AUSTRIA - Recovering office across European markets still offers yields as a sector no longer available in retail and industrial, according to property firm Matrix.
In a presentation to investors and analysts, the UK-listed Reit firm said office was in a "growth or recovery phase in most European markets", notably Germany, the Netherlands and Finland and France. The firm specifically identified French regional markets as interesting as they match strong occupational demand with limited supply.
Austria is said to be among the most promising recovery-stage markets and accounts for 32% of the firm's real estate assets - second only to Germany, with 39% - largely because of its status as a gateway to Central and Eastern Europe. Matrix recently acquired Vienna's IZD office tower for €256.7m, representing a yield of 5.73%.
Roman Herzog, a real estate analyst at Raiffeisen bank, claimed in August Austrian property firms are following a trend established by their UK counterparts, as the country has rising interest rates and a greater tendency to short-term lending than elsewhere in continental Europe.
He told IPE Real Estate there could still be traction in Central and Eastern Europe - which make up Austrian property firms' investment horizon - for the next 2-3 years.
"Many analysts are still pessimistic but not me. The fundamentals are still good and I'm still optimistic, especially about Eastern Europe," he said.
"Prices are still increasing - though property is probably in the right price bracket in Central Europe - and rental prices will too, which will mean no more yield compression.
At 4—5%, the rental increase will outstrip Austrian GDP growth of 2—3% over the next two years, according to Herzog. "In three years, maybe it will stabilise," he said.