Luxury real estate in Vienna: Corporations rely on top addresses

The luxury business is flourishing. The recently published report shows how well luxury properties perform above average „Luxury Real Estate Report 2024“ of the international real estate service provider CBRE.
While the increased key interest rates in recent years have led to sales by large institutional investors, family offices or owner-occupiers with strong equity capital are currently taking advantage of attractive opportunities. the best addresses in Europe to purchase at reasonable prices. “Across Europe, luxury retailers are trying to secure first-class locations for their flagship stores,” says Walter Wölfler, Head of Agency & Sector Retail Austria at CBRE.

In Vienna, however, this approach of large retail chains to acquire property as property has not yet arrived. Potentially suitable locations in Austria are rather limited for top brands. While mass market retailers can choose from shopping centers, retail parks and shopping streets, luxury goods suppliers only have a few “high streets” to choose from.

High rents

“The concentration of luxury brands on the most sought-after spaces in the best shopping streets has driven up rents further and faster than those in the mass market,” says Wölfler. In Vienna, similar to Paris and Milan, the ratio of prime rent between luxury and mass market is currently around 2.6 times.

In the Vienna city center are the addresses Kohlmarkt and Graben the measure of all things. The industry structure on the Kohlmarkt is largely stable. If there is a change of tenant, the replacement usually comes from the same division. In recent years – as a result of the increased space requirements of flagship stores such as Louis Vuitton, Hermes and YSL – there has been an expansion of Kohlmarkt’s luxury labels towards Graben. “Across Europe, luxury streets have significantly lower visitor frequencies, but people’s purchasing power and the resulting value of their purchases are significantly higher in these luxury locations,” says Wölfler.

Tourism plays a big role in this. New visitor records are expected for 2024, from which luxury retail locations will benefit disproportionately.