OTTO Immobilien Compass

CW 19 - Global residential market update

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Strong interest in second residences – if they are reachable by car

Mag. Martina Gruber - OTTO International Network Management

International vacation rentals:

A comeback in autumn

The corona crisis has also hit the market for international residential and holiday homes. It is currently impossible to travel abroad and visit properties on site, mainly due to travel restrictions. The market is on a break, if only for the short term. There will be a comeback by autumn at the latest, or when travel restrictions are relaxed, says Richard Buxbaum, Head of the Residential Property Department. “Right now our customers want to feel free and independent, enjoy nature and maybe even use their residence abroad as a temporary alternative work location.”  “Despite the current situation, Austrians are showing particular interest in international residential properties that are easily reached by car. The distance doesn't matter that much”, says Martina Gruber of OTTO International Network Management.

Tuscany, Marbella, Provence – the current market situation

How are the markets developing in countries that are especially popular with Austrians for a second or holiday home, such as Tuscany, Marbella, Provence and Berlin?  Certified real estate agents from our international network with Knight Frank were asked to share their expertise for the Immobilien-Kompass real estate guide.

Tuscany: Market could be flooded with unoccupied Airbnb flats

“Austrians and Germans are now in a geographically better position. After the borders reopen, they can jump in the car to go and look at cheap properties, which the British and Americans can’t do”, says Bill Thomson, a real estate specialist for Tuscany at Chianti Real Estate. 

In fact, there will be some bargains, but only in certain sectors. “The market could be flooded with small flats purchased for use as Airbnb rentals, as some owners are now in default with the loans.” However, the traditional farmhouse in Tuscany has hardly been affected by any loss in value, says Thomson.

Marbella: Not as much impact on prices in the top segment

MarĂ­a del Mar Poza of dm properties expects Marbella to see a fall in real estate prices, but this will depend heavily on the location and type of property. “There will be smaller declines in top properties and prime locations, and we expect the market to recover again in the second half of 2020, and especially in 2021.” As in previous crises, the top price segment is more resilient.  She is optimistic, given that “Marbella is a privileged location with one of the best climates in Europe, a low population density, many green spaces and golf courses, and a good infrastructure, including public and private health services.”

The current market situation

A survey of real estate professionals in the Marbella and Costa del Sol areas at the beginning of April 2020 revealed the following results:

60% expect the market to recover in 2021

26% recommend that owners cut property prices

46% expect international funds to stop investing in property in the region until the market recovers

Provence:  Prices stable in the medium and long term 

Rudi Janssens (Janssens Immobilier) from Provence reports a massive slump after the effects of the pandemic became known. Since then, however, he has not only recovered this lost clientele but has also uncovered additional visitor dynamics from online enquiries. “We believe that the impact will be limited to the short term due to several factors: the strength and appeal of the ‘Provence’ brand, a structural undersupply of quality properties and continued low interest rates. Real estate prices should therefore resist and hold out in terms of stability over the medium and long term”, says Rudi Janssens, adding: “Real estate also has something to do with psychology. A property in a holiday destination – that’s the psychology of happiness.”

Berlin residential market and international buyers for Vienna

Berlin: No impact on residential properties due to high demand and low supply

According to Sven Henkes (Ziegert, Berlin), the German and especially the Berlin residential real estate market has so far been resistant to crises, even though the number of enquiries has clearly declined. In any case, the corona pandemic has had only a minor impact on housing purchases as a stable form of investment in comparison with other asset categories. The supply of condominiums in Berlin is still much lower than the demand, and the supply of new homes will run even shorter due to fewer completed buildings and delayed building permits”, said Henkes. Moreover, now that people are cocooning, nesting and working from home more than before, their own homes are gaining importance. A fulfilling life inside one’s own four walls is now the priority, with travel taking a back seat. “But from an international perspective, Germany is also regarded as a ‘safe haven’ in these times and remains attractive to investors and people who want to live here”, says the Berlin expert.

Growing interest from abroad in Austria

It is essential for international experts to share their knowledge, especially in times of cross-border crises, says Martina Gruber of OTTO International Network Management. “Our European network with our fellow real estate agents from Knight Frank is in high demand under these circumstances and is working very well. We give each other regular updates on the different markets and exchange information on the latest developments.” On the other hand, enquiries from abroad and interest in residential real estate are also on the rise, according to the experts at Otto Immobilien. “Austria has received a lot of positive attention due to its very structured and successful management of the Corona situation and is now perceived internationally as a particularly safe and attractive location for residential properties, much more so than in the past”, says Gruber.

For a look at the most important markets in Europe, Asia, USA & Canada, Australia and New Zealand with the latest data from Knight Frank, click here:

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