Vienna's commercial real estate in the crisis: increasing vacancies and credit cases

Vienna's commercial real estate in the crisis: increasing vacancies and credit cases

In the past few months, numerous signs with the inscription "For rent" have become more visible in the Austrian shopping streets and shopping centers. The economic downturn is clearly reflected in the cityscape. Everywhere in Vienna there are vacant shops and cafés, many of which were still lively visited until recently. An exemplary example is a small café in a less frequented pedestrian zone from Vienna Meidling, which recently closed its doors. Shops that once flourished on the well -known shopping street Mariahilfer Straße have now become quiet and cannot win any subsequent tenants.

credit cases and real estate crisis

The situation in the real estate industry has changed drastically. When real estate was considered a "concrete gold" a year ago, the industry is now haunted by a crisis that manifests itself in the increasing bankruptcies of construction companies. Since the beginning of the year, 901 construction companies have had to register bankruptcy, which corresponds to a shocking number of three bankruptcies per day. This aspect is also reflected in the new challenges of real estate financing, since interest rates have shot up, which has increased the purchase and renting of business areas. In addition, the need for office space has decreased since pandemic, which further tightens the situation.

The latest statistics of the Austrian National Bank (OENB) show that the credit cases in commercial properties have tripled since the early 2023. The non-performing loan quota (NPL ratio) has risen to 4.8 percent, which corresponds to a total value of 6.3 billion euros that are considered unusual. These dramatic numbers throw a light light on the problem with which the banks are faced. In total, domestic banks have given loans of 141 billion euros that are secured by commercial or residential properties. This means that in Austria there is a particularly high proportion of 68 percent of such loans compared to other EU countries.

The need to take measures was also recognized by the financial market stability body. About a month ago, this introduced a regulation that calls for the domestic banks to increase their risk provision for loans in the field of commercial real estate. The banks are intended to form a reserve of one percent of their equity in order to prevent possible failures. While the situation cannot yet be referred to as a full -grown real estate crisis, it remains to be seen whether the economic situation can soon stabilize. There are serious worries that the credit cases could continue to increase.

A particularly concise symbol for the challenges in the industry is the unfinished scaffolding, which was once planned as a luxury department store for the Signa Group. This construction site is now a sad memorial for one of the most sought -after company bankruptcies in Austria. The Viennese investor Georg Stumpf was given responsibility for the completion of the project, while the domestic banks still fight with a debt load of around two billion euros in connection with Signa. It is to be hoped that marketing the Signa real estate can record enough money to repay the open loans.

The current real estate situation in Austria is dazed and throws a shadow on the once flourishing industry, which now has to master seriously. Details on the financial effects and the developments in the real estate industry can be read in a comprehensive report on www.profil.at become.