The IPD Austria Annual Property Index, released today, generated a total return on all property of 6.2% in 2012, only 10 basis points lower than the performance for 2011.
“Capital growth at 1.2% in 2012 was 0.3% lower than the previous year, while income return increased by 0.1% to 4.9%”, said Dr. Nassos Manginas, Managing Director of IPD DACH.
Property underperformed equities, which delivered 25.1% (MSCI Austria) and bonds with 13.7% (Austrian bond index) in 2012, but strongly and consistently outperformed stocks over a three, five and nine-year period.
“Looking at the key sectors, returns are broadly comparable with the results shown in 2011. Retail and residential properties have been the top performers with over 7%, while offices and industrials generated returns of 5.2% and 5.3% respectively,” said Prof. Justus Vollrath, Managing Director of IPD DACH. “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%.”
Manginas further added, “Performance in the Austrian real estate market over the last few years has been unspectacular but remarkably solid. The defining characteristic of the market has been an annualised income return of 5.0% per year over nine years, while capital appreciation and rental value growth were modest over the long-term.
“In times of continued economic uncertainty, the security of cash-flows at a sustainable level over long periods has been the main attraction, creating a strong risk-adjusted investment proposition against alternative asset classes.”
The IPD Austria Annual Property Index is based on a sample of ca 600 assets and an aggregate market capitalisation of more than €7 billion, as at the end of 2012.