre-certifica e – addresses the contents of the urban design and is valid for three years. In phase two – the design/connections certifica e – 25 per cent of the infrastructure must be complete and a development plan with urban planning contracts must have been signed. The validity of this certifica e is limited to fi e years. For the quarter certifica e, the validity of which is unlimited, at least 75 per cent of the buildings and public open and circulation space must be complete. This certification occurs in three phases due to the period required for the development of an urban quarter. The opportunity to influence quality and sustainability is greatest at the very start.

This is when one can lay the foundation stone for a sustainable quarter which, after three phases of certification, can then lead to a fina certifica e. These three phases diffe entiate this system from building certification which involves only the pre and the final certifica e.

This extra phase is due to the longer design period. Looking abroad, entire urban quarters such as the Europaviertel West in Frankfurt am Main (Germany) and Carlsberg City District in

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Copenhagen (Denmark) have already received been certified … and in Austria? >> Vienna Airport recently became the firs commercial district to be awarded DGNB pre certification What decides whether I am an urban or a commercial quarter? >> We diffe entiate between these two types of quarter. An urban quarter must have a certain size - around one hectare - and contain several buildings, at least two building plots and some publicly accessible space. The proportion of residential space must be between 10 and 90 per cent. A commercial quarter has several buildings, at least two building plots, publicly accessible space and the corresponding infrastructure and at last three diffe ent types of use, each of which must represent a share of at least ten per cent. One condition must be met in all urban quarter certification processes: all owners of a quarter must agree to the certification

Sabine Dorn

… it sounds complicated! >> But it isn’t. Specially trained – certified – DGNB auditors help with their expertise. These ÖGNI experts are able to advise and support n owners.

...is one of the two Managing Directors of the Austrian Sustainable Building Council and responsible for system development and conformity testing.

She is an expert for sustainable building and was previously active with PE International in Vienna.

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24.02.15 09:35 12:01 23.02.15

Urban Development and Planning

For sale: Barracks and Railway Stations High development potential. The Austrian Armed Forces and the Austrian Federal Railway Corporation (ÖBB) are planning a series of land sales over the coming years.

Author: Walter Senk

“Starting in 2017, this will be the site for a lively quarter with roughly 1,500 apartments, offices, shops, restaurants and cafes, convenience stores, support and social services.“ Herbert Logar, Managing Director of ÖBBImmobilienmanagement GmbH

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n Vienna alone, the Austrian Federal Railway Corporation (ÖBB) owns land with a development potential of roughly two million square metres that is no longer required for network operations. That makes the ÖBB one of the city‘s largest landowners. Often found at central locations, these sites are now being sold, and the area surrounding the new Central Railway Station has become a model for urban development. Another landowner with centrally located properties is the Austrian Armed Forces, which is also planning a series of land sales over the coming years.

The new Central Railway Stationr

The end of October 2014 marked the relocation of employees into the ÖBB corporate headquarters at the new Central Railway Station, which also opened at almost the same time, even though not all areas are currently in use. This transfer to the new headquarters made ÖBB a forerunner in its own landmark project. Facing the ÖBB corporate headquarters at the “front end” of the location is the construction site for the ERSTE Bank Campus. This project is scheduled for completion at the end of 2015, and employees are expected to move in starting in January

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“The city of Vienna is very interested in seeing residential construction – including subsidised apartments – on former army grounds.“ Stephan Weninger, Managing Director of SIVBEG

2016. Together with the ÖBB headquarters, these two complexes already form an optical framework for the area. “A sensational urban development project with a successful mix of residential and offic space, hotels and shopping as well as ideal connections to the public transportation system“, described Alfons Metzger, Managing Director of Metzger Realitäten Gruppe (MRG), whose company prepared the studies for the basic structure of this new city quarter in 2006 and evaluated the sites and development alternatives.

These two major ventures will be joined over the coming years by SIGNA projects and the Quartier Belvedere, whose core is formed by the ERSTE Campus. The Quartier Belvedere will form a completely new, multifunctional city district. On Lot No. A01 facing the railway station, SIGNA is planning to realise a modern, multiuse project in the form of three separate towers with diffe ent heights ranging up to 88 metres.

Photos: Metzger Realitäten Group (MRG), ÖBB, SIGNA

Behind these lines, and somewhat farther away from the beltway, plans call for the construction of residential and hotel buildings. SIGNA also secured a further building lot by acquiring the project “Parkhotel & Parkapartments am Belvedere“ from Seeste Real Estate Projekt GmbH. The reason for this purchase, added Christoph Stapotentdlhuber, Managing Director of the SIGNA Group, is that: “This will be the site for an entirely new city quarter with striking apartments, interesting jobs, hotels, educational facilities and a wide-range of leisure activities, all of which will provide the ideal setting for a high quality of life. That is what makes the location so attractive for us as an investor!“ Focus on smaller structures

The residential buildings, which extend into the 10th District, have been completed and a number of tenants have already moved in. The last free construction sites, which surround the newly created Helmut Zilk Park, were sold by the ÖBB at the beginning of 2015. “The focus here is on smaller structures. Starting in 2017,

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this area will be transformed into a lively quarter with roughly 1,500 apartments, offices shops, restaurants and cafes, convenience stores, support and social services“, added Herbert Logar, Managing Director of ÖBB-Immobilienmanagement GmbH. Barracks have great potential

In addition to the ÖBB, Vienna’s major landowners also include the Austrian Armed Forces. Their real estate portfolio is not as large, but the unused barracks grounds also represent interesting areas for the city government. The Biedermann-Huth-Raschke Barracks in Vienna-Penzing (Montleartstrasse) were recently sold, and “parts of the General Theodor Körner Barracks in the 14th District (Spallartgasse) will be placed on the market in 2015/16“, explained Stephan Weninger, Managing Director of SIVBEG, which is responsible for the sale of army real estate that is no longer in use: “Barracks have great potential, and the city of Vienna is very interested in seeing residential construction

– including subsidised apartments – on former army grounds.“ Size and location make these barracks areas ideal for the residential construction that is so urgently needed in Vienna. City Council member Michael Ludwig, who is responsible for residential construction, still sees a great deal of housing potential in the armed forces’ locations in Vienna: there is talk of 5,200 apartments for roughly 13,000 residents. The focus here is on inner city expansion. Subsidised residential construction would give these areas a new identity, indicated Ludwig. Which is why his wish list also includes properties that the armed forces have not (yet) designated for sale: the former fi e arms testing centre in Simmering (250 apartments), the Vega-Peyer-Weyprecht Barracks (800 apartments), the former Zeiss plant (400 apartments) and the Radetzky Barracks (250 apartments). At the top of Ludwig‘s wish list are the Albrecht Barracks in the 2nd District, meaning the offic building n in the Vorgartenstrasse.

“A sensational urban development project with a successful mix of uses and ideal connections to the public transportation system.“

“This will be the site for an entirely new city quarter with a high quality of life.

That is what makes the location so attractive for us as an investor!”

Alfons Metzger, Managing Director of Metzger Realitäten Gruppe (MRG)

Christoph Stadlhuber, Managing Director of the SIGNA Group

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Urban Development and Planning

Wien Aspern: Seestadt One of the largest urban development projects in Europe is currently under realisation on the grounds of the former Aspern Airfield in Vienna’s 22nd District. This project, which will continue through 2028, is designed to create a quarter with wide-ranging municipal functions for 20,000 residents and with 20,000 jobs. One special focal point is the Smart City theme – plans also call for the Seestadt to become a “living lab” for innovative urban technologies. www.aspern-seestadt.at

Vienna continues to grow

Quartier The Lände 3 ent Lände 3 stands for a large-scale developm e Länd and revitalisation project on the Erdberger goal (Landstrasse) in Vienna’s 3rd District. The create of this urban development project is to space, g a future-oriented mix of offices livin s stage hotels and retail businesses in several offi e on 5.5 hectares of land. The Silbermöw office building was the fi st fully renovated Suscomplex in Austria to receive an Austrian gold. tainable Building Council certifica e in obilIn addition to this quarter, Premium Imm us Postb ien AG also acquired the adjoining e.

Estat grounds together with ARE Austria Real l entia Their development plans include resid . park and office ojects as well as a public

A home for an internationally recognised centre for biotechnology research, development and education was created by the Vienn a Institute of BioTechnology, a division of the University of Natural Resources and Life Scien ces (BOKU-VIBT), and spin-off-companies on newly vacant space in the Muthgasse at the Heiligenstadt Railway Station.

Plans call for the step-by-step expansion of this facility into the Vienna Biotechnology Park Muthgasse. www.lifescience-vienna.at

se Lifescience Vienna Muthgas

www.laende3.at

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r Lafarge-Perlmooser cement On the outskirts of Vienna at the site of the forme al modern buildings, local factory, a new housing development with sever units is under construction as infrastructure and 450 high-quality, affo dable aign. Completion is schedpart of Vienna’s 2011 residential construction camp uled for 2016 www.waldmuehle-rodaun.at

Rodaun Waldmühle-

North Railway Station A new city quarter with 10,000 apar tments and office for 10,000 jobs as well as reta il and service companies plus the necessary infra structure will be developed on this 65-hectare site by 2025.

Roughly half of the space has alrea dy been completed: since 2007, 20 diffe ent deve lopers have built nearly 4,000 apartments for 10,0 00 residents and created several hundred jobs plus an educational campus. The new headquarters for UniCredit Bank Austria are also under developm ent nearby www.oebb-immobilien.at

The power is in the urban quarters ailway Station R l a tr n e C a n n e Vie Roundabout th In connection with the construction of Vienna’s new Central Railway Station, this 59-hectare site – which is as large as the entire 8th District – will be transformed into a new urban quarter with roughly 5,000 apartments for 13,0000 residents plus offices hotels, shops and service businesses with a total of 20,000 jobs. Investors and partners are working together with the city of Vienna on various construction projects in order to design and build a sustainable utilisation mix and infrastructure.

The sale of the last construction sites has already started and marks one of the final steps in creating a modern residential quarter around the planned Helmut Zilk Park. www.hauptbahnhof-wien.at

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Urban Development and Planning A modern location for media, research and technology is currently under construction on the former St. Marx slaughterhouse grounds in the centre of Vienna. Renovated brick structures are now contrasted by modern, architectonically interesting new buildings. A 37-hectare site has been designated for this centrally located quarter. www.neumarx.at

Neu Marx

CITYGATE The CITYGATE project sym bolises a “city in the city“ and will offer future residents full-service infrastruct ure. In addition to a shopping centre with roughly 20,000 square metres and 54 shops, the project will incl ude 1,167 rental and owner-occupied apartment s, a day-care centre plus gre en and recreational areas. The project has a volume of approx. 250 million euros and will be completed shortly. www.citygate.at

TEL ZWEI, with its dominant Over the coming years, the current VIER ed into a VIERTEL ZWEI with a offic structures, will be transform al and living space and 50 per balanced mix of 50 per cent residenti n will also give this urban develcent working space. The expansio dynamic centre with local conopment quarter a main square as a s. Construction in the VIERTEL venience stores, restaurants and shop cent of the available space, with ZWEI has covered only about 50 per sustainability playing a central role. www.viertel-zwei.at

EI VIERTEL ZW

Neu Leopoldau 13.5 hectares of land, 17 listed buildings and lots of free space: the area surrounding the former Leopoldau natural gas plant in Vienna-Floridsdorf has the potential to become a new, exciting urban quarter. Following the shutdown of plant operations, Neu Leopoldau Entwicklungs-GmbH, a subsidiary of WSE, and the property owner WIENER NETZE GmbH have been working on the subsequent use of the area. Future plans include the development of 1,400 apartments and roughly 70,000 square metres of commercial space– with construction scheduled to start in 2016. www.wse.at

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The Vienna Business Agency is currently developing the Forum Donaustadt – a city quarter that reflects the latest international urban development trends – together with STC-Swiss Town Consult AG, a private partner. The six buildings will offer a diverse functional mix and are located adjacent to the U1 Kagran underground station. The nearly 70,000 square metres of usable space will include up to 200 serviced and private apartments, a 3- to 4-star hotel, a high-rise office building and three fl t buildings with additional offic space as well as selected gastronomy facilities, businesses and services.

The former Tegetthoff Naval Barracks are located in the north of Vienna’s 19th District near the border to Klosterneuburg. This nearly 34,000-square meter area stretches along the Kuchelauer Harbour and is situated directly on the waterfront. Roughly 70 premium, freely financed owner-occupied apartments will be built here, directly on the shores of the Danube River, by summer 2017.

www.forum-donaustadt.at

www.oesw.at

t Forum Donaustad

Former Tegethoff Naval Barracks

rger Station, a 9-hectare site near Laxenbu Close to the Vienna Central Railway in ting Star ent. sed for urban developm Strasse/Landgutgasse has been relea a with nds grou t on these former railway 2015 a new city quarter will be buil and offic of res tments, 50,000 square met balanced mix of roughly 1,000 apar campus and day-care centre. ol scho a commercial space as well as www.oebb-immobilien.at

ndgutgasse a L / e s s a r t S r Laxenburge

a Airportcity Vienn Vienna Airport is currently developing offic and conference space, hotels, traffi infrastructure and much more on over 70,000 square metres. The goal of these projects is to position the airport as a multifunctional location. Roughly 1,200 hectares are still available for investors and project developers. The Airportcity Vienna is the first commercial development in Austria to receive a quarter certifica e for sustainable real estate development from the Austrian Sustainable Building Council. www.viennaairport.com

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Urban Development and Planning

Off to the suburbs – B-locations catching up HYPO NOE Real Consult and its project partn er ARE Austrian Real Estate Development are developing a utilisa tion concept for the former provincial and district court on the main square of Korneuburg in Lower Austria. The Karrée Korne uburg project covers the former provincial and district court on Korneuburg’s main square as well as directly adjoining prope rties and the facilities previously used by the family court.

The project is currently in the final coordinatio n phases – whereby the goal of the utilisation concept – mixed use with residential and retail space, parking and office – includes, among others, the revitalisation of the inner city and an increase in the attractiveness of the location for businesses.

Linz, Upper Austria

Korneuburg, Lower Austria

The “grüne Mitte Linz“ is currently the largest – spatially connected – urban development project in the Upper Austrian capital. The conversion of this 85,000-square metre area at the former cargo station, which was no longer used by the Austrian Railway Corporation, has given the city of Linz an opportunity to create new urban development perspectives that place high demands on innovation and sustainability.

Several residential construction companies will build 805 low-energy apartments at this site, and the transfer of the last projects is scheduled for summer 2017.

There are also a number of other ideas: the master plan calls for the step-by-step development of the former Linz tobacco company grounds together with private investors based on clear parameters defined by the city. This previous factory is to be transformed into a creative area, where it will serve as the centre for innovative industries in Upper Austria.

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ower Austria L , n te t te s m A 2016. The city and the Austrian Railway ict in the heart of Amstetten will start in The sale of the first areas for a new distr n. Partly developed sites will be convertlop new districts near the railway statio Corporation are working together to deve n will then follow based on ideas by the smaller areas around the railway statio ed to new uses over the coming years. The ranges from municipal administrative abe Simo / Tomas Labanc. The spectrum Spanish architecture duo Ramon Bern new residential forms. facilities to central health services and

The second largest city in Austria is currently the site of several interesting urban development projects. Land formerly owned by the Reininghaus family currently represents the largest still undeveloped expansion area in Graz. It has the potential to become a sophisticated, dense and energy-optimised development area. Graz-Reininghaus is only two kilometres from the city’s historical core and will become a distinct urban quarter – in other words, a new district for the city.

At one square kilometre, the area designated for this district is only slightly smaller than Graz’s inner city district.

In cooperation with the city of Graz, ÖBB-Immobilienmanagement GmbH is developing two new city quarters on the grounds of the former Graz railway station. Plans for the BahnhofCity include 41,000 square metres of gross floor space for apartments, shops and service businesses. Hotels, retail outlets and services are planned for the second site, namely the beltway surrounding the railway station, with 21,000 square metres of gross floor space

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Graz, Styria The Smart-City area on Waagner-Biro-Strasse is located roughly two kilometres north-west of the Graz inner city. The Graz-West provincial hospital and the emergency hospital are located nearby, and the Graz Central Railway Station is only about 800 metres away. This heterogeneous, former industrial area will become the home for an energy-autonomous district. An integrative planning process will first be used to identify energy technologies

for an intelligent “zero emissions“ city. The planning area for this urban development covers approx. 127,000 square metres and should be completed by 2020.

Asset One Immobilienentwicklung recently acquired the 385,000 square metre site of the former Nittner Airfield adjacent to Graz-Thalerhof Airport. Various options for the use of the property are currently under evaluation.

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Urban Development and Planning

rlberg Bregenz, Vora

in the capital city of The SEESTADT Bregenz is under development er will combine retail Vorarlberg. This modern multifunctional quart activities on roughly and residential space, jobs and recreational ADT Bregenz will 21,000 square metres in the inner city. The SEEST space on six floors have nearly 21,000 square metres of usable e and gastronomy approx. 14,000 square metres of retail, servic and approx. 5,500 space, approx. 1,500 square metres of offic space underground garage square metres in 62 apartments. 570 extra-wide e of this inner city spaces on two levels are another special featur partnership between project near Lake Constance. A joint venture rs is responsible PRISMA and SES Spar European Shopping Cente n on this 100 million for the development. The start of constructio the opening is schedeuro project is planned for autumn 2015, and uled for 2017.

The overwhelming success of the Sternbrauerei Riedenburg project has led UBM to start work on its next development area: on the 3.7-hectare grounds of the Riedenburg Barracks, the company is building 80 freely financed owner-occupied apartments, while a residential construction cooperative owned by the province Salzburg and the city of Salzburg is planning subsidised apartments here. Extensive green areas will give this residential complex a garden city atmosphere.

The Austrian Armed Forces will vacate the area at the beginning of 2015, and the existing structures will then be demolished. If there are no unexpected delays, construction should start in 2016 and completion is planned for 2017.

“STADTWERK“, a new construction quarter in Salzburg‘s Lehen district, is defini ely one of the most exciting projects.

A dynamic quarter is under development on the grounds of the former municipal utility company in the heart of Salzburg.

The Competence Park SALZBURG will provide a modern, dynamic campus for companies and institutions in creative industries and life sciences, which will be rounded out by educational and service providers. The STADTWERK will offer a wide range of living alternatives with nearly 300 apartments. Development work should be completed in 2015.

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City of Salzburg, Salzburg

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Investing in Europe - Emerging Trends

The top five European real estate investment markets in 2015 Dublin is forecast to be Europe’s second preferred location for real estate investment in 2015, according to the latest report from the Urban Land Institute (ULI) and PwC.

Autor: Michael Neubauer

D

ublin is forecast to be Europe’s second preferred location for real estate investment in 2015, according to the latest report from the Urban Land Institute (ULI) and PwC. Competition for prime assets in Europe’s major real estate markets is leading property investors to continue their move into secondary assets and recovering markets, according to Emerging Trends in Real Estate Europe 2015, a forecast published jointly by the Urban Land Institute (ULI) and PwC. The report highlights a surge in popularity for real estate investment opportunities in a number of cities that were hit particularly hard during the last market downturn, with dramatic rises in this year’s city rankings for Madrid (up 16 positions), Athens (up 23 positions), Birmingham (up 14 positions), Amsterdam (up 17 positions) and Lisbon (up 17 positions).

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London, the most global real estate market in Europe, remains a firm favourite, due to its sheer depth and liquidity. It has slid down fi e places from last year to Number 10, mainly over concerns that core assets are becoming overpriced. Nonetheless, it remains the first port of call for many international players. Against a gloomy economic backdrop and weak tenant demand, Vienna has dropped 14 places this year to Number 26.

Many offic tenants are unwilling to relocate until the business environment becomes more upbeat, so demand is currently being driven by space consolidation as well as rent reviews. The development pipeline, meanwhile, is not expected to gain momentum over the next 18 months.

Strong expectation of rental growth

Over in Dublin, there is a strong expectation of rental growth based on low supply, coupled with economic and employment growth. In addition,

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Berlin (1)

Dublin (2)

Investment prospects 2015

Investment prospects 2015

Excellent

Excellent

Good

Good Berlin

Fair

Fair

Dublin

Poor

Poor

Very poor

Very poor

Year

05

06

07

08

09

10

11

12

13

14

15

Year

05

06

07

08

09

Source: Emerging Trends Europe survey 2015

Source: Emerging Trends Europe survey 2015

2014

2014

Population (m)

5.1

Employment (m)

2.5

Disposable income (bn)

€91.8

Population (m)

1.8

10

Employment (m) 0.8

11

12

13

14

15

Disposable income (bn) €34.9

Source: Moody's Analytics

Source: Moody's Analytics

Ireland’s state-owned “bad bank” NAMA plans to offloa more assets, which are likely to appeal to a wide range of buyers. Ireland’s residential sector is also attracting investors, due to the undersupply of rental accommodation. However, Dublin is a small market, so investment opportunities will be limited. Southern Europe recovered strongly over the past 12 months, so it not surprising that Madrid has jumped 16 places to take the bronze at Number 3. Global capital has poured into Spain, led by private equity funds.

Prices have risen considerably in Madrid, suggesting that investors seeking higher returns are likely to look to secondary markets in Spain next year for better yields. And remarkably, Athens rebounds to claim the Number 5 spot, moving up 23 places. With Greece final y pulling out of recession after six years of misery, international money is eyeing the market, and locals are very upbeat about an upturn. However, it is early days

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and some of the bigger real estate fish think it too small a pond for them.

The report finds that in spite of economic uncertainties in Europe, property remains fertile ground for investors. 70% of investors expect more equity and debt will flow into their markets this year in a quest for the best real estate. The biggest problem investors are anticipating is a shortage of assets, ahead of the challenges of regulation or the cost of finance. A large majority of investors (82%) believe the availability of suitable assets will have a moderate or significant impact on their business this year.

As a result, real estate investors – armed with capital from sovereign wealth funds and pension funds from Asia and North America – are moving into less competitive environments, looking at secondary cities, secondary assets and devel-

opment opportunities. Berlin, for example, has replaced Munich as Europe’s top market for investment, as it is viewed as less costly than other major German cities.

Simon Hardwick, real estate partner at PwC Legal and one of the authors of the report, said: “Real estate investors will face a tricky balancing act in 2015 as the market is awash with capital surging into Europe from around the world. The wave of capital-rich investors entering European real estate markets is savvy and sophisticated. Their need to preserve and create new wealth will, for some, see a move away from core markets where many feel there is little value to be gained and into assets, developments and cities that give them the opportunity to achieve better returns. Smart investments will be the types of property that benefi from population growth, urbanisation, an ageing society and technological innovation.”

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Investing in Europe - Emerging Trends

Madrid (3)

Hamburg (4)

Investment prospects 2015

Investment prospects 2015

Excellent

Excellent

Good

Good

Fair

Fair

Poor

Poor

Very poor Year

05

Madrid 06

07

Hamburg

Very poor 08

09

10

11

Source: Emerging Trends Europe survey 2015

12

13

14

15

Year

05

06

07

08

09

10

11

12

13

14

15

Source: Emerging Trends Europe survey 2015

2014 Population (m)

3.2

Employment (m)

1.8

Disposable income (bn)

€73.9

Source: Moody's Analytics

In terms of the real estate sectors investors are chasing, the report says retirement living tops the list for 2015, followed by healthcare, housebuilding opportunities, High Street retail accommodation and private rental accommodation.

The top five in 2015

Top investment location for 2015 is forecast to be Berlin, thanks to a concentration of technology, media and communications investors and a growing demand for residential accommodation from the city’s young population. Dublin retains the number-two spot, unchanged from 2014 thanks to a rebounding economy, which is now forecast to be the fastest growing in Europe during 2015. While Dublin remains a geographically small European city with around a third of Berlin’s population, it attracted 2.2 bn euro in real estate investment in the first nine months of 2014 - close to 2.9 bn euro of investment pumped into Berlin over the same period. Overall, during the first nine months of 2014, Dublin attracted the sixth highest level of real estate investment amongst the European 28 cities reviewed in the report.

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Berlin – The city has moved up the rankings from last year, knocking Munich off the top spot for investment prospects this year. Historically dominated by domestic buyers, Berlin’s investment climate has now changed as international investors pour capital into the city. The city is a hotspot for media and technology and its young population has helped boost the investment appeal of its residential sector.

Dublin – Ranked again in second place, the city has had another strong year in which investors have jostled for opportunities. It has a good story to tell: strong rental growth based on low supply, employment growth and an improving economy. Offic rents and values are recovering strongly but still have some way to go before they reach their pre-crisis peak.

Madrid – the Spanish city has shot up the rankings for investment prospects this year and many overseas investors are targeting the city. But whether Spain offers solid, long-term business prospects is hotly debated among opportunistic investors.

Hamburg – The city has slipped by one place this year, but this is mainly due to investors looking to smaller, less established markets rather than any real decline in the city’s fundamentals. International investors are flooding into Hamburg, accounting for half of the 2.4bn euros of deals in the first three quarters of 2014. Its growing population means the residential sector is thriving.

Athens – Athens is the biggest mover on the list this year, zooming 23 places to number 5. In recent Emerging Trends surveys, investors have indicated a willingness to enter other distressed markets such as Spain, Ireland and Italy, but Greece is starting to gain attention. Although Europe’s hardest-hit economy remains fragile, a few trailblazing investors are moving in to take advantage of pre-rebound opportunities. n

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Athens (5)

Vienna (26)

Investment prospects 2015

Investment prospects 2015

Excellent

Excellent

Good

Good

Fair

Fair

Poor

Poor Athens

Very poor Year

05

06

07

08

Vienna

Very poor 09

10

11

12

13

14

15

Year

05

06

07

08

09

10

11

12

13

14

15

Source: Emerging Trends Europe survey 2015

Source: Emerging Trends Europe survey 2015

2014 Population (m)

1.8

3.9

Employment (m) 1.5

Disposable income (bn) â‚Ź51.4

Source: Moody's Analytics

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Investing in Central Eastern Europe

The reshuffling of the cards In 2014 the CEE Region was most notably affected by falling oil prices and EU sanctions against Russia. These lead to a massive decline in the Russian market which, until then, had been the strongest in the region.

Author: Michael Neubauer

“The increased investor activity in countries other than Poland – especially in Hungary, Rumania and Slovakia – is particularly striking.”

Mike Atwell, Head of Capital Markets CEE at CBRE

F

urthermore, while the volume of investment in the CEE Region – excluding Russia – rose by around 25 per cent in 2014 to approximately 7.6 billion euros by the end of the year, this increase was lower than in most other European countries.

“Indeed, Rumania experienced an impressive increase of around 220 per cent, albeit from the admittedly low level of around 351 million euros to 1.1 billion euros”, reports Andreas Ridder who, as Chairman of CBRE, is also responsible for the entire CEE Region.

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Although Poland experienced a slight decline of around nine per cent in the volume of transactions - 2014: 2.9 billion euros, 2013: 3.25 billion euros – it remains one of the region’s most stable countries. Russia and Poland have competed for the position of regional leadership in recent years and yet the dramatic declines in the oil price and in the value of the rouble together with the conflict in Ukraine have further weakened Russia’s position. It remains unclear when and how the political conflict can be settled. However, it is unlikely that a speedy solution will lead to a swift recovery in the levels of cross border investment.

If investors are to be encouraged to return, market confidence must first be restored and this can take some time.

Poland: Stable annual investment volumes

Since 2011 Poland has achieved markedly stable annual investment volumes of around three billion euros. There are already indications that this development is set to continue. Interestingly, a major share (90 per cent) of last year‘s in-

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vestment volume came from around 20 large international investors – a fact that underlines the significance of cross border investments for Poland.

Impressive growth rates of 71, 220 and 72 per cent respectively were achieved by Hungary, Rumania and Slovakia. The resulting volume of transactions of 2.1 billion euros carried out in these countries represents more than a quarter (27 per cent) of all annual investments in the CEE Region. In 2013 these countries recorded 15 per cent of all transactions carried out in the region.

Optimistic investors

According to Mike Atwell, Head of Capital Markets CEE at CBRE, “the increased investor activity in countries other than Poland – especially in Hungary, Rumania and Slovakia – is particularly striking. The fact that optimistic investors are even increasing the geographic spread of their allocation is explained by their hope of higher returns and a result of the limited supply of suitable properties in Poland. We expect that this trend towards regional diversification will increase and that Hungary and Rumania will be the leading beneficiaries ”

Fotos: Fotolia

“As the development of the CEE investment market is heavily dependent on the political situation, prognoses – particularly for Russia – can only be very vague. Our assumption is that the region will develop more slowly than the rest of Europe“, adds Ridder.

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Suffering under the rouble’s decline

In the meantime, the crisis in Russia has reached Austrian banks and real estate companies. Immofinanz owns fi e large shopping centres in the Moscow Area. The tenants – who include large European retailers – are suffering under the rouble’s decline due to the fact that they pay rent in dollars or euros. “It is not possible to estimate how things will develop,” reported CEO Eduard Zehetner to the half-yearly press conference in Vienna citing the instability of the situation and the complicated environment. “But we are not panicking”. In the short term, the situation is not likely to improve dramatically.

Prognoses are difficul to make, adds Zehetner, because this is a “purely political” crisis. However, the CEO is not considering withdrawing from Russia, where the company holds over 25 per cent of its real estate assets and generates 30 to 35 per cent of its rental income. “You can also scare yourself to death”. In the medium to long term Russia is going to be an important economic factor and it remains important for Immofinanz “Taking the long-term perspective, Russia remains the most strongly growing part of the entire Eastern European Region.” The current challenge is to jointly overcome the crisis. Rental income in Russia in the current trading year is set to fall by a further 10 per cent, estimates Zehetner. Even after this, however, rents per square metre will still be 20 to 30 per cent higher than those in Rumania, Poland or the Czech Republic. In order to reduce the economic pressure on tenants, rental levels will be renegotiated with them and

continuously adjusted. Zehetner is convinced that, “we will overcome this crisis together with the tenants.” One thing, however, is certain: the decline of the Russian currency could have “a significant y greater impact on our operating results in the coming quarters than has been the case so far.” For this reason it remains open whether shareholders will receive the previously announced dividend of between 15 and 20 cents for the current 2014/15 trading year. This depends upon whether Immofinanz is able to distribute a profit at the end of the year. The company is no longer willing to risk making a concrete prognosis.

“We will overcome this crisis together with the tenants.”

Eduard Zehetner, Immofinanz CEO

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Investing in Central Eastern Europe

“Poland has developed excellently in economic terms. Now it was time to grasp the opportunity.”

Peter Ulm, Chairman of the Board , 6B47 Real Estate Investors AG

Immofinanz: Great success in Poland

The Immofinanz Group is having greater success in Poland where it is pushing on with the expansion of its VIVO! shopping centre brand. In the city of Krosno in the south of the country a six-hectare site has been secured on which a further VIVO! shopping centre will be built. Completion is planned for the first quarter of 2017 and prospective investment costs are approaching 37 million euros. The development is being carried out together with the Acteeum Group, a specialist in retail development projects. Zehetner, however, wants more. “In Poland we want to expand further in the retail sector: in the last calendar year alone we opened 33,000 square metres of retail space in this core market. Following the already completed VIVO! Pila and VIVO! Stalowa Wola, which is currently under construction, Krosno is the third city in Poland in which we are making our presence felt through our VIVO! brand. Further locations are being looked at with the aim of guaranteeing rapid expansion.

In May 2015, 6B47 will start the construction of its first residential property in Poland, a project in Wilanow, an up-and-coming residential neighbourhood in Warsaw. 6B47 is investing 15 million euros in the construction of 148 mod-

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ern apartments in a location with good transport links. Further projects in Poland will follow.

This makes Warsaw the company’s third location after Vienna and Dusseldorf. The Polish real estate expert Mirek Januszko was persuaded to join the company as CEO. Referring to 6B47’s entry into the Polish market, Peter Ulm reports that, “we are only investing in cities which have been earmarked as promising by our market analyses and in which we have local real estate experts who understand the best locations, the development of the city and the needs of the population. Alongside Vienna, Warsaw is one of the fastest-growing cities in the European Union and, in the past few years, Poland has developed excellently in economic terms. We always had good networks in this region and now it was time to grasp the opportunity.”

6B47: New projects in Poland & Germany

6B47 is currently implementing a total of 23 projects in Austria and Germany with a volume of around 500 million euros. According to Ulm, “in addition to the remodelling of the Philips building in Vienna, three projects in Frankfurt - the Palais an den Höfen, East Village and Louis am Park – will soon be completed and sold,” In 2015, 6B47 Real Estate Investors AG plans to invest 40

to 50 million euros of proprietary capital in new project developments together with the 6B47 Real Estate Club. 2014 saw the acquisition of new objects in Vienna, Ingolstadt and Frankfurt with a total area of 100,000 square metres in which 220 million euros are scheduled for investment over the course of the next few years.

Heads are also being scratched at Warimpex, CA Immo Group and UBM. The sale of two offi towers in St. Petersburg threatens to fall through for project financing reasons. In November the sun was still shining. Zao Avielen AG, a joint venture of the Austrian real estate developers Warimpex, CA Immo and UBM – (Warimpex, the CA Immo Group and UBM own shares of 55, 35 and 10 per cent of the joint venture respectively) – announced the impending sale to a private Russian pension fund of the “Jupiter 1” and “Jupiter 2” towers at Airportcity St. Petersburg, which are let to Gazprom. However, the 70 million euro deal is now hanging by a thread: the project financing is threatened by the current value of the rouble and the deal has yet to be closed, says Franz Jurkowitsch, the Head of Warimpex. “ Negotiations regarding the sale began a year ago. In the meantime, however, the value of the rouble has virtually halved. The fact that the pension fund earns its

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income in roubles and yet wants to take over the project financing in euros means that the deal doesn’t add up for it at the present time.

Still good business to be done in the CEE Region

The fact that there is still good business to be done in the CEE Region is demonstrated by the Viennese Developer Raiffeisen evolution in Bucharest through its sale of Promenada Mall, a modern, sustainable shopping and entertainment centre in the north of the Rumanian capital, to New Europe Property Investments (NEPI). The original investment amounted to 130 million euros. NEPI expects an annual rental income of 10 million euros from the approximately 40,000 square metres of lettable space. In the first six

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months of this year the shopping centre generated profits of 3.1 million euros. NEPI manages a range of shopping centres in Rumania, including Ploiesti Shopping City, City Park Constanta and the Vulcan Strip Mall in Bucharest. In addition to this, the Mega Mall shopping strip is under development in Bucharest’s Pantelimon district. This represents the reaching of another milestone. “Last year‘s completion of the Promenada Mall represents the completion of the third phase of the development of the Floreasca City Center (FCC) district. And the sale within twelve months means that we have reached another milestone of this project”, is the delighted reaction of Markus Neurauter, Managing Director of Raiffeisen evolution. n

“Management is working to solve these problems.”

Franz Jurkowitsch, Head of Warimpex

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Urban Development and Planning

Back to the city Recognise the location advantages. Just like people and companies, cities also have their strengths and weaknesses, explained Urban Land Institute Chairman Manfred Wiltschnigg. The important point is to identify and specifically develop the location advantages that are critical for meeting future challenges.

Interview by: Michael Neubauer

What made you decide to join ULI Austria as its chairman?

Wiltschnigg. In recent years, I took part in a number of conferences, workshops and roundtable discussions where I repeatedly profi ed from the extraordinary expertise of the Urban Land Institute and its high-ranking, international network. When Joe Montgomery, CEO of ULI Europe, asked me to take over as the chairman for Austria, I found it was the right time to give the organisation something in return.

Which target groups are you focusing on? >> ULI addresses professionals and decision-makers working in various disciplines in the real estate industry as well as planners and architects, and the political and public administration sectors. Through their creative interaction, these men and women play an important role in designing the liveable cities and urban landscapes that we see today – and need tomorrow.

Why would someone want to join the Urban Land Institute? >> Anyone who works as a professional in one of the above groups, who sees himself or herself as part of the urban development design process and who is interested in and looking forward to a continuous creative dialogue with international experts is invited to contribute his or her ideas to ULI.

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leads to a desire for participation. The city and its future should, in the ideal case, be an important issue for the largest possible number of residents!

Is migration back into the cities the dominating global trend of our times? >> International studies lead us to conclude that a good dozen mega-hubs will set the pace for the future development of our planet. The issue is not only the size of the population, but more so the centres for science and research, medicine, high-tech industries, finance, infrastructure, art and top-class sport, and above all the headquarters for the decision-makers of increasingly larger economic units. Although these mega-hubs are, to a certain extent, only now emerging, they already have an irresistible attraction for the elites of this world.

One level below, we find metropolitan areas with over a million residents as well as countless larger cities. These residential hubs are competing for wealth and quality of life – and their appeal is based on the attractions of the “urban life style“. Private television and Internet haven’t made country life more attractive, what they have done is to transfer the desire for the supposedly easy-to-come-by wealth and hip feeling created by larger cities back to the most distant mountain farm.

How can a city prepare for the increasingly rapid, far-reaching changes in the economic environment? >> Just like people and companies, cities also have their strengths and weaknesses, opportunities and risks. Climate and geography, infrastructure and the proximity to mineral resources, political and economic system factors, historical building substance and historical importance, but also the educational level, talents and residents’ commitment and motivation – in addition to many other factors – are the parameters for dynamic urban development. The important point is to identify and specifical y

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develop the location advantages that are critical for meeting future challenges.

What current developments/aspects do you see as particular challenges for sustainable urban planning? >> Absorbing the influx of new residents from rural regions – above all the dispossessed and low-educated economic refugees from all corners of the world – represents a major challenge for the cosmopolitan cities of the developed west. Educational facilities, hospitals, housing and jobs must be created, social segregation must be prevented and integration must be made possible. Growth has its limits, also for cities, and “concentration“ is therefore an absolute priority. Public areas must be created for communication and recreation, and public transportation must be expanded to meet the changing requirements. At the same time, the city‘s international connections shouldn’t be neglected – think of the expansion of city autobahns and the major airport projects.

Do we need to reinvent “the city“? >> The high-performance “city of the 21st Century“ is the focal point of continuous and untiring work by countless architects, planners, social and economic policymakers as well as real estate developers, entrepreneurs, charitable organisations and many others. Bringing the urban planning visionaries, political decision-makers and financial “movers and shakers“ together is one of ULI’s goals.

How important are long-term resident’ ties as a growth factor for a city? >> The emotional ties – not only of residents, but also national and international companies – to “their“ city is extremely important. Commitment leads to responsibility, and responsibility

What are the next plans for ULI Austria?

What events are scheduled in the near future? >> Our work over the next two years will concentrate on Vienna’s positioning in the competition among the European capitals. In line with the best practice approach, we will be comparing Vienna with cities like Berlin, Zurich and Munich as well as Prague and Budapest in areas like “international transportation“, the supply of goods, housing, urban development projects etc.

In addition to your activities as chairman of the Urban Land Institute, what other projects are you currently working on? >> Since the middle of last year, I’ve been working with long-standing associates from the real estate branch on an innovative development project at several locations in Romania. Blind optimism would certainly be out of place here given the country‘s increasingly difficul economic position, but a number of positive developments lead us to believe that we will be able to realise our plans.

THE URBAN LAND INSTITUTE The Urban Land Institute (ULI) was founded in 1936 and is a multidisciplinary forum for top decision-makers and experts from the construction and real estate industry. With over 35,000 members in 94 countries throughout the world, the ULI is a non-profit organisation for the sustainable development and use of living and economic areas. The institute is internationally respected for its high demands on quality and leading standards of excellence. ULI’s members in Austria, Germany and the neighbouring CEE markets include more than 400 decision-makers and experts in the public and private real estate sector.

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Rubrik

Wordrap – amongst real estate managers Is the danger of a bubble increasing? Too much capital and too few investment opportunities.

G

ood properties continue to be seen as the only ‚safe haven‘ where excess liquidity can be parked with a reasonable sense of security.

It is, above all, foreign investors who are currently on the lookout for investment opportunities in Austria. A locations are just about sold out and investors are now setting their sights on B and C locations.

The high price level is principally being driven by extremely low interest rates. “Liquidity is rising and interest rates are falling. But this also increases the risk of asset price bubbles, not least on the real estate market,” recently warned Andreas Dombret, Board Member of Germany’s Central Bank. “From this point of view, the world has thus become a little more risky for real estate investors.” Is he right? Or is he over-cautious? ImmoFokus asked top managers of Austrian real estate companies for their personal assessment.

“Is the real estate bubble coming or not?” We were also interested to know which asset classes international investors in Austria should have on their shopping list. And the Danube Tower – a landmark – is up for sale. How would they use it? A wordrap amongst real estate managers. n

THE QUESTIONS: The money printing machine has been turned on. Will the ECB’s current monetary policy lead to a real estate bubble?

Which asset class(es) should international investors have on their shopping list for Austria?

The Danube Tower is up for sale. Do you have any spontaneous ideas for a new use?

No, it is predominantly real money that is being invested rather than credit which is being reinvested. At most, the ECB’s action will depress yields on the real estate market.

Residential property in Vienna and also, possibly, in Graz, Salzburg and Linz. Offices around the new Central Station and hotels in the same location or in the city centre.

Karl Bier CEO UBM

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As an advertising vehicle, because the rental income from the restaurant alone is unlikely to provoke a rush of potential purchasers.

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No, I do not expect that a lot oft he money will bring significant more real estate projects (may be helpful for housing projects, but not for commercial ones). Most of money will be used to stabilise the economical growth and push forward the urban infrastructure.

Still flats, hotels and logistic facilities

Anton Bondi

Raise the quality of the restaurant, but do not tray to change the character of the monument itself.

Bondi Immobilien-Consulting GmbH

The ECB’s monetary policy is leading a) to the expansion of the money supply, which b) is holding interest rates at a low level. All this capital, in turn, is creating substantial pressure on investments.

The low capital market interest rates are making other forms of investment more attractive, while stronger demand is leading to a decline in yields – and that has triggered an increase in (purchase) prices. In Austria, acquisitions were characterised by a high equity component in recent years.

For that reason, we’re not expecting a bubble (which is generally caused by financing problems in other areas and the resulting pressure to sell certain assets) at the present time. We see the increase in real estate prices not only as a result of the above-mentioned demand overhang, but also as part of a real value inflation that is not (yet) reflected in current inflation rates.

Modern office buildings with financially strong tenants and long-term leases. Newly built apartment houses in good locations. Shopping centres and specialty retail parks with active management. reinvested. At most, the ECB’s action will depress yields on the real estate market.

Stefan Brezovich Member of the Management Board of ÖRAG Österreichische Realitäten AG

A restaurant or very extravagant apartments.

The high liquidity leads to lower interest rates, which tends to make alternative investments less attractive and, hence, increases the demand for real estate. As the borrowing ratio is still be at a reasonable level, we don’t anticipate the creation of a bubble.

In the commercial sector the majority of investors are currently looking for retail real estate, while residential real estate remains highly sought-after and interesting due to demographic trends. In the office sector, which has been weak for the past three years, we are also positive about the medium- and long-term.

Michael Ehlmaier FRICS Managing Partner EHL Immobilien GmbH

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This is certainly a very special property which lends itself to creative solutions in the restaurant and tourism sectors.

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Rubrik We’re not expecting a substantial increase in office rental prices and, for that reason, we shouldn’t see any overheating on the market. Prices have stabilised because of the increased supply.

International investors in Austria are mainly interested in buying office and retail properties.

Residential would be an interesting alternative.

Bruno Ettenauer

In particular, a marketing-related use would be realistic.

CA Immo CEO

The policy of extremely low interest rates has been resulting in price inflation for all sorts of investments for several years now – and real estate is no exception.

Investors under pressure to achieve high returns will only obtain them from distressed assets; interesting opportunities repeatedly arise in the tourism real estate sector. It is also noticeable that Austria lags somewhat behind its neighbours in the area of logistics real estate; there could be some potential here. Finally, the residential real estate market is currently moving somewhat sideways and should cool down slightly in the medium-term.

Gregor Famira If it could be financed, I would be delighted if a cultural use could be found.

The fact that Bratislava could be used from the tower to create “something” that brings the cities even closer together.

CMS Reich-Rohrwig Hainz

The large amount of extra money means that interest rates will certainly continue to be very low. This, in turn, increases the attractiveness of real estate investment. The limited number of properties guaranteed to retain their value means that purchasers will be prepared to pay more for such assets. The result is that purchase prices do not always reflect real values. This poses no problem until the property is re-sold, but then adjustments may well be necessary. This will not immediately lead to a new “bubble”, but the increase in the amount of money could indirectly reinforce any tendency towards the formation of such a bubble. .

Alongside such classic asset classes as offices, shopping centres and logistics real estate, healthcare and school projects should also attract more interest.

Gerhard Haumer PORREAL Immobilien Management GmbH

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First class restaurant or adventure slide!

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The ECB‘s quantitative easing measures will grant access to affordable capital to not only institutional investors but also companies and private households. From the point of view of private households, the low costs of financing will offset already high real estate prices and make home ownership appear attractive in comparison with low-return alternative investments and pension schemes. Amongst institutional investors such as funds and insurance companies, a shift towards riskier asset classes can be seen due to the fact that conservative investments currently fail to offer the necessary minimum yield.

Stephan Langer Director | Corporate Finance Advisory | Real Estate

Alongside hotel real estate, of which Austria has a number of special trophy assets that are attracting increasing interest from investors in the CEE Region and Middle and Far East, the current development of Vienna’s apartment and retail markets continues to offer high potential.

Deloitte Financial Advisory GmbH Considering the constructional qualities and the meaning of this landmark, a comprehensive renovation of the restaurant areas could lead to the creation of a unique multifunctional event location in Vienna.

Additional capital will increase the pressure on yields in the one or other area. However, the USA, where the FED carried out its QE policy much earlier with much more capital, shows that a real estate bubble is driven by several factors, above all by irresponsible lending. That was not one of the outcomes in the USA, and I hardly expect this strategy will filter through to businesses and consumers in Europe.

We still see the retail and residential segments as interesting, whereby the prices at some locations should be viewed with caution.

Georg Muzicant The largest billboard in Vienna! A 150m poster would be great.

Colliers International

The ECB policy will undoubtedly also have an effect on the real estate market – but one can certainly not talk in terms of a general real estate bubble. We also cannot envisage such a development occurring on the Vienna office market, even though we are currently seeing top prices for certain types of investors and certain classes of investment.

As a result of the low supply of newly-built core properties, we point investors towards office buildings in good sustainable locations which have already shown that they can be successfully re-let. Recently completed offices in existing properties which readily fill with tenants due to the low number of completions are maturing into attractive investment products in 2015.

Eugen Otto Otto Immobilien Group

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There are several conceivable uses: the broad spectrum of gastronomic applications ranges from themed restaurants to Austria‘s highest disco.

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Rubrik Real estate bubbles result from an oversupply of real estate, a high proportion of external financing in purchase prices and an overvaluation of property. This danger does not apply to Austria.

Responsible lending by the banks can also guarantee the future stability of the real estate market.

One is best advised to invest in prestigious apartment buildings in Vienna and Austria’s other provincial capitals. Mixed-use properties and retail space are also sought-after.

Michael Pisecky Managing Director of s REAL Immobilien

Spontaneous answer: as an event centre!

No, not at present. As long as interest rates remain at this historic low and purchase prices remain more or less stable there can be no talk of a real estate bubble.

Good office locations, shopping centres and retail parks, hotels and new residential units are certainly of interest.

The Danube Tower would certainly be a good advertising vehicle or, as previously, a top-grade tourist attraction with a restaurant and a panoramic view across the whole of Vienna.

Karl-Heinz Strauss CEO Porr AG

The expansion of the money supply and the related low-interest policy have, in any event, generated additional interest in real estate investments. At the same time, prices stabilised during the past year and, from the current point of view, there are no signs of a bubble. Another factor to consider is that the increased investments in real estate are backed by a strong equity component.

Residential construction provides a high degree of security because of the strong demand for housing and, together with office buildings in top locations, is definitely an attractive item for a shopping list. From the investor’s viewpoint, I wouldn’t only concentrate on core properties, but would take a longer look at buildings with a potential for renovation or expansion.

Peter Ulm Member of the Management Board of 6B47 Real Estate Investors AG

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What use would I spontaneously think of? In recent years 6B47 has given increased attention to the development of new usage concepts for properties, but we haven’t developed any tourismrelated ideas for this one – and tourism should be the main focus for the Danube Tower.

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In my opinion, the ECB’s monetary policy will not immediately lead to a real estate bubble. The decisive factor will be whether the commercial banks make these funds available to the market and, in that way, loosen the credit crunch. If this is the case, it could provide added impulses for real estate investments and bring about an increase in property prices.

Peter Vcelouch Head of Real Estate & Construction CHSH Cerha Hempel Spiegelfeld Hlawati

Our international clients were recently focused primarily on shopping centres and specialty retail parks plus office and hotel properties. We’re also seeing a growing demand for apartments.

Residential could therefore also be an interesting asset class for investors who are not afraid to face the risk of changing legal regulations (key word: mandatory maintenance for gas-water heaters).

Tourism – the same as before. An increased focus on events and conferences could also be a good idea. The tower’s shaft could be used for advertising by means of projection, and the lower section could be transformed, for example, into a climbing wall.

A bubble normally develops when properties are acquired with high leverage. There are no signs of such a development at this time – on the contrary, we’re seeing transactions that are financed primarily with equity or a high equity component. My answer to this question right now is therefore a definite “no”. In addition, the current low interest rates have created a very attractive environment for real estate companies: the difference between property yields and long-term interest rate has never been this high.

For Austria, and particularly for Vienna, the following is still true: investments in core properties are a good idea – regardless of their use. A look back into the past also shows that even when these properties were purchased during a higher price phase, they were never a bad investment.

Ernst Vejdovszky My spontaneous idea would be a starting ramp for base jumpers or a climbing wall for experts.

Or you could develop a rather unusual shopping centre, not with two or three levels, but over 60 floors. All joking aside: there will always interested investors for a distinctive building like this – and great concepts for the future use!

Member of the Management Board of S IMMO AG

There is currently very high liquidity on the real estate market. The bottleneck in the availability of properties suitable as investment objects is resulting in high price levels. I cannot see a real estate bubble on the horizon due to the lack of one key element, over-financing by borrowed capital.

The office and retail segments can be found on any shopping list. If an investor is interested in looking beyond the classic solutions, the market also offers interesting hotels or special classes of real estate such as student residences. In order to ensure that an investment is really worthwhile, I strongly recommend the involvement of local experts who are really familiar with the Austrian situation.

Richard Wilkinson Managing Board of Erste Group Immorent

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One creative idea would be Vienna’s longest slide, ideally straight into the Alte Donau! But let´s be serious. The Danube Tower currently contains a restaurant which rotates on its own axis and offers a magnificent 360° view and bungee jumping for adrenalin junkies. Perhaps event firms can come up with new creative ideas which could be implemented here.

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In application for LEED Gold.

The kró.LEW.ska project – a diamond

jewel of Warsaw’s real estate market. The

project developer with offices in

of S+B Gruppe in the heart of Warsaw,

office project was designed to be used

Poland, the Czech Republic, Romania

which transformation into a real jewel

in all three variants of modern offices.

and Austria. A number of major

is already noticeable – is located in the

Open space office without partition walls

developments are currently underway

innermost core of

Central Business

between the working zone and corridor

in Central and Eastern Europe.

District. The name of the project has a

without partition walls between the

certain majesty.

working places. Single office units for 1-2

Floor space

6,018 sqm

While the Polish Word “LEW” (in

persons (with one or two working places)

Office space

5,446 sqm

polish means a lion) symbolises power

and mixed used office, a combination of

Retail

and strenght, “kró.LEW.ska” with

the two solutions.

Parking lots

44

meaning of “royal one”. It is truly a real

The S+B Gruppe AG is an international

Completion

Spring 2016

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572 sqm

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INTRODUCING: The new

Viennese Investment Vehicle

OTTO IMMOBILIEN GRUPPE In the past three years Otto Immobilien...

MANAGED an investment volume of € 740 million RENTED AND SOLD • 129,000 sq. m of commercial real estate • 312,000 sq. m of office spac • 140,000 sq. m of „Viennese Zinshäuser“ • 71,000 sq. m of residential space ASSESSED AND VALUED real estate valued at more than € 1,510 billion.

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Martin Weinbrenner Director Capital Markets +43 1 512 7777-500 m.weinbrenner@otto.at

„We know the Viennese investment market like the back of our hand, and therefore act as city guides for our investors.

We will not only show you the right properties, we will show Vienna as an exciting and promising location.

This emotional aspect is very well received in today´s demanding investment market.“

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Rubrik

Vienna Airport: A Real Estate Location with Potential

A

bout 22.5 million travelers made use of Vienna Airport in the year 2014.The airport is the leading flight hub in Central and Eastern Europe thanks to the numerous destinations it serves in the region. This is particularly important to the Austrian economy. Companies which operate the headquarters for their CEE business operations in Austria rely on Vienna Airport as an efficient high-performance connection to the international economy. In turn, this generates value creation and jobs. At present 20,000 employees in more than 230 companies ensure the smooth functioning of airport services. All signs point to further growth in 2015. Several airlines have already expanded flight service from Vienna by adding destinations to their route network or increasing frequencies. For this reason, Flughafen Wien AG anticipates an increase in passenger volume in the range of 0% to 2% for 2015. This shows that the economic growth driver is picking up steam once again.

Vienna Airport plays an important role in the process, serving as a transport hub for Austrian companies and travelers.

Important part of the airport’s business strategy

These figu es confirm the high potential of the airport as a real estate location. An area of more than 1,200 hectares is owned by Flughafen Wien Ag. This opens up many opportunities for commercial use. For example, a commercial property of over 140,000 m² near Fischamend is ideal for companies which require close proximity to the airport, for example logistics services providers. The proximity to Eastern Austria’s largest transport hub with all the services it offers short distances to local suppliers in Fischamend and at the airport and the closeness to the A4 Highway and the B9 Federal Road make this industrial park a perfect location for setting up business operations. In close cooperation and with the support of the Municipality of Fischa-

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mend, Flughafen Wien AG is particularly targeting companies which rely on being close to the airport. Two of these companies recently settled here: cargo-partner will expand its logistics operations to about 21,000 m², and Makita Austria is relocating its corporate headquarters to the new commercial property with about 23,000 m² which it acquired. New industrial premises are to be built in this industrial park.

Top-equipped office space & conference rooms

Vienna Airport also has an attractive offerin for companies in terms of offic space. In the Offic Park buildings, we offer top-equipped offic space and conference rooms which are well suited for meetings and company events.

The entire portfolio of offic space at Vienna Airport comprises an area of about 84,000 m².

Hotel capacities will be expanded In order to be able to offer optimal accommodations. In this regard, Moxy Hotels, a new trendy brand of Marriott International, will open up its firs hotel in Austria featuring 400 rooms. The new hotel is expected to commence operations at the beginning of 2017.

exploit this. The aim is to establish the airport as a multinational location.

1st award for commercial properties in Austria

At the same time, Vienna Airport is the firs commercial area in Austria to be awarded the DGNB Sustainability Certifica e by the Austrian Sustainable Building Council. The award is based on an evaluation of the site according to various factors such as its ecological and economic quality along with socio-cultural and functional features. Ultimately, these results are compiled to create a unified assessment of n the entire site.

Vienna Airport is turning into an “airport city”

The trend is clearly towards the development of “airport cities“. Airports have long not only offe ed the infrastructure to handle airplanes and passengers but also other services as well, from a wide range of shopping opportunities and culinary delights to conferencing and event facilities and overnight accommodations. They also include new services such as medical and fitness centers. Vienna Airport is also moving in this direction. One third of the airport’s revenue is already derived from the non-aviation segment such as parking, leasing of commercial properties and shopping/catering. Considerable growth potential still exists in the Eastern Austria region, and Vienna Airport hopes to

MORE INFORMATION IS AVAILABLE AT www.airport-city.at

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EHL: Leading expertise on the Austrian real estate market

T

he Austrian real estate market has become increasingly interesting for international investors. During the recent economic crisis Austria has proven to be a stable and safe investment market: its offic and retail property sectors stand out internationally due to stable, steadily upward price development and very moderate vacancy rates. Developers have always focused on building high-quality properties that meet international sustainability standards and are highly sought after by tenants and investors alike.

Austria also has a longstanding tradition as a gateway to the East and is viewed increasingly as a hub for investors from CEE and the Middle East.

A successful partner for investments

EHL, Austria’s leading real estate service provider, focuses on the Austrian market and has ex-

tensive market expertise and established contacts to international investors. As a partner of international real estate firm Savills, the company also has an extensive global network. EHL is specialised in investment, retail, residential and office operties.

EHL enjoys a dominant position, particularly in the investment market. In 2014, when the transaction volume skyrocketed to a record EUR 3 billion, the company was involved in deals comprising a third of this volume. It also brokered the sale of the retail/offic complex Millennium City, the largest Austrian real estate transaction in several years.

In retail EHL offers comprehensive services to real estate investors as well as to retail chains expanding to Austria. The company regularly advises shopping centres on branding, manage-

ment and on establishing a successful tenant mix. It has also advised several international chains on their roll-out in Austria.

The offic experts at EHL brokered 40,000 sqm of space in 2014 and are the exclusive brokers for several outstanding offic properties coming on the market such as ORBI Tower and messecarree.

In recent years EHL has steadily focused on expanding its real estate services. “International clients truly appreciate obtaining all of their real estate services for the Austrian market from a single partner”, says Michael Ehlmaier, managing partner of EHL. These services include property and construction management as well as property and portfolio valuation based on the internationally n accepted criteria of RICS.

REFERENCES 2014 | 2015 Investment: Sale of Millennium Tower / Millennium City EHL brokered the sale of Millennium Tower, the largest transaction of the year.

Retail: New retail concept for Auhof Center EHL developed an innovative tenant mix for the shopping centre Auhof Center and brokered the retail space.

Residential: Exclusive freehold flats EHL markets exclusive freehold flats in Theresiengasse/Kreuzgasse in Vienna’s 18th district, a project of Raiffeisen Leasing.

Office: New design hotel in Vienna’s city centre EHL brokered space to an exclusive design concept of the brand Ruby hotels in Vienna’s prestigious first district.

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CONTACT: EHL Immobilien www.ehl.at Office:

Stefan Wernhart MRICS

Investment: Franz Pöltl FRICS Retail:

Jörg Bitzer MRICS

Residential: Sandra Bauernfeind MRICS

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Advertorial

Corporate restructuring – it’s all about the real estate

T

he current economic situation is characterised by uncertainties on the global financial markets, and many companies are not able to keep pace with a rapidly changing economic climate.

At Deloitte we have recently released our annual survey on the European restructuring environment, including the outlook for 2015. In compiling the report, we sought feedback from key European risk and workout bankers together with alternative investors and asset-based lenders.

The overall restructuring environment in Europe appears to be stabilising, but banks reporting an increase (in restructuring activities) were based in Spain and Austria. The main reason Austria has seen an increase in restructuring activity is due to its exposure to countries in CEE. Currently, corporate restructuring cases are a familiar feature in the Austrian press. Two prominent national examples are Asamer and Baumax, for both companies Deloitte Corporate Finance teams have carried out and implemented extensive restructuring/debt advisory services.

In these cases, the real estate portfolios were instrumental in creating the financial problems for the companies and, consequently, constituted a critical issue during the restructuring process. The survey highlights that, Historically across Europe, retail and real estate have been the sectors that have kept work-out teams busy, and this continued to be the case in 2014. There are diffe ent reasons why a company’s real estate portfolio may become a major issue in a restructuring process. In some instances, industrial corporates may prioritise their core business, focussing less attention on their real-estate portfolio, even though this is often a significan part of their balance sheet. We have also seen companies try to rapidly boost growth by leveraging their balance sheet using a variety of financing tools, such as sale & lease-back, long-term leases, construction rights or mortgages. These financing methods make the management of real estate portfolios more complex and can result in financial challenges for the company.

Moreover, within restructuring processes we

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regularly identify signifi ant diff rence between the company’s strategic value and the fair market value of its property - this gap becomes even larger under e.g. RICS Red Book “special assumptions” such as a reduced marketing period.

Real estate typically ties-up a large proportion of a company’s available capital. This is therefore an area that requires careful focus and attention from suitably qualified individuals. We have experienced several instances where it is the management of the financial burden from the real estate portfolio that determines the fate of a financial y distressed business.

It is necessary to start with a restructuring process as soon as it is clear that financial imbalance can-

The relevance of real estate and its intrinsic value was also prominently shown by the ECB via the Asset Quality Review (AQR) which was performed across Europe and represented the ECB’s concerns in regards to the non-performing loan portfolios pledged by real estate. To conclude, AQR resulted in a €136 billion increase in NPL exposures across European banks. Based on Deloitte’s restructuring survey, bankers’ expectation of the impact the AQR process were as follows:

not be managed alone, ideally before the loan is transferred to the bank’s work-out department.

In our experience, the earlier discussions with creditors and other stakeholders to find a consensual solution commence, the greater the chances of successfully restructuring and turning the business around. Restructuring measures start with a comprehensive analysis of the current situation including cash fl w analysis of the objects, legal status, valuation, challenging of the forecast, analysis of liabilities, covenants, collaterals and the consideration of management, including whether additional support, either via new hires or instructing professional advisors, is required. Moreover, an analysis of the intrinsic value of the collaterals is helpful to design a cash fl w based model and ensure liquidity. n

Increase in level of provisioning

33%

Increase in loan portfolio disposals Chance in lending practices

14% 11%

Need for capital raising

6%

Need to improve credit profile

6%

For more details on the European Restructuring Survey, please visit >> www.deloitte.at/realestate We believe that the combination of deep financial and restructuring knowledge with focus on real estate becomes more and more relevant when a corporate faces financial challenges. In order to best serve these customer needs, Deloitte Austria has established a real estate restructuring team with significant experience in property analysis and transactions.

For any questions, please do not hesitate to contact us: Deloitte Austria

Corporate Finance / Real Estate Advisory > Stephan Langer, slanger@deloitte.at > Frederike Benscheid, fbenscheid@deloitte.at > Miklos Palffy, mpalffy@deloitte.at

ImmoFokus Austria

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