Market Interview

What is so interesting about residential markets in Germany that the Immofinanz Group has been expanding in this segment for some time and even partially withdrawing from its Austrian home market to do so?

The situation in our core countries of Austria and Germany is currently almost ideal for residential property companies: the market is clearly demand-driven – for freehold apartments, for rented apartments and in the investor market. The situation for both markets is that rental levels are stable with clear growth potential, there is a considerable, primarily demographically-driven need for apartments, the current and forecast construction activity in the market is significantly below demand, and these are economies characterized by stability and long term health, so-called “safe havens”.

Our Austria strategy envisages concentrating on the housing stock and construction activity in the Viennese market. Just recently we profitably disposed of a large package of apartments in Carinthia and the bulk of our portfolio in Upper Austria. Other deals are on the stocks. We are therefore being very successful in taking advantage of the current demand situation for Austrian residential property.

We are investing the sales proceeds both in purchases in Germany and in our own developments in Vienna and Berlin. BUWOG currently holds 6,300 apartments in Germany and we want to increase that to 15,000 to 20,000. This step by step restructuring of our portfolio enables us not just to position ourselves within the “German Residential Players’” peer group but also to increase the gross rental yield across our entire portfolio – an important point in view of BUWOG’s planned stock exchange listing in Frankfurt.

BUWOG can sell at between 3.5% and 6% in Austria and buy at between 7% and 9.5% in Germany – in terms of net cold rent. This represents a significant and sustained strengthening of our company’s cash flow.

Source : blog.exporeal.net/en/posts/2013_marketinterviews/19_11_2013_riedl

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