Give Vienna a whirl

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Vienna’s museum quarter, where apartments in the Hotel and Residences Sans Souci cost from €769,450 to €8,164,676

Vienna has long attracted tourists keen to absorb some of its rich culture, but the Austrian capital is now drawing an increasing number of wealthy international property buyers looking for a secure location for a second home.

“The market is very busy at the top end and 90 per cent are cash buyers,” says Richard Buxbaum of Otto Immobilien, associates of Knight Frank.

The vast majority of buyers are from Russia, eastern Europe and the Middle East and their purchases are driven as much by the promise of economic stability, as they are by Vienna’s attractions.

“Vienna is very safe and in the heart of Europe, and this is very important to east Europeans,” says Buxbaum. “While the husband works all over the world, the family is based here.”

However, Vienna appeals to more than just haven seekers. There is a substantial international community in the city due to the many embassies, international organisations (the United Nations and Opec have bases here), and the presence of global companies such as Coca-Cola. Rather than rent, many expats, including Swiss, Americans and especially the British, prefer to buy and it is easy to see why.

The city, which is less than three hours’ flight from Moscow, Geneva and London, is well-run, efficient and cultured. As the former centre of the Habsburg empire, Vienna’s wealth enabled architecture and the arts to flourish, and the city was home to notable composers including Mozart, Beethoven, Schubert and Haydn.

Now the Habsburg love of ornate architecture has become the backdrop for a modern city with a high standard of living. So much so that Vienna has topped Mercer’s Quality of Living Survey for the past three years (2009-2011).

One of the most popular areas for upmarket homebuyers is in Vienna’s First District in the historic centre. Many of the turn-of-the-19th century buildings were once smart hotels that then became drab offices. Now, however, the buildings are being restored and developed into spacious flats.

The Hotel and Residences Sans Souci is in Vienna’s museum quarter and on the edge of the First District. Owners of the 15 apartments will be able to use the hotel’s amenities, including the restaurant and spa, for a pro rata service charge. Knight Frank and Otto Immobilien are selling the one to three-bedroom properties at prices ranging from €769,450 to €8,164,676.

The area surrounding the Hofburg Palace and St Stephen’s Cathedral, known as the “Golden U”, is in the heart of Vienna’s tourist centre and encompasses the upmarket shopping streets of Kaerntnerstrasse, Kohlmarkt and Graben.

Expat Consulting, a real estate and relocation agency based in Vienna, is selling a 480 sq metre penthouse, within the “Golden U”, with a terrace and views of St Stephen’s for €5.9m.

“Even through the economic crisis, and in 2008 and 2009, when property prices around the world went down, prices in Vienna have stayed stable because we did not have the initial hikes,” says Aslan Kurtaran, chief executive of Expat Consulting.

In the past five years, demand for homes in Vienna’s First District has increased dramatically. “Vienna offers political stability, so people are looking to invest in property and prices have never been so high,” says Kurtaran.

Prices in Vienna’s First District have increased by about 30 per cent since 2008, and top tier penthouses are now priced, on average, between €4m and €6m. Two to three-bedroom apartments cost between €1m and €1.6m.

Such rises tally with Knight Frank’s most recent Global Cities Price Index which reports that overall, Vienna’s property prices have increased by 3.8 per cent in the 12 months to June 2012.

This four-bedroom villa is on the market for €8.9m

However, despite these prices rises, Vienna is still perceived to be very affordable by international buyers, particularly when compared with the cost of homes in the centre of Paris, Frankfurt and, above all, London.

The average price of top tier homes in Vienna’s First District is €12,000-€15,000 per sq metre, while in prime central London it is just over €41,000 per sq metre.

“Although there are few new-build homes, there are many quite large mansions built in the 19th century and they are very popular with wealthy Austrians and expats,” says Kurtaran.

The 18th and 19th Districts are the most attractive (the former British Embassy was in the 19th District) and this area includes the pretty village and local wine centre of Grinzing. In the 18th District near a former English garden, the Pötzleinsdorf Palace Park, Knight Frank is selling a 19th-century four-bedroom house for €8.9m.

There are international schools, large family mansions, and open countryside, woods and vineyards, are on the doorstep. Moreover, these affluent districts are within a 20-minute drive of the city centre.

The Viennese climate of hot summers and very cold winters has ensured that homes are well-built and energy efficient. Engel and Voelkers are selling a Swedish-styled clapboard villa, built in 1988 and refurbished in 2003. Situated in the smart residential area of Salmannsdorf, in the 19th District, near the American International School, the house has large terraces, six bedrooms, a big garden and a swimming pool. It is on the market for €4.2m.

Yet to some extent, Vienna’s attraction is also its undoing. Few of the international buyers who purchase homes in the city centre live there for very long. And, as in London, many top tier homes in the centre stand unused for months if not years. Despite a strong local renting culture and high rents – a good quality apartment lets for between €3,000 and €5,000 per month – few of these apartments are let out due to protective tenancy laws and rent capping.

And although Vienna feels uncongested and is very manageable (cycling is encouraged, the trams are frequent, the centre is pedestrianised and the boulevards are spacious and clean), it lacks the energy and vibrancy of a major capital city.

Nicola Venning was a guest of Knight Frank

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Buying guide

Pros

● Politically and economically secure

● A high standard of living

● Within easy reach of other major European cities

Cons

● Letting out properties is complicated due to very protective tenancy laws

● Relatively small capital city

● Culturally homogenous, with little diversity

What you can buy for ...

€100,000 Two garages in the First District

€1m A one to two-bedroom apartment in the First and 19th Districts