The market for retirement apartments is stabilizing

The Market for retirement apartments has stabilized again. After a significant drop in demand was recorded in the first half of 2023, triggered by the sharp rise in interest rates, there was already a recovery in the second half of the year, which will continue more strongly in the first weeks of 2024.

Recovery after interest rate shock

In total, last year according to the just published “EHL market report for retirement apartments spring 2024” 875 units sold. Compared to 2022, this means a decrease of around 38 percent. “The market recovered quite quickly from the interest rate shock for several reasons,” analyzed Karina Schunker, Managing Director of EHL Wohnen the latest development: “First and foremost, what was important was the stabilization of the interest rate situation with the last increase in key interest rates in September and now there are very concrete signs of a gentle decline over the course of 2024.” Also Marion Weinberger-Fritz, Managing Director of Raiffeisen Pension Apartments confirms the increasing demand and increased sales figures since the end of the year.

Demand for rental apartments is high

From an investor’s perspective, the strong rental market is equally positive: “The demand for rental apartments is very high while supply is becoming increasingly scarce, the vacancy rates are currently exceptionally low and re-lettings after tenant changes occur very quickly. Above all, rents have risen sharply, which, given the comparatively moderate purchase price developments, leads to significantly higher initial returns for buyers of retirement apartments,” says Schunker.

That’s why it’s worth investing now

Why does it make sense to invest in a retirement apartment now? Marion Weinberger-Fritz explains: “There is a relatively narrow window of opportunity to take advantage of the nominal stagnation in housing prices. The production of new living space is declining massively. But the basic need for housing is there, as is population growth. Rents and therefore returns are rising – the perfect mix for a land register-secured investment in your own retirement apartment. Rental income from retirement apartments is a constant and reliable source of income. Real estate is considered to have stable value and has the potential to increase in value. In times of high inflation, retirement apartments prove to be effective protection against inflation, as their stable value and increasing rental income promise real wealth preservation.”

By Editor

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