Published on and written by Cyril Jarnias
Austrian real estate has a reputation as a steady, reliable market: stable, highly regulated, with little speculation, but far from simple for a foreign investor to navigate. Between regional restrictions for non‑residents, specific tax rules, condominium law, residency programs, and vastly different price trajectories across the federal states (Länder), a superficial approach can be costly.
For a patient investor, Austrian real estate offers capital preservation, decent rental income, and exposure to a stable Eurozone economy. Austria benefits from a high financial rating (AA+ from S&P) and solid institutions, making it a safe-haven investment.
A Generally Safe Market, Currently in a Stabilization Phase
The Austrian residential real estate market has just come out of a correction cycle after a decade of continuous growth. Prices soared between 2015 and 2021, with annual increases sometimes between 10 and 15 % in some areas. Vienna, for example, saw its residential prices climb by about 41% during that period, following a first very strong wave of increases between 2003 and 2014.
The downturn occurred in 2023‑2024, due to rising credit costs and high inflation. Nationally, residential prices fell by about 2.1% in 2024, with a 0.2% decline for the full year after inflation adjustment. Vienna recorded seven consecutive quarters of decline, with a 2.08% year‑on‑year drop in the fourth quarter of 2024, while the rest of the country saw a more moderate decrease.
Overall price drop for certain real estate segments in Salzburg, the hardest‑hit region.
This adjustment is occurring within a tighter economic context. Austria experienced two years of mild recession in 2023 and 2024 (GDP decline of about 0.6% in 2024, after -0.8% in 2023), before returning to modest growth projected around 1 to 1.6% in 2025‑2026. Inflation, which had peaked at over 8% in 2022, is now approaching the European Central Bank’s 2% target, averaging around 2.9% in 2024 and about 3% in early 2025.
Real estate transaction volumes increased by approximately 8.6% in 2024.
Average Prices by Federal State: Striking Disparities
Regional disparities are particularly marked. In the segment of houses around 150 m², price differences range from single to triple between the upscale Alpine states and the most affordable regions.
| State / Region | Average Price 150 m² House | Average Price per m² |
|---|---|---|
| Tyrol | ≈ €1,074,519 | ≈ €7,163/m² |
| Vienna (City‑State) | ≈ €962,144 | ≈ €6,414/m² |
| Salzburg | ≈ €868,421 | ≈ €5,789/m² |
| Vorarlberg | ≈ €825,000 | ≈ €5,500/m² |
| Upper Austria | ≈ €497,144 | ≈ €3,315/m² (approx.) |
| Styria | ≈ €474,375 | ≈ €3,163/m² |
| Carinthia | ≈ €454,592 | ≈ €3,030/m² (approx.) |
| Lower Austria | ≈ €538,400 | ≈ €3,589/m² (approx.) |
| Burgenland | ≈ €363,480 | ≈ €2,423/m² |
In city centers, the gaps are even larger. In Vienna, the price per square meter easily exceeds €10,000 in the 1st district (Innere Stadt) and can reach €25,000 to €30,000 in the ultra‑high‑end segment. In February 2025, the average price there was already around €24,977/m², up nearly 30% year‑on‑year, even as the overall market was correcting.
Rental Yields: Moderate but Steady Income
Austria is typically a market of average yields, rather than a cash‑flow bonanza. Rents are regulated in many cases, tenants are highly protected, and the tradition of renting is very strong, especially in Vienna where nearly three‑quarters of households live in rented accommodation.
Nationally, gross residential yields range from about 3 to 4 % depending on the city and segment. Recent data shows an average around 3.5 % to 3.7 % in 2023‑2025, with significant variations based on apartment size, neighborhood, and status (new or old).
Number of additional residents the Austrian capital could accommodate by 2030, fueling rental market pressure.
For an investor, the focus shifts from “prestige” to “performance”. Smaller units, particularly studios and one‑bedroom apartments, often offer the best gross yields, as the rent per square meter is higher.
Examples of Yields in Vienna by Apartment Type
| Property Type (Vienna) | Average Monthly Rent | Average Gross Yield |
|---|---|---|
| Studio (< 40 m²) | ≈ €630–890 | ≈ 3.8–4.5 % |
| 1 Bedroom (40–60 m²) | ≈ €975–1,045 | ≈ 3.5–4.2 % |
| 2 Bedrooms (60–90 m²) | ≈ €1,396–1,531 | ≈ 3.2–3.9 % |
| 3 Bedrooms (> 90 m²) | ≈ €1,599–2,393 | ≈ 2.8–3.6 % |
The differences are striking in popular, transforming neighborhoods. The 10th district, Favoriten, very dense and connected to major transport routes, is a telling example: a studio costing around €150,000 can be rented for about €850 per month, generating a gross yield close to 6.6 %, above the Vienna average. Conversely, a luxury three‑room apartment in Döbling (19th), bought for nearly a million euros, yields around 3.2% gross, with most of the performance coming from long‑term appreciation.
Outside Vienna, rental yields remain comparable, sometimes slightly higher in certain cities. In Graz, the country’s second city with nearly 330,000 inhabitants and about 60,000 students, gross yields average 3.6%, and can exceed 4% for studios or one‑bedrooms. In Linz, an industrial and technological city, yields for well‑located properties typically range between 4% and 4.5%.
A Highly Protective Legal Framework… Especially for Tenants
One of the major peculiarities of the Austrian market is the strength of tenancy law. Many residential leases fall under the Mietrechtsgesetz (MRG, Tenancy Law), which limits the landlord’s contractual freedom and offers great security to occupants.
Rents are regulated in many cases, particularly in older or subsidized buildings, with ceilings calculated from official indices. Unilateral increases are highly restricted and, apart from a few inflation indexing mechanisms, it is not possible to freely increase rent during a lease.
Fixed‑term leases must be concluded for at least three years and in writing, otherwise they are reclassified as open‑ended leases. Termination by the owner is strictly regulated and often requires a court decision. In case of unlivable conditions or serious breach by the landlord, the tenant may suspend rent payment.
For an investor, this translates into three major consequences. First, an “established” tenant tends to stay a long time (5 to 10 years is not exceptional), which stabilizes rental income streams. Second, rental income growth is slow, linked mainly to indexation. Finally, any repositioning project (major renovation, change of use, re‑renting on the “free” market) requires very precise legal analysis to avoid lengthy and costly appeals or disputes.
Buying as a Foreigner: Freedom for Europeans, Hurdles for Others
On paper, Austria is open to foreign capital. In practice, access to real estate ownership depends closely on the buyer’s nationality and the state (Land) where the property is located.
Citizens of the European Union and the European Economic Area are, in most cases, treated like Austrian citizens. They can buy an apartment or house without special permission, except for certain property categories (agricultural land, forests, second homes in highly regulated tourist municipalities). Swiss nationals enjoy a status close to that of Europeans.
For third‑country nationals, real estate purchase in Austria is subject to regional laws (Grundverkehrsgesetz) that vary by state. In some Alpine provinces (Tyrol, Salzburg, Vorarlberg), the acquisition of vacation homes or agricultural land is nearly prohibited. Even for a residential property in an urban area, authorization from the land authorities is often required, based on criteria such as economic, social, or cultural interest for the region.
In Graz, the rules are relatively flexible for non‑Europeans, whereas in Vienna the framework is simpler if one spouse in the buying couple is Austrian. In all cases, the administration requires detailed documentation on the buyer, the origin of funds, and sometimes proof of concrete ties to Austria (residence, economic activity, tax payments).
Obtaining a purchase permit for a third‑country national is a long and uncertain process, taking two to three months or more, with no guarantee of success. It is therefore crucial to include a contingency clause in the sales contract, making the transaction conditional upon obtaining this authorization. This clause should set a precise “deadline date,” after which the buyer can withdraw without losing their deposit.
Real Estate Investment Taxation: Acquisition, Holding, Sale
A recurring trap for foreign investors is underestimating the overall weight of taxes and fees. Between transfer taxes, notary fees, registry fees, agent commissions, the additional bill commonly reaches 9 to 11 % of the purchase price.
Acquisition Cost: A Double‑Digit Envelope
The cost structure upon purchase is relatively standardized across the territory.
| Cost Item | Rate / Indicative Range |
|---|---|
| Real Estate Transfer Tax (Grunderwerbsteuer) | 3.5 % of price (standard case) |
| Land Registry Entry (Grundbuch) | 1.1 % of price |
| Mortgage Registration | 1.2 % of loan amount |
| Notary / Lawyer (contract + formalities) | 1–3 % of price + 20% VAT |
| Real Estate Agent Commission | 3–6 % of price (often 3% buyer side) + VAT |
| Foreigner Authorization Fee (State/Land) | ≈ €500–1,500 |
| Miscellaneous (translations, appraisals, etc.) | a few hundred to thousand euros |
For a €500,000 property, investing in Austrian real estate therefore often means deploying €545,000 to €560,000 in total capital, excluding potential renovation work.
Rental Income and Capital Gains Taxation
During ownership, taxation depends on the investor’s status (individual or company, resident or non‑resident) but follows a few broad rules.
Rental income received by an individual is added to their other income and taxed according to the progressive income tax scale (from 0% to 55%). To calculate taxable net income, expenses related to the property (loan interest, renovation work, management fees, condominium charges) are deductible. The building can be depreciated, typically at an annual rate of 1.5% (2% for older constructions), with the possibility of accelerated depreciation for certain recent work, unlike the land which is not depreciable.
For companies (notably GmbH), rent constitutes business income taxed at the corporate tax rate of 23 % (after a gradual decrease from 25%). If dividends are distributed to shareholders, an additional levy of 27.5 % applies to the capital distribution, subject to potential double taxation treaties.
Real estate capital gains are taxable, with a flat rate of 30% for individuals. Exemptions exist for the main residence (occupied for 2 consecutive years or 5 of the last 10 years) and for properties held long‑term. For properties acquired before 2002, specific rules can significantly reduce taxation (e.g., 4.2% of the sale price in some cases).
For companies, the capital gain is included in the result and subject to corporate tax at the fixed rate, which may prove more or less advantageous depending on the holding period, financing structure, and shareholder situation.
Rental Market: Robust Demand, Especially in Vienna
While prices have recently softened, rents have not fallen. On the contrary, pressure on the rental market remains strong. Between 2005 and 2023, rents increased by about 90 % nationally, and even doubled in Vienna. In the 2021‑2023 period alone, some segments saw increases close to 25 %, partly due to inflation, partly due to a shortage of new construction.
In 2024, the average rent per dwelling (excluding charges) was around €496.5 per month, up 4.9 % year‑on‑year, averaging about €7.40/m². This figure obviously hides large disparities. Salzburg leads the ranking of rents per square meter at about €11.3/m², ahead of Vienna where some segments far exceed €13/m² for apartments under 60 m².
Number of owner‑occupied primary residences in Vienna, out of a total of about 969,000.
For an investor, this translates into a very limited vacancy risk, but also the need to work with a diverse tenant population: students, young professionals, families with children, expatriates, each with different expectations. Studios and one‑bedrooms rent quickly to students or foreign workers, while three‑ and four‑bedrooms are more suited to long‑term family leases in quieter or outlying neighborhoods.
Financing: More Expensive Credit Than Before, But Accessible Again
After a period of near‑zero interest rates, the sharp rise in European central bank rates in 2022‑2023 caught many borrowers off guard. In Austria, the average rate for new housing loans thus rose from about 1.2% in 2021 to nearly 3% in autumn 2022, then to over 4% in 2023.
Since then, the trend has gradually reversed. By late 2024, the average rate for new mortgages was around 3.63 %, and ten‑year loan offers are now trading around 3.2 %, a level that remains above the era of free money but is more manageable for households. Successive ECB rate cuts since mid‑2024 have enabled this gradual easing of borrowing costs.
The Austrian authorities have tightened mortgage lending conditions via the KIM‑VO regulation. This imposes a minimum personal contribution of 20%, limits the repayment burden to about 40% of net income, and sets a maximum loan term of 35 years. These measures aim to reduce systemic risks linked to indebtedness. They caused a market slowdown in 2023‑2024 but have also improved the strength of bank portfolios.
For the foreign investor, the consequence is twofold. On one hand, access to local credit remains possible, particularly for residents or those earning income in euros, but a significant down payment (often 30 % or more for non‑residents) is required. On the other hand, the size of the Austrian mortgage market remains modest relative to GDP (about 27.7% of GDP in 2024, vs. 50% EU average), limiting the risk of a credit‑fueled bubble.
Usage Restrictions: Primary Residences, Second Homes, and Tourist Use
An often overlooked but crucial aspect when wanting to invest in Austrian real estate concerns the property’s legal designation. Austrian law distinguishes several categories: primary residence (Hauptwohnsitz), tourist rental property (Touristische Vermietung), second home (Zweitwohnsitz), etc. Some tourist municipalities have implemented quotas or bans on new second homes to combat “cold beds.”
In Alpine regions (Tyrol, Salzburg, Vorarlberg), the buyer must often sign a declaration committing not to use the property as a vacation home, a prerequisite for land registry entry. Non‑compliance with these obligations can lead to heavy fines, even expropriation in extreme cases like in Tyrol. Authorities are enforcing these sanctions increasingly actively in the face of international tourism pressure.
Properties specifically designed as tourist residences (e.g., apartments in a hotel residence) follow a different logic: the owner is then required to entrust the property’s management to a professional operator for most of the year, with a limited period for personal use (on the order of 4 to 12 weeks per year). In return, a large part of the 20% VAT on the purchase price can be recovered, and the property functions as a “turnkey” rental investment with gross yields of around 3 to 6% depending on the resort and management mode.
Specific Risks for Foreign Investors
Beyond market conditions or taxation, several structural risks must be taken seriously by any non‑resident investor.
The first is regulatory. The need to obtain a purchase permit in certain states (Länder), the lack of total transparency on acceptance criteria, or the variability of rules between regions create uncertainty that can derail a transaction after months of procedures. That is why it is essential to contractually include contingency clauses and clear deadlines.
Since virtually all legal documents (sales contracts, condominium regulations, meeting minutes, zoning regulations) are drafted in German, misunderstanding a clause can lead to costly disputes. It is strongly advised to engage a local real estate‑specialized lawyer, French‑ or English‑speaking, to guarantee an accurate interpretation of rights and obligations, particularly regarding property usage, pre‑emption rights, or charge distribution.
The third concerns cross‑border taxation. A non‑resident is taxed in Austria on their Austrian‑source property income, but also remains subject to the taxation of their country of residence. Double taxation treaties avoid paying the same tax twice, but their practical application requires producing tax residence certificates, correctly declaring foreign income, and managing tax credits. An improvised tax strategy can result in reassessments, penalties, or heavier taxation than expected.
Acquiring land formerly used for industry can engage the owner’s financial liability for its decontamination, even if the pollution predates the purchase, if it is deemed they “should have” been aware of it. Furthermore, a zoning change or tightening of energy renovation rules can impose costly work to comply with new standards, impacting the property’s value.
Ownership Structures: Directly, via a GmbH, or a Foreign Company
The way an Austrian real estate investment is structured has legal, tax, and sometimes political implications (acceptance by regional authorities). Three main schemes dominate.
Direct personal ownership is the simplest and least costly option in management fees. It is suited to single acquisitions (one apartment, one house) and primary or secondary residence projects. However, it does not offer limited liability (in case of dispute, the investor’s personal assets can be targeted) and does not easily allow tax optimization if the portfolio grows.
Creating a company like a GmbH (Austrian LLC) allows legally separating real estate assets from personal assets. It requires a minimum share capital of €35,000 (half of which must be paid up at incorporation) and entails annual accounting and tax obligations. Corporate tax applies at 23% on income, and dividends are then taxed at the shareholder level. For non‑European investors, this structure can facilitate administrative procedures in certain states (Länder), compared to a personal purchase.
Finally, using structures located in other EU countries (holdings, management companies) is conceivable for significant portfolios or investors already using European vehicles. This can sometimes benefit from freedom of capital movement and favorable tax regimes, but makes legal and tax management more complex. Austria also applies strict transparency rules on beneficial owners, limiting opaque structures.
Residency and Citizenship: Real Estate as a Support, Not an Automatic Ticket
Unlike some Southern European countries, Austria does not offer a “golden visa” based simply on purchasing real estate. Investing in Austrian real estate does not, in itself, grant an automatic right of residence. The logic is inverse: a long‑term residence permit requires, among other things, proof of suitable accommodation – whether owned or rented.
This is the minimum amount of liquid assets required for a single person under Malta’s private residence program.
Other residence permits, such as the Red‑White‑Red Card for highly qualified workers or entrepreneurs, or permits for business investors (with investment thresholds around €100,000 in a local business), offer prospects for more stable residence, but remain focused on economic activity rather than mere property ownership.
Austrian citizenship by investment is reserved for exceptional economic contributions, on the order of €10 million in direct investment or a €3 million non‑refundable contribution to a development fund. This program remains very limited in practice (20‑30 people per year) and can only reasonably be considered by a handful of ultra‑wealthy individuals.
Investment Strategies: Where and What to Buy Today?
In a context of price correction, moderate yields, and strict regulation, the key to success lies in aligning one’s strategy with the structural strengths of the Austrian market rather than seeking speculative windfalls.
Vienna, first, remains the locomotive. Its status as a political, economic, and cultural capital, quality infrastructure, transport network, and steadily growing demographics make it a long‑term market focused on capital preservation. The central districts (1st, 3rd, 4th) and traditional upper‑middle‑class districts (18th, 19th, 13th) are suited to wealth‑management strategies, with moderate yield but expected appreciation of 3 to 5% per year over the next five years.
Transforming outer districts of Vienna, such as Favoriten (10th), Meidling (12th), Penzing (14th), Floridsdorf (21st), Donaustadt (22nd), and Liesing (23rd), often offer gross yields between 3.5% and 5%. They benefit from infrastructure projects like subway line extensions, railway modernization, or the development of large mixed‑use complexes (e.g., “Village im Dritten”). Concrete cases show investors have significantly improved their profitability by buying at reasonable prices and performing targeted renovations, allowing rent increases of 25% to 75% within twelve to twenty‑four months.
Graz is the second major target. A very dynamic university city, with a new technology hub and a large student population, it recorded price growth close to 6 % per year over the last five years, with rental demand up 10 %. Studios and one‑bedrooms in the city center, bought for around €160,000 to €220,000 and rented for €570 to €800 per month, easily achieve gross yields above 4%. The prospect of a high‑speed rail link (Koralmbahn) reducing the journey to Klagenfurt to 45 minutes should further enhance its appeal.
Austria’s third city, Linz, is experiencing a technological boom with the establishment of companies like Dynatrace and Runtastic and the creation of business parks. Former industrial zones are being redeveloped. Rental yields there are about 4% and rent growth should continue, driven by the creation of skilled jobs.
In Alpine regions and high‑end ski resorts (Kitzbühel, Lech‑Zürs, Zell am See, etc.), the situation is different. Prices reach very high levels (often €10,000 to €25,000/m² for luxury apartments, several million euros for exceptional chalets), with lower gross yields but appreciation potential driven by land scarcity, the international image of the resorts, and sustained global demand for these destinations. In return, investors must accept very strict regulations on property use, marked seasonality of rental income, and a competitive context dominated by an ultra‑affluent clientele.
Conclusion: A “Common‑Sense” Market for Patient Investors
Investing in Austrian real estate is neither a gold rush nor a short‑term speculative bet. Everything in how the country regulates its market – strictly controlled loans, residency permit quotas, a strong public housing sector, rent caps, restrictions on second homes – aims to avoid excesses and preserve a form of social stability.
For the foreign investor, the French real estate market differs from more deregulated ones. It imposes constraints like less powerful credit leverage, regulated rent increases, reduced flexibility on property usage, and high transaction taxes that make quick trades costly. In return, it offers high legal security, limited systemic risk, solid rental demand in major cities, and an overall upward price trajectory in the long term.
By relying on local professionals (lawyers, notaries, property managers, tax advisors), taking the time to understand regional specifics, and adopting an investment horizon of at least five to ten years, Austrian real estate can become a solid pillar of an international portfolio, particularly for prudent profiles who prioritize capital preservation and income regularity over the pursuit of maximum yield.
A French business owner, around 50 years old, with financial assets already well‑structured in Europe, wanted to diversify part of his capital into residential real estate in Austria to seek rental yield and exposure to the Euro outside France. Allocated budget: €400,000 to €600,000, without using credit.
After analyzing several markets (Vienna, Graz, Linz), the chosen strategy was to target a quality apartment in a developing neighborhood in Vienna or Graz, combining a target gross rental yield of about 4–5% (the higher the yield, the higher the risk) and medium‑term appreciation potential, with a total ticket (acquisition + fees + potential work) of around €500,000. The mission included: selection of city and neighborhood, connection with a local network (real estate agent, lawyer, tax advisor), choice of the most suitable structure (direct ownership or via an Austrian civil law company), and definition of a plan for diversified asset allocation in Austria over time.
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Cyril Jarnias is an independent expert in international wealth management with over 20 years of experience. As an expatriate himself, he is dedicated to helping individuals and business leaders build, protect, and pass on their wealth with complete peace of mind.
On his website, cyriljarnias.com, he shares his expertise on international real estate, offshore company formation, and expatriation.
Thanks to his expertise, he offers sound advice to optimize his clients' wealth management. Cyril Jarnias is also recognized for his appearances in many prestigious media outlets such as BFM Business, les Français de l’étranger, Le Figaro, Les Echos, and Mieux vivre votre argent, where he shares his knowledge and know-how in wealth management.
