Austrian real estate underperforms stocks and bonds

Austrian commercial real estate generated far lower returns relative to stocks and bonds in 2012.

Property underperformed equities, which delivered 25.1% (MSCI Austria) and bonds with 13.7% (Austrian bond index) in 2012. But IPD noted that real estate 'strongly and consistently' outperformed stocks over a three-, five- and nine-year period.

The IPD Austria Annual Property Index generated a total return on all property of 6.2% in 2012, only 10 basis points lower than the performance for 2011. Capital growth amounted to 1.2%, 0.3% lower than the 2011 figure, while income return increased by 0.1% to 4.9%.

Justus Vollrath, managing director of IPD DACH, said returns for all property sectors were broadly comparable with the results shown in 2011. Retail and residential properties were the top performers with over 7% in 2012, while offices and industrials generated returns of 5.2% and 5.3% respectively.

'A weighted comparison highlights that the residential sector accounts for a quarter of the total value of the Austrian databank, while offices make up almost 46%,' Vollrath added.

The IPD Austria Annual Property Index is based on a sample of 600 assets and an aggregate market capitalisation of more than €7 bn at end-2012.