Is Austria Europe’s Next Investment Hotspot?

Even in the bad years which were a problem for many European countries, the Federal Republic of Austria produced some pretty impressive economic indicators. According to KMPG, Austria’s GDP grew between 2006 and 2010 by just under 28 billion Euros, with inflation and unemployment barely changing in the same period. Now that Europe’s economy has turned the corner, many are eyeing the nearest neighbor of Germany – which has really led the Eurozone into recovery – as the smart place to invest.

With just over 32,000 square miles of space, Austria is one of the smaller European countries and, because much of the land is mountainous, real estate development opportunities are thin on the ground. This means – in recent years, at least – that supply shortage tends to drive the market. Those looking at property for sale within Austria can expect capital growth rates of around four per cent these days, something that investors in other Eurozone states’ property markets could only hope for. Additionally, the republic’s very high occupancy rates mean that rental yields tend to be higher than elsewhere. Furthermore, this is the case with smaller housing units as well as larger ones. Even throughout the years of Eurozone stagnation, following the global economic crisis, Austrian real estate has continued to return handsome growth, both capital returns and rental income.

In terms of being attractive to foreign investment, the legal system and tax regime in Austria are both well established and unproblematic. The country offers several forms of tax relief for overseas investors, notably when investment is made into companies that undertake research and development activities. In 2011, Austria was able to announce that 2.79 per cent of its GDP was devoted to RD. This is significantly better than the average within the European Union. Investors should be aware that no limit is place transferring funds that are related to inward investment to Austria from outside of the country.

From 2013, Austria has become the home to 14 new corporate headquarters – most of them attracted by the tax regime. The country also became home to 303 regional headquarters in the same period and Austria is now outstripping competitors like Poland and the Czech Republic in this regard. Because of its high quality graduates and central location in Europe – close to nearly all of the large economies that make up the Eurozone – Austria is only likely to become more popular among multinationals.

The standard of living in Austria is relatively high and this can put some investors off. Nevertheless, unit labor costs rose by only 0.7 per cent each year from 2006 averaged over five years. According to the national investment agency, this compares favorably with the higher cost increases posted in Germany – at 2.5 per cent – and other centrally located European states that ran at about 1.5 per cent. Those looking for an economy which offers great growth potential in the region, both in terms of real estate and business, really ought to consider giving the Alpine country a closer look.

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