In a relaxed atmosphere, a summer press conference was held on 22 June 2022 on the rooftop terrace of the BUWOG Customer and Administrative Centre at Rathausstraße 1. With a view across Vienna, the two BUWOG managing directors Andreas Holler and Kevin Töpfer reviewed the first half of 2022, reported on BUWOG’s current situation and provided an outlook on what the company and the housing market can likely expect in the future.

“The past six months have gone very well for BUWOG,” Andreas Holler, managing director responsible for development, says, summing up the current situation. “Despite the external, to some extent challenging circumstances, we are very well positioned and this financial year can realise the record level of completion of approximately 2,000 apartments as planned and look optimistically to the future.”

There are no significant negative effects in the portfolio either, Kevin Töpfer, managing director responsible for BUWOG’s real estate management, explains. “Of course, we also have to face the challenge that everything in the portfolio is becoming more expensive. Thus we are giving precise consideration to and inquiring which measures make sense or are necessary – naturally with regard to sustainability, or from an environmental and economic point of view. In every area it is a matter of efficient budgeting, so that various investments naturally benefit our customers, but are also in our company’s economic interest.” This in no way means we are stopping our investments: “We’re doing everything in our power to carry out and manage our projects and properties in accordance with our high-quality standards as before, and this also applies to measures in the interest of climate and environmental protection,” Töpfer states.

No fears of a real estate bubble for BUWOG

Andreas Holler does not currently see a real estate bubble threatening to burst: “We aren’t likely to see a decline in prices for residential real estate any time soon – they won’t rise as significantly as in the recent past, but there will definitely not be a drop in prices.” He justifies this above all with the steady increase in demand for residential space in Vienna, which continues as a result of the influx. “It’s all the more important to create residential space in the affordable segment. The City of Vienna is a good partner with whom we’re constantly carrying out projects, for example under the Vienna Housing Initiative. As a private housing developer, in particular, I see it as part of our responsibility towards society to develop housing for everyone.” Nevertheless, there are hurdles that need to be overcome in this respect: On the one hand, the increase in construction costs is impacting the development of affordable projects: “BUWOG has a treasure trove of land in its portfolio – as long as the construction costs are reasonable for us and the corresponding permits are available, our building can continue seamlessly. We are in the fortunate situation of being able to sit out further price increases – not every property developer can afford that,” Holler says. It makes no sense to develop projects at horrendous prices that no one can ultimately rent or purchase because they’re simply no longer affordable. On the other hand, the possibility for BUWOG to develop affordable housing also reaches its limits when lengthy bureaucratic approval and dedication procedures delay the entire process, Holler points out: “Here I see a plenty of potential for the city, e.g. to speed up processes through digitalisation measures.” According to Holler, abolishing the 2/3 solution in subsidised housing would also ease the situation: “Just adjusting the ratio to 50:50 would already help ensure that additional subsidised flats could also be developed through the income from the additional privately funded new apartments.”

Social responsibility as a property holding company 

“As the holder of more than 21,000 apartments in Austria, we also have a social responsibility towards our customers,” Kevin Töpfer adds. Especially in view of the current wave of inflation, many people are anxious about rising rents. Therefore, it is also important to make sure we can provide an affordable supply when managing our portfolio. “We are currently leasing at an average rent of just under EUR 5 per square metre and are trying to keep it that way.” This is another reason why the efficient use of available resources is necessary.

There is still a considerable demand for condominiums, especially when apartments are purchased as an investment. “As of July 2022, new financing requirements will apply, and interest rates will also rapidly rise – both factors will lead to a change in the market, which is why, from our point of view, now is the time to invest in purchasing an apartment to rent out,” Töpfer adds. “On the other hand, there is ample cash in circulation and there are plenty of people buying properties with little leverage as a kind of inflation protection.” Either way, residential real estate will still be considered a safe haven for investment and the surplus demand will remain, “especially because there will be less construction in the coming years than in 2022, for example. Thus we also anticipate demand for existing properties to increase, especially in the rental segment.” According to Kevin Töpfer, however, extreme hikes in purchase prices are over for the time being: “We expect prices to level off, perhaps with a slight uptick, depending on the location of a property.

Thinking about tomorrow today 

“To be able to exploit the potential of the efficient use of resources, BUWOG is focusing on digitalisation in all areas,” Töpfer says. BUWOG considers itself a driver of innovation and takes advantage of every opportunity to optimise processes and make customer contact more transparent. “Whether it's a customer app or an internal innovation platform – we promote innovation across every department in order to create additional added value for our customers and to simplify and accelerate work processes.” Digitisation should never be an end in itself, but at the end of the day, it should bring an improvement for everyone involved. In terms of sustainability, plenty can also be achieved, as for example, possible property damage, such as a defective irrigation system, can be detected and repaired more quickly with digital tools. “However, policies are also needed to be able to achieve even more in the area of sustainability and the energy transition in the long term,” Holler says. Töpfer adds: “Part of our responsibility is to continue our buildings’ energy upgrades at a fast pace. For this, however, we need a better funding system and planning security, as in Germany. That’s because climate protection must remain affordable for both tenants and lessors.”

For the green management of the portfolio, a pilot project is planned in Carinthia. In Villach, a photovoltaic system that will partially cover the facility’s electricity consumption in the future is being implemented on a BUWOG property. In addition, BUWOG is still consistently pursuing the EU-wide aim of converting all heating systems in its portfolio from oil and gas to alternative energy sources. “We are working intensively to successively optimise our portfolio in this area,” Töpfer says.

“We will continue to keep a close eye on the situation,” Holler concludes. “There is probably no industry or company that is not affected by the current developments in some way. Our goal is to anticipate as much as possible so we are well prepared for any challenges that may still arise and able to successfully go through challenging times together with our customers.”