AUSTRIA - Austrian property firms will largely escape the sub-prime crisis and remain immune to interest rate rises, according to a report from Raiffeisen bank.

A paper published by the firm claimed Austrian property firms' minimal exposure to US real estate would protect them from the worse of the recent US sub-prime debacle.

That said, Raiffeisen analyst Roman Herzog told IPE Real Estate Austrian property companies had become more anxious about the impact of the crisis.

"They're concerned - but it's psychological," he said.  "There has already been an impact, with 20% off prices, but it's still OK," he continued, as Herzog also pointed out thigher interest rates would likely drive up rental.

Raiffeisen believes Austrian property firms are following a trend established by their UK counterparts, albeit the UK currently has slightly higher interest rates and a greater tendency to short-term lending than in continental Europe.

"The difference is that UK property companies won't do so well now, though they have in the past," he said.

He said there is still traction in Central and Eastern Europe - which make up Austrian property firms' investment horizon - for the next two—three years.

"There is still yield compression going on.  If yields come down, prices will go up. But in Eastern Europe you can still get yields of 7%. It should come down to 6%, as we've seen in the Czech Republic and Poland," added Herzog.