Investing in Austria Does it take longer to complete deals in market phases like the current one? Transactions are definitely taking longer at the moment. And the more time that passes, the more can happen. This also increases the risk of another interest rate adjustment or something else happening. In other words, if it usually takes two to three months on average to complete a deal, it‘s currently perhaps four to six. Financing in particular takes longer. And when you are close to the finish line at the end of the day and find out that the financing has fallen through, that is of course, highly annoying to all parties involved. Is it true that some sellers only start negotiating with secured financing? In the current situation, securing financing is particularly important for the seller, as it is not uncommon for financing requested by the buyer to end up not being approved or not approved as planned. As a seller, you understandably want to make sure that your counterpart, to whom you are also granting exclusivity and thus rejecting other investors, can also handle the deal financially at the end of the day and that you are not entering negotiations in vain. At the moment, there is optimism in the industry that something is moving with the KIM regulation, regarding the ban on interim financing. Do you see it that way as well? I think it‘s obvious that something has to change here. If it is no longer possible for people to acquire property, or if the KIM Regulation creates such major obstacles, then that is not a healthy development. Particularly when you talk about interim financing, this is really incomprehensible: If, for example, you have already built up real estate assets or an extensive stock portfolio and thus clearly have a credit rating that can be financed, the KIM Regulation prevents financing from taking place if you do not have an additional 20% equity capital, a paradoxical situation. Although banks are allowed to finance such borrowers to a certain extent, this quota is exhausted relatively quickly. What would be the impact on the market of lifting the ban on interim financing? First and foremost, something that was created by regulation and hinders the market would be abolished. However, it remains to be seen whether the market would then be noticeably boosted because the increased interest rates are not exactly conducive to transaction activity either. Should the legislature not consider how to help people to raise the 20 percent equity? If one asks around, one gets the distinct impression that above all younger people cannot afford a loan. To begin with, it is difficult for many people to raise even 20 percent of their own capital. But that‘s not the main reason why you can‘t get a loan. In many cases, there are still moms, dads, grandmas and grandpas who can help out if you can’t raise this 20 percent on your own. A bigger hurdle is the debt service ratio of 40 percent, which may not be exceeded. This often hinders the process even more. Various sources currently tell us that the cycle of interest rate hikes should come to an end in the first half of the year. Is that realistic, or will the interest rates stay higher for much longer? I assume that we will see a few more interest rate hikes this year, as announced. The next one in March. Over the course of the year, we will see at least one more interest rate step, so we can assume that interest rates will not only move up insignificantly but noticeably. With what consequences? As you know, the capital market has a significant impact on the real estate industry, especially in the institutional sector. And when interest rates are higher, alternatives to real estate investments also become attractive. When I look at German government bonds, for which you currently get around 2.6 percent, or bonds from the USA, which even offer up to four percent. Not to mention good corporate bonds. That sends clear signals to large investors and financial intermediaries with broad investment spectrum. At present, they often prefer to look at more liquid asset classes, some of which offer higher returns than real estate. While real „Raising even 20 percent equity is difficult for many. But that‘s not the decisive issue why some people can‘t get a loan.“ Markus Mendel, EHL Investment Consulting estate investments will never go out of style, they will have to offer different yields to be competitive. After all, one must remember: It‘s not just the brick I buy that counts, but also how much interest I have to pay to afford the brick or finance it. Because you are talking about other yields, do you see that the situation is slowly normalizing in asset classes such as logistics, where yields approached those of residential properties in the wake of the Corona crisis? Of course, logistics properties are also in demand again at significantly different prices. Many investors are not only active in Austria but also on a European level or at least in 16 ImmoFokus
WORDRAP MIT MARKUS MENDEL Are you a risk taker? As long as it is calculable Favorite hobbies? Riding motorcycles and going to the gym Your favorite way to drink coffee Milk without sugar Morning or evening person? Definitely morning person Which book is on your desk? My notebook In the next ten years, I would definitely like to... … Take a trip around the world When you turn on the radio in the car, what‘s playing? Kronehit How did you earn your first money? Changing tires in a car repair shop If you won the lottery, what would you do? Treat myself to a longer vacation Your biggest vice? All types of sweets With whom (living or deceased) would you like to spend an evening? Steven Spielberg <strong>MIPIM</strong> | <strong>2023</strong> 17
Change language