Most recently, Vienna continued to top Mercer’s quality of living survey for the 10th year running. The Austrian capital has again retained the highest ranking because it provides resident and expatriates with high security, well-structured public transportation and a variety of cultural and recreation facilities.
Yet, there is another factor as to why Vienna remains the most livable city in the world: affordable real estate. Viennese real estate is generally more affordable compared to real estate in European cities of a similar standard, like Munich or Zurich.
Here’s an example: A new apartment in Vienna’s prestigious 4th district, located right next to the city center and in between Charles’ Square (Karlsplatz) and the world famous Belvedere (Schloss Belvedere), will cost you around €5,400 per square meter; comparable property in Munich will cost around €8,000 per square meter and in Zurich even €10,000 per square meter.
Combine that with the current low interest rates, a stable real estate market and moderate but steady yields, owning property in Vienna has become an attractive investment option for foreign buyers.
There are, however, some legal hurdles to overcome for expat buyers in order to become property owners in Vienna.
1. Viennese Act on the Purchase of Real Property by Nonnationals
In Austria, property can be owned by any individuals or legal entities with legal capacity. The acquisition of real estate itself is a matter of the federal provinces. The applicable provision for Vienna is the Viennese Act on the Purchase of Real Property by Nonnationals (Wiener Ausländergrunderwerbsgesetz or WrAuslGrG).
According to Article 1 WrAuslGrG a mandatory approval by the Municipal Office MA35 is required, if a foreigner intends to purchase a right to a property or an apartment in Vienna. EU-citizens or citizens of an EEA-member state can acquire property without restrictions and are legally on equal terms with Austrian. The approval procedure thus only must be done by third-country citizens.
There are, however, certain groups of people who do not need a permit to acquire property. Iranian citizens who are not gainfully employed, Swiss citizens and certain people favored due to state treaty regulations (i.e. employees of certain International Organizations) may apply for a so-called negative certification (Negativbestätigung), stating that they are exempt from the permit requirement under Viennese law.
The approval procedure usually takes at least three months.
In general, the approval is granted if the purchase is of social or (macro)economic interest and has no negative effect on national interests. Usually, private persons fulfill the social requirement if the transaction satisfies the buyer’s individual housing needs. Companies on the other hand, usually go for the economic requirement, which is met if the transaction leads to the establishment, expansion or maintenance of a business in Vienna.
2. Using a Company Structure for Real Estate Acquisition
As mentioned above, legal entities with legal capacity may own property according to Austrian law. Unlike other provinces, the Viennese lawmakers are quite open to attract foreign investments in the real estate market. And by establishing intercompany holdings, even a nonnational would not need the approval to acquire property in Vienna.
Here’s how it works.
Article 2 WrAuslGrG states that a company having its seat in Austria and which is either predominantly owned by third-country citizens or by companies having their seat outside of Austria, is foreign.
The company would thus require an approval if it intends to buy property in Vienna.
As described above, the approval process takes several months.
So, in order to speed things up, a third-country citizen could set up an Austrian holding company called “Company A”. Company A itself would own another Austrian company, called “Company B”.
If Company B acquires real estate in Vienna, the approval would not be necessary, simply because the (Austrian) company buying the real estate (= Company B) is wholly-owned by another Austrian company (= Company A).
This is possible, because the WrAuslGrG only considers the foreign nationality of shareholders in the company that would directly buy the property. In other words: the ownership-structure of the (Austrian) holding company in the example above does not matter in Vienna.
The laws in the other federal provinces of Austria on the other hand are not quite as “liberal”. Before buying a certain property, one thus has to check the state law applicable to the property.
It is in any case advisable to get professional assistance before putting pen to paper.