Wealthy Eat Vienetta but Miss-a-Trick with Vienna?

11 November 2011

Around the world, prime cities are seeing their property markets flourish, as wealthy global investors buy property, because of the perception that it is a safe investment in a volatile world. With the price of gold now sky high, and the value of cash plummeting by the day in most countries, property is a safe asset to store wealth in. But Vienna is looking like a safe-haven that may have been overlooked.


London, Paris, Hong Kong, Shanghai, New York and Zurich have all benefited from this trend. According to the Q2 Knight Frank global cities index (first recorded in Q1 2011 as a testament to these cities having become almost completely detached from the global housing reality), property prices in Hong Kong grew 16.1% in the year ending Q2, in London prices grew by 8% during the same period, and in Moscow the growth was 6%. Apart from the cities mentioned above, St Petersburg, Singapore, Geneva, Monaco, Los Angeles and Kiev also make the index as "prime cities".


But no Vienna. The Global Property Guide has just published data on the Austrian and Vienna property market for Q1 of this year, which shows that Vienna property price growth makes it more than suitable for the list. The data shows that Vienna property prices grew 9.52% in the year ending Q1 2011.


Thus, if Vienna had been in the Q1 global prime cities index, it would have been in 6th place, knocking London into 7th. Why wasn't it? Because in the sense of the word "prime" as it is meant here, Vienna is not a prime city, because property prices are too low for it to make the grade. Looking back to an earlier report by the Global Property Guide, the average price of an apartment in Vienna was 3000 euros per sqm at the end of last year, compared to 14,000 euros per sqm in London.


But Vienna is a safe haven, in fact more of a safe haven than London. According to the aforementioned Global Property Guide research, Vienna property prices have been growing consistently since 2004, even throughout the worst of the financial crisis, while London prices fell in 2008. So, with Vienna being a safe-haven, but offering property at lower prices than "prime" cities, it surely presents an opportunity that may be getting overlooked by the aforementioned wealthy investors -- an opportunity that the not-so-wealthy can also utilise.

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