Geopolitical changes in Vienna’s real estate market

Abstract

This chapter deals with the development of commercial real estate in the city of Vienna. With the transformation of Central and Eastern Europe (CEE) and the integration of these countries and of Austria into the European Union, Vienna has moved from a peripheral to a much more central position in its market area. This positive long term development opened up opportunities for the city and for its companies. Austrian firms invested heavily in CEE countries, changing the country from a net-recipient of FDI to a net-investor. These developments had implications for the city of Vienna and for its commercial real estate market in particular, which are discussed in this chapter. After presenting the spatial and economic framework, we discuss the recent development of Vienna in the office and retail sector as well as some of the current hotspots of real estate development in the city. Then, we briefly characterize the institutional framework of the commercial real estate market in Vienna. In the last section we look at the dynamics of the market in the years since the turn of the century. Despite favourable conditions in the first half of the decade and the economic crisis in the second half, we find a high level of market stability with only small movements of key indicators like rents and vacancy rates. In the closing parts of the chapter we speculate about the reason for this stability and relate it among others to the positive long term development of Vienna’s economic conditions.