Every year for the past 10 years, the same city has been crowned the best in the world for corporate relocation: Vienna. According to Mercer’s global Quality of Living Index, the Austrian capital is unbeatable.
But with tourism on the rise in the city of Mozart, Sigmund Freud and Gustav Klimt — last year visitor numbers were up 6 per cent on 2017, according to the tourist board — this historic city is facing very modern problems, including rising demand for housing and tourist accommodation. If it fails to solve them with sensitivity, some predict Vienna’s desirability may come under threat.
Tourism is affecting the local property market. The number of properties available for short-term holiday lets in Vienna has increased dramatically. In the prime First District — the Innere Stadt — the number of listings on Airbnb and Homestay has increased 42 per cent in two years, from 574 in June 2017 to 813 in June 2019, according to AirDNA, which tracks the short-term rental market. “This could have an indirect impact on Quality of Living criteria such as safety and sanitation in the long term,” says Slagin Parakatil, Mercer’s principal.
Last year, Vienna joined nine other European cities in appealing to the EU to protect its ability to regulate holiday rentals. But in December, Airbnb secured an EU legal victory on its status as an online platform, meaning that it need not comply with regulations applied to property agents in the EU.
Meanwhile, demand for housing in the Innere Stadt, home to 16,465 residents, is at “an unmitigated high”, says EHL-Immobilien, an estate agency. Yet the supply of new housing across the city is falling. Prices have risen consistently since 2004 and the population is growing, up 12.3 per cent since 2010, according to Statistik Austria.
Most buyers are forced to look beyond the Innere Stadt, where the price of an average apartment is €13,297 per sq metre, according to data by Immopreise.at, rising to €30,000 per sq metre for new penthouses in prime period buildings. An example is the three-bedroom home in the listed Palais Hansen, home to a five-star Kempinski hotel. It is priced at €8.8m with Knight Frank.
“Buyers in the First District tend to be 50s-plus — wealthy Austrians, but also international people who have made their money elsewhere,” says Richard Buxbaum, head of residential at Otto Immobilien, an agency. “It’s complicated to rent out properties long-term in buildings built before 1945, so apartments in these old buildings tend to be bought by owner-occupiers.” Short lets are exempt from Austria’s tenancy laws — hence increased numbers in the city centre.
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Elsewhere, however, renting is the norm, with 75 per cent of homes occupied by tenants. Adia Trischler, a 38-year-old university lecturer from New York, rents her two-bedroom apartment in a newly renovated Altbau (historic building) in Penzing in the west of the city for €1,000 a month. “It’s ethnically, culturally and economically diverse, which means a lot to me as a black woman from New York,” she says. “It’s also one of the greenest districts, and easy and fast to get to the centre.”
Vienna’s newest high-rises are in contrast to the city’s baroque architecture. One such development is the three towers known as “TrIIIple”, overlooking the River Danube. Its 480 homes cost between €314,000 and €825,000.
While the domestic market accounts for up to 90 per cent of purchases in Vienna, TrIIIple is one of three Viennese projects attracting interest from overseas investors, says Alex Koch de Gooreynd of Knight Frank. The others are the Renzo Piano-designed Park Apartments Belvedere and The Ambassy, in the diplomatic quarter opposite the Prater park. “The starting price is from €500,000, but a lot of investors can’t afford the First District. This is the closest to it,” he says.
Three-bedroom flat in the First District, €4.9m (Knight Frank)
For Trischler, Vienna retains an “open-minded, varied and dynamic” feel. Its historic monuments will continue to draw tourists, but residents value its beauty, natural resources and recreational pursuits. “I hope that part will never modernise,” she says.
Buyers in Austria pay between 10 and 13 per cent of the property’s value in transaction fees, including a 3.5 per cent property transfer taxVienna’s population has risen by more than 12 per cent since 2010. In early 2019, more than 40 per cent of its population were either foreign nationals or Austrian nationals born abroadIn the third quarter of 2019, there were 12,679 short-term rental listings in Vienna, up 24 per cent in two years
What you can buy for . . .
€360,000 A one-bedroom flat in a new development overlooking Prater park
€1.4m A one-bedroom flat near the Innere Stadt
€1.4m A three-bedroom penthouse near the Innere Stadt
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