VIENNA-The mood on the Austrian property investment market has improved. International buyers are now offering domestic investors more competition, while second row assets offer strong yield opportunities, says Vienna-based chartered surveyor EHL Immobilien.

“Vienna is back on the international playfield,” managing partner Michael Ehlmaier told a presentation in Munich recently. “Especially German institutional investors are looking for active asset management. That means they buy and sell objects quicker than before and that assets will increasingly find buyers.” Apart from the German interest, the main reasons for the stronger market are the Austrian economy rebounding above European average, and the stability of commercial real estate with largely unchanged office rents - combined with moderate vacancies and small price drops in Vienna.

EHL expects transaction volume of $2.4 billion this year, one-third up from 2009. “Especially objects with stable cash-flow expectations will be sought after by large international funds and insurances,” said Ehlmaier. The market upturn also brings second row assets back into play, which have been all but ignored since 2008. “The yield curve is a lot steeper than before the economic crisis,” he added. “That is why it pays to invest in less glamorous objects with lower future expectations but distinctly higher yields.” The strong interest has already brought slightly falling yields and rising prices, and prime office yields are currently at 5.5%. They are expected to drop to 5.3% by the middle of 2011.