Alarm in Vienna: Construction slowdown dramatically threatens housing supply

Alarm in Vienna: Construction slowdown dramatically threatens housing supply

The real estate industry in Vienna is faced with enormous challenges. The first Austrian new building report, prepared by Exploreal GmbH, is alarming: the number of new buildings is falling dramatically, and the decline could soon lead to a serious shortage of living space.

Forecasts for 2024 show that completions across Austria will decline by 10 percent, with this trend expected to increase by 2025, with a feared decline of up to 38 percent compared to 2023. For the federal capital, this specifically means that from around 17,000 newly built apartments in 2023, a decline is expected to around 15,300 units in the current year - a worrying trend.

A worrying trend

Michael Pisecky, the specialist group chairman of the real estate and asset trustees in Vienna, emphasizes the urgency of this situation. “If commercial residential construction continues to be blocked more than politicians support it, the entire housing supply in Vienna is at risk,” he explains. In recent years, commercial developers have completed over 65 percent of all new residential construction in the city.

The observations suggest that construction work is primarily being pushed to the outskirts of the city. The Donaustadt district has the highest construction activity with 18.55 completed residential units per 1,000 inhabitants. However, this shift means that internal development, i.e. the creation of new living space in already built-up areas, is neglected.

Regulations as an obstacle

One reason for this decline is the numerous legal regulations that are inhibiting construction activities. Hans Jörg Ulreich, a property developer, points out that cost-increasing requirements such as parking space obligations are putting additional strain on housing construction in the city. The political framework definitely needs to be improved in order to promote internal development.

In addition, Nicole Fürntrath, a property manager, sees the need for measures in the already built-up city, particularly with regard to thermal retrofitting. “Internal development must become the engine for our climate goals,” says Fürntrath. It is important to motivate residents to switch to environmentally friendly heating systems through incentives.

“For a comprehensive renovation and the construction of new affordable housing, it is essential that politicians adapt the legal framework,” Pisecky appeals to the city government. “Without a clear perspective for investors, the creation of housing will fail in the long term.”

Despite all the challenges, Pisecky and his colleagues see opportunities to improve the housing situation. They are calling for a review of standards and regulations to reduce construction costs and speed up the construction process. “Sufficiently large living space must be created in Vienna, and this requires appropriate political measures,” concluded Pisecky.

The changes demanded by the real estate industry could be decisive in turning around developments in housing creation in Vienna and guaranteeing security of supply for the population. Details about this spotlight on the living space situation can also be found on immobilien-redaktion.com.